Philippine Business Process Outsourcing Amid AI: Will the Resilience Last?

The Philippines’ outsourcing industry was supposed to be among the first casualties of artificial intelligence (AI). With machines increasingly able to answer queries and process information, the fear was clear: Why would foreign companies keep hiring Filipinos? Intriguingly, though, recent employment figures show an industry still expanding despite the emergence of AI. While this gives the Philippines some time to prepare, there is little reason for complacency.

The information technology and business process management (IT–BPM) industry employed about 1.9 million people and generated USD40 billion in revenues in 2025, according to the IT and Business Process Association of the Philippines (IBPAP). Within it, the contact centre and business process management segment added roughly 60,000 workers, bringing employment to 1.68 million. Those figures, reported in June, hardly paint an industry being “wiped out.”

International evidence also tempers the gloom. A June 2026 assessment by Yale’s Budget Lab found no clear relationship between AI usage and changes in employment or unemployment in the US. A separate International Labor Organization (ILO) review, also published in June, concluded that large-scale displacement remained limited even as work organisation changed. These findings challenge sweeping claims that technological capability translates into mass unemployment.

But growing employment does not mean that AI has not displaced employees. Firms can eliminate some positions while expanding others. Hiring might also have been stronger without automation. Industry totals give a sense of what has happened, but they do not, by themselves, isolate the impact of AI.

For the Philippines, a promising opportunity lies in selling more specialised services: complex customer support, financial analysis, healthcare administration and the supervision of automated processes.

The distinction between tasks and jobs helps explain the apparent resilience. An AI system that assists with a customer conversation need not replace the employee responsible for resolving the problem. In a study published in 2025, researchers found that AI assistance increased customer-support productivity by 15 per cent. This was measured by the number of issues resolved hourly. Less experienced workers benefited disproportionately. Indeed, technology can make workers more useful to employers.

Whether this will sustain employment depends partly on market dynamics. If AI lowers service costs and raises productivity, IT-BPM firms in the Philippines could attract new clients or receive more outsourcing contracts from existing clients. However, the demand for IT-BPM services might increase only slightly, and AI could enable firms to handle the workload with fewer people. AI-boosted productivity growth therefore can create opportunities without guaranteeing that employment will keep pace.

For the Philippines, a promising opportunity lies in selling more specialised services: complex customer support, financial analysis, healthcare administration and the supervision of automated processes. AI could help workers deliver these services more efficiently. But moving into them requires domain knowledge, sound judgment and safeguards for handling client information. Skillful and trustworthy person-to-person service would be difficult for chatbots to replace.

There are already reasons to watch hiring closely. An August 2026 Stanford study, using US payroll data through June, found that employment among workers aged 22 to 25 in AI-exposed occupations lagged behind that of peers in less-exposed jobs, largely because of weaker hiring. The authors describe these as early and descriptive indicators rather than causal estimates. But they suggest where Philippine policymakers should look, particularly the opportunities available to new entrants.

The employment growth rate deserves closer attention. From roughly 1.9 million workers in 2025, reaching the original 2.5 million target by 2028 would require annual employment growth of about 9.6 per cent. The revised best-case target of 2.14 million implies an annual growth rate of roughly 4 per cent, which is much closer to the reported 3.7 per cent growth in 2025. The downgrade therefore looks partly like a correction of ambitious expectations. It does not, by itself, establish an AI-driven employment shock.

AI is also not the only threat to future hiring. US initiatives to discourage offshoring — including the bipartisan Keep Call Centers in America bill and the US Federal Communications Commission’s onshoring proposals — create another source of uncertainty. The prospect of restrictions could encourage clients to postpone Philippine expansion even before these new rules take effect. That is a plausible chilling effect that should be studied separately from automation.

Policy Implications

For the Philippines, the policy response should answer a basic question: upskill into what? Relevant government agencies and the IBPAP should identify the tasks employers need, the competencies workers lack, and the positions trainees can realistically enter. Given the exponential pace of AI development, no entity would be able to map every future job, but publicly supported training should be tied to demonstrated demand and updated as work changes. Success should be measured through placement, retention and earnings. Without that connection, “upskilling” risks becoming a promise of employability without a credible route to employment.

Employers should also preserve routes into skilled work. If automation removes the simpler tasks through which recruits traditionally learn, firms need paid apprenticeships and supervised progression into more demanding roles. Otherwise, the industry risks demanding experienced workers while steadily weakening the means of producing them.

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