While the rest of the world is still debating the impact that artificial intelligence might have on jobs,the PhilippinesPeople have experienced it in reality.
Initially, companies moved back-office jobs to the Philippines to cut labor costs, but now robots are taking over these jobs.The Philippines’ massive outsourcing industry is expected to generate revenue of more than $38 billion this year, and all major companies are racing to launch artificial intelligence tools to stay competitive and defend their business models.
In the past eight or nine months, most companies have launched some form of AI assistant. These algorithms work in tandem with human operators to, for example, summarize all of a customer’s previous contacts with a company. This process requires a combination of advanced speech recognition, content processing, big data sifting, sentiment analysis, and context in real time. Just a few years ago, this would have been the stuff of science fiction.
For some employees, the rapid deployment of these tools was sudden and overwhelming. Christopher Bautista, 47,Call CenterBautista has worked in the industry for nearly 20 years. In his last technical support job, he saw artificial intelligence begin to control more customer calls before transferring them to customer service staff. He said that last November, he and about 70 other people were suddenly transferred to a "floating state" - no job, no salary, but still on the company's employee list. Six months later, he resigned and switched to sales. "Artificial intelligence will take over our jobs," Bautista said. "It's cheaper and more efficient."
Stories like Bautista's remain relatively isolated, and call industry employee headcount remains elevated, but that may not last. Avasant, an outsourcing consultancy with extensive operations in the Philippines, estimates thatAs many as 300,000 business process outsourcing jobs in the Philippines may be replaced by artificial intelligence in the next five years.
“This is both a huge risk and a huge opportunity for the industry in the Philippines,” said Akshay Khanna, managing partner at Avasant. The company’s analysis estimates that AI could also create up to 100,000 jobs in new roles such as training algorithms or managing data. “It’s not all doom and gloom.”
The business process outsourcing industry is vital to the Philippines. It is the largest source of employment in the local private sector and the largest contributor to the country’s GDP. From a social perspective, these call centers provide a decent income for Filipinos who do not have a higher education, without having to leave their homes. The Philippine government has been pinning its hopes on the industry to help move up the value chain, pushing more than 100 million people into the middle class and driving other white-collar jobs. But the rapid arrival of artificial intelligence has disrupted progress toward these goals.
Despite years of talk of the impending demise of the call center industry, the technology solutions available in the real world are still disappointing. Text bots on websites simply repeat FAQs that customers have already read, and voice menu systems often fail when questions deviate slightly from the pre-set ones.
But things are changing fast. In February, payments company Klarna Bank AB announced that AI robots were handling two-thirds of its customer service, the equivalent of 700 full-time customer service staff, sending share prices of some major call center operators tumbling. In May, OpenAI The demonstrated ChatGPT-4o was able to expertly resolve a customer issue regarding a new iPhone that would not turn on.
This obviously threatens back-office jobs such as customer service agents and technical support, which the Philippines excels in. Experts such as Carsten Jung, head of macroeconomics and artificial intelligence at the London think tank Institute for Public Policy Research, say policymakers need to prepare now to avoid turbulence during the transition. “Social security and tax systems need to be improved to ensure that the benefits of artificial intelligence are widely shared,” he said.
However, the Philippines has not chosen to shy away, but is actively embracing the technological revolution. As the world's second largest outsourcing center after India, the Philippines has become a testing ground for many new AI tools. Local AI research centers have been established and several training programs have been launched; some are government-supported and some are industry-funded, aiming to improve the capabilities of 1.7 million employees across the industry.
“If you don’t upgrade your skills, it’s clear that AI will replace you,” said Arsenio Balisacan, director of the Philippines’ National Economic and Development Authority. “That’s the challenge we face.”
Artificial Intelligence in Action
The somewhat jarring coexistence of old and new technologies is evident in the busy contact center of [24]7.ai. On one floor, traditional customer service agents, many wearing client-branded polo shirts, are busy trying to convince customers not to cancel their cell phone plans. Occasionally, cheers can be heard throughout the floor as people celebrate meeting their own and their colleagues’ daily targets.
But at another level, ChatGPT is training customer service agents. It is used for role-playing to help new employees learn how to deal with emotional customers who are about to cancel their service. The AI can play various roles, such as a Gen Z woman (born in 1995 + 2000), a male baby boomer (aged 60 to 80), an angry caller, and a difficult bargainer.
PV Kannan, the company's co-founder and CEO, said that the time it takes to train new employees to adapt to actual calls using artificial intelligence has been reduced from 90 days to one month. He firmly believes that the world is too complex and there are always some situations that machines cannot handle, such as passengers urgently canceling flights due to bad weather, or customers launching new features, new pricing models or new package services.
However, PV Kannan also pointed out that humans will play more of a “middleware” role in future work. And he believes that this redefined role will mean fewer jobs.
“What’s unknown is how quickly AI will disrupt the industry. Is it two years?” said PV Kannan, whose company has 12,000 employees worldwide, including 5,000 in the Philippines. “Half the industry is in denial, pretending there won’t be any impact.”
Other major companies are also pushing AI. At Nasdaq-listed Concentrix, an AI assistant works alongside 10,000 customer service agents in a 23-story office building in Manila. It listens to conversations, summarizes calls, analyzes negative sentiment, and keeps managers informed of any employee comments that are not in line with regulations or calls from callers seeking legal action.
Chris Caldwell, chief executive of Concentrix, said this is just the beginning. His company employs 100,000 people in the Philippines. “This technology is not waiting for anyone,” Caldwell said. “I’m not sure many countries can catch up with the pace of technology companies.”
Like many executives in the industry, Caldwell is reluctant to talk about job losses. He says AI will create new job roles, such as data labeling or correction, that many existing employees can fill.
In fact,The local industry association still predicts that the number of employees and revenue will continue to grow in the next few yearsJack Madrid, president and CEO of the IT and Business Process Association of the Philippines, said he has met with at least 80 companies interested in setting up or expanding business process outsourcing in the Philippines, mainly because of rising operating costs in the United States.
“We’re at an interesting juncture,” Madrid said. “The panic about job uncertainty has been replaced by a recognition that the cost of integrating generative AI is still high and we need to seize the one- to two-year window to reskill employees.”
Despite the frequent night shifts and the occasional verbal abuses from clients, many locals still want to enter the industry. Facebook groups are still full of discussions on how to find a job in the industry. In Manila's large BPO technology park - including cafes, karaoke rooms, clinics, laundromats and recruitment centers - 18-year-olds only need to pass a series of tests and interviews to get a job offer in a few hours, with a monthly salary of at least 13,300 pesos (about 1,750 yuan), plus allowances, and salary increases for outstanding performance.
But changes and anxieties are already evident. Jihan Elijah Paloma, 32, lives with her brother, husband and 3-year-old daughter in General Trias, a two-hour drive southwest of central Manila. With all the adults in the family working in the call center industry, the once-poor family is now well off. Paloma, who works on a credit card hotline for Capital One Financial, is saving to buy her own house and hire a babysitter so she can sleep during the day. “This industry has changed my life,” she said. “If artificial intelligence takes my job, I don’t know what I’m going to do.”
Paloma knows better than many how fast things are moving. After 17 years in the industry, her husband earlier this year got a new job in quality assurance at artificial intelligence startup Sanas, one of many companies studying how to use technology to optimize human work. Sanas' software helps coordinate accents and eliminate background noise such as roosters crowing, ambulance sirens, and office noise, making customer service conversations smoother.
While this sounds like it’s about helping customer service agents, not replacing them, the use of such tools poses a risk for the Philippines, which has led the market since the 1990s not only because of lower labor costs than in the United States, but also because of a large local workforce that speaks fluent English and is culturally closer to the West. If factors such as accents are no longer a competitive advantage, foreign companies may move to lower-cost locations such as Egypt or Ghana, where outsourcing industries are also on the rise.
“Previous generation tools couldn’t learn, but these new bots are always listening, learning, understanding context, accent and customer needs,” said Christine Caballero, head of Sanas’ Philippines operations. She added, “Soon customers may not be able to tell they are talking to an AI bot.”
Customer Concerns
Despite rapid technological advances, there are still many signs that technological solutions are far from perfect. Many companies have launched artificial intelligence with great fanfare.However, the plan was forced to withdraw due to technical failure or the need for a large amount of manpower support.
For example, e-commerce giant Amazon has attracted huge attention for the artificial intelligence systems used in its cashier-less convenience stores. But it turns out that these stores still rely heavily on manual operations, with Indian workers responsible for marking data for object recognition and being on call to review problematic transactions. In April this year, Amazon announced that it would withdraw the system from its US stores.
Sidharth Mukherjee, chief executive of TP Infinity, the digital services arm of Teleperformance SE, said his clients often cite the Air Canada AI system failures, saying they remain uneasy about deploying AI at scale. “Clients are excited about the efficiency gains, but they are still concerned about the risks,” he said.
Despite this, many companies are accelerating the promotion of artificial intelligence. Yusuf Tayob, CEO of Accenture Plc., whose U.S. operations have more than 85,000 employees in the Philippines, said traditional call centers are facing a wave of change. For example, he said that in a call center operated by a client in the Middle East, artificial intelligence has already shared 20% of call volume.
"We can imagine that within a year we could triple that," Teob said, adding that the challenge was more about data and human behavior than the technology itself. He estimated that about 40% of work time across industries would be impacted by AI models and robots, and said clients were scrambling to get ahead of the curve. Accenture's new technology for its generative AI product suite has surpassed the $1 billion sales mark fastest in history, with sales of $2 billion so far this year. "This is one of the fastest adoption rates we've seen," Teob said.
The question is, for all the talk about technical training, is the Philippines ready? Industry insiders worry that the government may be moving too slowly. "The government should take this issue more seriously and develop a range of response plans, including the worst-case scenario," said Senator Risa Hontiveros. "Unfortunately, the Philippines is not yet fully prepared to deal with the impact of the wave of artificial intelligence on our workers."
Joniel Godino, 32, has similar concerns. In 2021, after 12 years in the business process outsourcing industry, he lost his job at Australian telecommunications company Telstra Group. In the following years, he witnessed Telstra Group conduct a series of artificial intelligence trials to try to make customer service staff more efficient. In February of this year, the company publicly announced that AI tools had reduced customer follow-up calls by 20%, so it decided to roll out the technology to all call centers. A few months later, Telstra Group announced that it would cut 2,800 jobs across its business.
Telstra Group denied any connection between the layoffs and the rollout of artificial intelligence. In a statement, Telstra Group said: "While artificial intelligence will definitely help us become more efficient and provide better service to our customers, the layoffs are not related to artificial intelligence."
Godino has left the call center industry for good, though. He’s convinced that his colleagues in customer service and other back-office jobs face the same challenges of tight deadlines, no matter who their employer is. He himself isn’t afraid of technological innovation: He now freelances as a remote assistant, using AI to write marketing materials for clients, including an executive at a company that runs a short-term rental business in the U.K. “The CEO once said to me, ‘That sounds too American.’ Now I’m using ChatGPT to make it more British.”
Still, he worries about the future. “The pursuit of efficiency is the essence of business,” Godino said. Many employees “not only have headphones on their heads, but they are also deaf to what’s going on outside.”