MANILA, PHILIPPINES – The Philippine BPO industry brings in US$38 billion in 2024 and supports nearly 2 million jobs. It has been a cornerstone of the country’s economy, strengthening foreign exchange remittances and reserves. But rapid AI advances, combined with the U.S. considering reshoring, have triggered concerns: Could AI ruin this industry?
Outsourcing Services That Are at Risk
Outsourcing services that involve routine, low-complexity tasks are the most at risk, including:
- Voice-based customer support
- Telemarketing
- Simple data entry
- First-level IT troubleshooting
AI tools like Google Duplex and platforms like those from Microsoft and Amazon can now handle basic queries and processes with ease. Meanwhile, robotic process automation is efficiently managing structured data tasks, heightening the disruption for employees performing such roles.
BPOs Should Invest in KPO
To survive, BPOs must shift toward roles that require critical thinking and problem-solving, as these are complex judgment roles that AI and automation can’t easily replicate.
The knowledge process outsourcing (KPO) roles that they can focus their business on and train their talent more include:
- Data analytics
- Cybersecurity
- Business intelligence
- Legal process work
- Clinical data analysis
- Specialized financial reporting
Barriers to the KPO Shift
Despite being one of the world’s outsourcing giants, the Philippines acknowledges that it lags in certain areas. These can be challenging for BPOs aiming for KPO roles.
- Skills gap. Many graduates lack readiness for advanced roles, as seen in poor international education rankings.
- Infrastructure issues. Unstable internet, energy, and other support infrastructure hinder growth outside major tech and business hubs.
- Governmental concerns. Inconsistent governance, business, and tax policies and data privacy concerns lessen investors’ confidence.
- Competitive pressure. Rival countries, such as India, Vietnam, and parts of Eastern Europe, offer more mature tech ecosystems and incentive packages.
Overcoming the Barriers to the KPO Shift
If the Philippines’ BPO industry is to succeed with KPO, the following actions should be taken:
- Education reform. Improve university performance to reduce skills mismatch and produce a capable workforce.
- Enhanced training. The government and the industry can partner up to upskill employees in analytics, coding, cybersecurity, and other complex processes.
- Infrastructure investment. Modernize digital and physical infrastructure beyond key city hubs (Metro Manila, Cebu, and Davao).
- Policy stability. Ensure consistent regulations, data privacy rules, and agreeable incentives to retain and attract BPO investments.
With these, the BPO industry can look forward to a value, innovation, and agility-driven future, and not just market itself for “cost savings.”
