How the Philippines will adopt AI in the business process outsourcing industry

AI For Business

A leading Philippine business process outsourcing (BPO) company has reaffirmed its support for artificial intelligence, believing that its integration will bring better opportunities for all stakeholders.

Local BPO companies have become one of the largest sources of revenue for the Philippines, with the sector's annual revenue expected to reach US$29.5 billion by 2023, according to global research firm Everest Group, accounting for 83% of the total revenue generated by the country's information technology and business process management (IT-BPM) industry.

The industry is expected to grow even more in the coming years, with business leaders expecting IT-BPM companies to reach a target of US$59 billion in annual revenue by 2028.

To achieve this, organizations such as the Contact Center Association of the Philippines (CCAP) believe that BPO companies need to adopt AI technologies that can help improve productivity.

Increased Productivity with Generative AI

CCAP, a non-profit association of more than 100 local BPO companies, is a strong advocate of AI integration in the Philippines. The group recently reiterated its position that generative AI can benefit not only contact centers but other IT-BPM companies as well.

“Contrary to the concerns of some stakeholders, we remain confident that AI will continue to make the industry more resilient and contribute to increased revenue growth,” CCAP Chairman Mickey Ocampo said.

“Though people may not fully realize it, AI is already widely used through the chatbots we encounter online and the mobile features and applications we use every day. Its utility can further strengthen our industry.”

According to Ocampo, AI technology allows contact center agents to focus on more important tasks, such as completing complex transactions, which increases productivity and creates a more positive experience for both employees and customers.

Read more: Inside the Philippines' multi-billion dollar creative economy

Leveraging machine learning in BPO processes

Piton-Global, a BPO service provider with operations in the Philippines, has also voiced its support for the adoption of AI, with CEO Ralf Ellspermann saying companies can use technologies such as automation and data analytics to augment their workforce capabilities.

According to Ellspermann, BPO companies can use machine learning algorithms to automate many of the repetitive tasks, freeing up human workers for higher-value work, and they can also use AI to generate insights and precise data analysis.

“Natural language processing algorithms can extract information from unstructured data sources, such as social media and customer reviews, providing valuable insights to improve customer service,” said Ellspermann.

“Additionally, AI-powered virtual assistants can help schedule appointments, triage customer inquiries and provide information, freeing up human staff to tackle more complex tasks.”

Another area where artificial intelligence can be leveraged is predictive analytics. BPO companies can use AI to accurately predict customer needs and trends, providing business leaders with the opportunity to make better-informed decisions. These insights can also enable companies to improve their recruiting and training strategies.

Positioning the Philippines as a leader in BPO AI adoption

As part of its goal to further grow the BPO industry through AI, the Information Technology and Business Process Association of the Philippines (IBPAP) announced that it has partnered with Everest Group to create a more comprehensive roadmap through 2028.

According to the initial Roadmap 2028, the industry is targeting annual revenue of US$59 billion by 2028. IT-BPM companies also aim to add 1.1 million jobs for Filipinos over the next six years.

IBPAP wants to leverage AI technologies, specifically generative AI, to help its members achieve these ambitious goals.

“As the Philippine IT-BPM industry rides the GenAI (generative AI) wave, the country is uniquely positioned to seize the opportunities,” said IBPAP president and CEO Jack Madrid.

“With the support of government, industry visionaries and academia, IBPAP will ensure that the industry and workforce are not just future-ready, but shape the future.”

For IBPAP, generative AI represents both a challenge and an opportunity for IT-BPM companies, but the group believes the technology holds the key to improving productivity and increasing business value.

As more BPO companies adopt AI technology, workers need to be equipped with the right skills to meet the new demands of the job. IBPAP recognizes the urgency of the upskilling revolution and is spearheading training of workers on GenAI, he said.

Read more: Improving jobs and skills in the Philippines

Securing employment for BPO workers

Concerns are growing among Philippine lawmakers about the job security of Philippine BPO workers, especially as more companies incorporate AI into their business processes.

Earlier this year, the Philippine Senate issued a statement on Senator Risa Hontiveros calling on the Department of Trade and Industry (DTI) to protect BPO workers from the rise of AI-enabled contact centers.

The Senate cited a report by global research firm Gartner, which said replacing human workers with AI in contact centers could save up to $80 billion by 2026.

As big tech companies like Microsoft begin to roll out AI tools for contact centers, the Philippines will have to grapple with the potential impact these changes will have on the BPO sector.

One of the new technologies introduced is Microsoft's Dynamics 365 Contact Centre, which scans and analyzes tools and systems to understand human speech. This AI has the ability to deliver customized experiences for Microsoft customers.

Microsoft's AI-powered contact center has three main capabilities:

Summary of the conversation: Copilot automatically records customer interactions, eliminating the need for contact center agents to write notes.

translation: AI translates languages ​​in real time, eliminating the need for workers to have foreign language skills.

Suggested answers: AI can suggest appropriate responses to customers, making it easier for businesses to respond to emails and phone calls.

The development of newer and better AI technologies has many questioning the role of human workers in the BPO sector, and India, the Philippines' biggest rival in global business outsourcing, has already noted the growing popularity of AI-powered contact centers.

In a message to Department of Trade and Industry Secretary Alfredo Pascual, Senator Hontiveros questioned whether Filipinos are at risk of losing their jobs to AI programs, stressing that the country could lose billions of dollars in revenue if the trend continues.

“Is the BPO industry also suffering?” Hontiveros asked.

“Secretary Pascual, at the helm of the DTI, what if more companies start investing in AI instead of workers? That will have a huge impact on the BPO industry and the economy. That's why our agencies must prepare for this possibility.”

Senator Hontiveros said BPO companies should provide continuing education opportunities for their employees.

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