The end of BPO as we know it

The business process outsourcing (BPO) industry in the Philippines is at a critical crossroads. As the world rapidly embraces artificial intelligence (AI) technologies, a seismic shift is already beginning to disrupt the very foundation of this sector.

The BPO industry contributes a substantial 8-10% of the country’s GDP, generating over $30 billion in revenue annually. It directly employs between 1.5 to 1.7 million Filipinos and indirectly supports an additional 3-5 million jobs across transportation, food, real estate, retail, and other related sectors. More importantly, call centers, which make up about 60-70% of BPO jobs, are highly vulnerable to the AI wave.

Artificial intelligence is no longer a futuristic concept; it is here and accelerating at an unprecedented pace. AI-powered solutions such as ChatGPT, customer service bots, and robotic process automation (RPA) tools are increasingly being used to streamline customer interactions, respond to queries, and perform repetitive tasks more efficiently than humans can. This places low-level roles like voice-based call center agents, non-complex customer support roles, and data entry work at significant risk of automation. Experts estimate that anywhere from 20-40% of these roles could be automated within the next five years as companies look for cost savings and enhanced efficiency through automation.

If this disruption is not adequately addressed, the economic impact on the Philippines could be devastating. Should just 30% of BPO revenue be disrupted, the country may lose more than $10 billion annually. With thousands of workers at risk of losing their jobs — an estimated 500,000 to 800,000 mostly in urban centers like Metro Manila, Cebu, and Davao — the shockwaves could be felt far and wide. Such massive layoffs would place additional pressure on the overseas Filipino worker (OFW) sector, as more people seek employment abroad to compensate for dwindling local opportunities. This, in turn, could increase the country’s dependence on remittances.

The potential loss of jobs will also significantly affect tax revenues. BPO firms are among the country’s top taxpayers, contributing billions in corporate and personal taxes. A reduction in employment would mean a considerable drop in government income, which could affect funding for essential services and infrastructure projects. The broader financial impact on individuals and families would be no less troubling. Many BPO workers support entire households on monthly salaries ranging from P20,000 to P40,000. With the sudden loss of employment, we could see a spike in poverty rates, loan defaults, household debt, and even a softening of the housing market as condos near BPO hubs lose value.

The repercussions do not stop there. As economic difficulties mount, social and political stability will be put to the test. Urban unemployment surges could lead to potential protests and civil unrest, particularly in BPO-heavy cities. Crime rates could rise out of desperation, and the frustration of unemployed youth, for whom BPO jobs are a key source of first employment, could become a potent social issue. Additionally, the disruption could lead to a brain drain of skilled professionals opting to seek more stable careers abroad. If unaddressed, the erosion of public trust in government institutions could weaken the nation’s ability to respond effectively to the crisis.

However, all is not lost. With proactive planning and immediate action, this disruption can become the biggest opportunity for transformation. The BPO industry, rather than vanishing, can instead evolve into something new and more robust. As automation takes over low-level tasks, demand will rise for highly skilled professionals who can work alongside AI systems rather than be replaced by them. AI operations, prompt engineering, data annotation, analytics, digital marketing, e-commerce, and cybersecurity will likely be the new skillsets required to stay relevant in the future job market.

New outsourcing niches are emerging that Filipinos can capitalize on. AI-human hybrid support, where AI tools are used to assist human agents rather than replace them, presents a viable model. The healthtech and fintech sectors, which require high levels of accuracy and expertise, will likely expand their outsourcing needs. Creative BPO services like animation, content creation, and social media management will continue to be in demand. There is also an opportunity for the Philippines to position itself as a global hub for AI development, training centers, and Filipino-led startups creating innovative AI solutions for the global market.

But this transformation will not happen on its own. The government must act quickly to implement policies that prepare the Filipino workforce for the new digital economy. Nationwide digital skills training and AI upskilling boot camps should be launched to reskill workers whose jobs are threatened by AI. To encourage AI companies to invest locally, tax incentives and other benefits can be offered. Public-private collaboration will be essential in creating industry-government task forces dedicated to planning these transitions.

A social safety net will also be crucial. Unemployment benefits, healthcare, and reskilling stipends can provide short-term relief for those affected by technological disruption. Beyond that, the government should fund Filipino startups focused on automation, AI, and software services to boost innovation and create new economic opportunities.

While it is true that AI will mark the end of BPO as we know it, the industry can still thrive if it embraces change. What is essential is not to resist the wave of AI but to ride it by enhancing skills and moving up the value chain. BPO professionals must focus on acquiring high-demand competencies that AI cannot easily replace, such as creative problem-solving, critical thinking, and emotional intelligence.

Ultimately, the question is not whether AI will disrupt the BPO industry, but how the Philippines will respond to that disruption. The path forward requires collaboration, innovation, and adaptability. If we play our cards right, this transformation could turn a looming crisis into an era of unprecedented growth and opportunity. The end of the BPO industry as we know it is also the beginning of something greater.

Dr. Donald Lim is the founding president of the Global AI Council Philippines and the Blockchain Council of the Philippines, and the founding chair of the Cybersecurity Council, whose mission is to advocate the right use of emerging technologies to propel business organizations forward. He is currently the president and COO of DITO CME Holdings Corp.