Paraiso, Jaime Lorenzo S.

Metrado, Joseph

ECONTWO V25

Impact of AI in the Philippines’ BPOs

I. Background

Business processing outsource, more commonly known as BPO, is the

outsourcing of work through third-party providers in order to reduce cost and ensure

quality of service. As technology progressed, the BPO companies of the Philippines is

looking to take the next step in progressing their businesses by adding AI into their

arsenals. The purpose of adding AI into the BPO sector will introduce process automation

to a industry that is very reliant on speed and reliability. The industry’s shift to AI and

automated processes may happen as early as 2021.

As the business process outsourcing industry is reaching a plateau (Fenol, 2018),

the Philippines BPO sector is getting ready to combat this problem by implementing the

use of artificial intelligence into the workforce. As one of the best performing BPO

countries, it was essential for the Philippines to future-proof the industry and adapt to the

industry standard which “showed a growing influence of AI.” (Fenol & de Guzman,

2018.)
 II. Research Problem

As one of the driving forces of the Philippine economy, the BPO industry will need to

find a way to overcome its maturity stage and decreasing growth rate which may lead to

economic decline.

III. Summary of the newspaper article

The article by Jessica Fenol and Warren de Guzman of ABS-CBN news titled “70,000

additional BPO jobs seen this year, as industry braces for AI” explains that the business process

outsourcing or BPO industry of the Philippines is expecting an increase of 70,000 jobs to get

ready for the industry’s shift to artificial intelligence. Fenol and de Guzman continues to state

that, compared to the global rate of 6%-7%, The BPO industry of the Philippines expects

industry growth rate of 7%-9%. According to the same article, these jobs are mostly going to be

occupied by information technicians but are also expected to be filled by data analyzing

statisticians and mathematicians. The introduction AI and automation would require BPO

companies to train current employees or hire new employees, as higher skilled jobs would be

needed in order for AI achieve its purpose in the BPO industry.

IV. Analysis

As a result of the AI shift in the BPO industry, there will be an increase of 70,000 jobs in

the BPO industry this year. The addition of 70,000 jobs will cause a small decrease in the

unemployment rate. The problem of high underemployment in the Philippines may also be

minimally affected as BPO workers that are underemployed may be given promotions that may

match their educational attainment and skills as high-skill jobs are needed in order for AI to

succeed in the BPO industry. It should be noted that the highest unemployment rate belongs to

the service industry which BPOs are a part of (Philippines Statistic Authority, 2018).

The spending power and disposable income of the 70,000 employees would increase as

most of the employed would probably be unemployed or underemployed. The increase in

personal consumption and expenditures would directly affect the GDP as it is one of its

constitutes based on the approaches in measuring GDP accounts, more specifically the final

expenditure account.

The Philippine government ensures that the introduction of AI into the BPO industry will

not replace, but complement current services and jobs being offered. Nevertheless the promise

from the government, a threat still remains that the introduction of AI to an industry that is

presently dependent on human interaction, may replace the jobs of hundreds of thousands or

maybe millions of Filipinos currently working in the BPO sector. If the implementation of AI
into the Philippine BPO sector succeeds, the Philippine economy will continue to grow and

grow.

V. Conclusion

The increase in jobs will ultimately boost increase the Philippines’ GDP as AI will help

the BPO sector of the Philippines grow and hopefully beat the competitors. As one of the largest

contributors to the Philippine economy, an increase in the BPO sector due to the AI shift will

surely benefit the Philippine economy. On a smaller scale, the addition of 70,000 jobs in the

BPO sector will result in a increase in disposable income. The increase in disposable income will

benefit consumer spending and expenditures in which increases the Philippine GDP. As long as

the Philippine government will keep their promise on how AI will be used in BPOs, AI may be

the Philippines’ solution to the slowing BPO growth rate.

 Reference:

Fenol, J., & Guzman, W. D. (2018, May 29). 70,000 additional BPO jobs seen this year,
as industry braces for AI. Retrieved from
http://news.abs-cbn.com/business/05/30/18/70000-additional-bpo-jobs-seen-this-year-as-industry
-braces-for-ai

Fenol, J. (2018, January 22). BPO ripe for skills upgrade as growth nears 'plateau,' gov't
says. Retrieved from
http://news.abs-cbn.com/business/01/23/18/bpo-ripe-for-skills-upgrade-as-growth-nears-plateau-
govt-says

Carty, S. (2017, September 26). The Effects of Purchasing Power. Retrieved from
https://bizfluent.com/list-7242892-effects-purchasing-power.html
Sausa, R. S. (2017, September 07). BPOs must innovate to tackle artificial intelligence
threat. Retrieved from
https://www.manilatimes.net/bpos-must-innovate-tackle-artificial-intelligence-threat/349160/

Arado, J. P. (2018, March 08). Expert: PH to feel AI effect in 5 years. Retrieved from
https://www.sunstar.com.ph/article/422597/

Philippine Statistics Authority. (2018, March 07). Employment Rate in January 2018 is
Estimated at 94.7 Percent. Retrieved from
http://www.psa.gov.ph/content/employment-rate-january-2018-estimated-947-percent