How can the outsourcing business navigate an AI-oriented future?

Much can be automated by AI. And there is much at stake with the Philippines’ information technology and business process management (IT-BPM) industry.

In the past, the IT-BPM has emerged as a hotspot for foreign firms seeking suppliers of customer service, technical support, and similar services. The graph below reflects the growth of exports of IT and computer services over the years.

Source: Philippine Statistics Authority

However, the rise of artificial intelligence has sparked questions about AI reshaping hiring processes within the next years. Overseas, firms are preparing to downsize their workforce to cut costs with increased efficiency.

Alternatively, on the local front, the Philippine government is proactively taking action to ensure that AI is used to uplift Filipinos, rather than replace them. From investing in proper infrastructure to creating technical courses on how to work with AI, strategies are already in place to enable the Philippines’ IT-BPM sector to reach new heights.

Investing in humans along with AI

As part of the National AI Strategy for the Philippines (NAIS-PH), the Department of Science and Technology (DOST) highlighted its commitment to upskilling Filipino workers through online courses.

This will be key in equipping Filipinos with valuable skills needed to work with AI, such as prompt engineering, proficiency with AI platforms, and many more instead of simply replacing their work.

Business process outsourcing companies and higher education institutions will also be major contributors to the adaptation to the age of AI. Business training for using AI to enhance IT-BPM processes and the integration of proper field-specific AI use into academic programs would help maximize AI’s wide range of applications.

Source: Philippine Statistics Authority

The graph above shows the distribution of IT-BPM establishments by sub-industry according to the Philippine Statistics Authority’s 2022 Annual Survey of Philippine Business and Industry.

Upskilling would be an avenue for those working in data processing, customer relationship management, and administrative support to expand their expertise, as AI can handle tasks and processes that can be easily automated in these fields (i.e., organizing datasets, optimizing customer flows, refining code) while workers can focus on addressing more complex problems (i.e., data modeling, market strategy, program ideation).

Expanding infrastructure

Another major pillar for NAIS-PH’s framework is infrastructure. NAIS-PH contains plans to increase high-performance computing (HPC) power 26-fold by 2028.

The strategy aims to promote far-reaching connectivity by establishing regional sites that provide businesses with AI-powered solutions. If realized, this serves as a massive investment for businesses nationwide that will provide a large boost to efficiency and productivity in the long-term.

In addition, the implementation of the National Broadband Plan (NBP) will make it accessible for IT-BPM offices in the Philippines to operate AI tools that demand high-speed internet.

Some examples of subindustries that stand to gain from these initiatives are software publishing and sales and marketing. Efficient hardware and low latency will speed up processing and allow seamless AI-assisted customer interactions.

Job creation, not job loss

The government’s investment in infrastructure also acts as a foundation for AI research and job creation. According to DOST, the upgrade will pave the way for research collaborations and access to global networks.

By understanding the extent of AI’s capabilities, Filipinos in the IT-BPM sector can utilize the technology to fulfill new roles that haven’t existed previously. New roles such as AI researchers, engineers, and developers can help create new IT-BPM subindustries that workers can populate. New programs of study in alignment with these fields will also be beneficial.

On the other hand, new policies like House Bills 9448 and 7913 have been introduced to safeguard Filipinos from AI-driven job displacement. The efforts will allow the IT-BPM industry to leverage AI’s productivity while finding a balance between using AI for work enhancement and human skills. These measures will be most effective for IT-BPM subindustries that have high exposure to AI.

An opportunity to rise above

The age of AI can be viewed by some as daunting, especially to industries like the Philippines’ IT-BPM sector, where customer service and internal processes can eventually be automated.

Fortunately, the government has devised strategic solutions to capitalize on AI’s efficiency. If Filipinos can utilize AI as a tool to streamline certain business processes while allowing workers to address more complex tasks and solutions, the Philippines can further solidify itself as a prime exporter of IT and professional services.

CARMEN CASTAÑEDA is an intern in the Research and Market Strategy Department, Institutional Investors Coverage Division, Financial Markets Sector, at Metrobank. She is currently pursuing her Bachelor’s degree in Strategic Management and Economics from the University of Notre Dame in the US in hopes of incorporating economic insights into corporate strategy. As much as possible, she enjoys trying new cuisines and exploring new cities with her loved ones.

(Disclaimer: This is general investment information only and does not constitute an offer or guarantee, with all investment decisions made at your own risk. The bank takes no responsibility for any potential losses.)