Philippines’ AI reckoning puts 13 million jobs on the line

Renso Bajala didn’t expect a machine to help decide whether he kept his job. In 2024, the 22-year-old Makati City native was on probation in a customer relations role for a US credit card company when he learned that becoming a regular employee would involve impressing a new gatekeeper: artificial intelligence. The AI analysed his tone, delivery and keyword usage, scoring each interaction for sentiment and customer experience. No one had mentioned it during training. “I was a new hire, and nothing in our training curriculum said that AI would be used to measure our performances,” Bajala told This Week in Asia. “Then the trainer informed us that the outcome from the AI software would be part of our metrics.” At first, he did not resist the idea of being evaluated by AI. What wore him down was the way the scoring felt fixed and context-blind, as if the system could not see what a human listener might understand about a difficult call. “If it [the score] was low, you’d start overthinking what you did wrong, even if you felt you did your best,” he said, adding that the process felt “unfair”. For Bajala, the most frustrating part of AI scoring was what it rewarded, forcing unnatural workarounds. To boost his sentiment scores, for example, he found himself gaming the system – asking redundant confirmation questions to rack up “yes” responses from customers. He said a human evaluator would have better understood what went into the real work of building rapport with customers. Bajala’s experience reflects a growing reality inside the Philippines’ business process outsourcing (BPO) sector, a cornerstone industry employing nearly 2 million people and contributing about US$30 billion annually to the economy. And his story is far from unique. As secretary general of the BPO Industry Employees Network, he has heard similar accounts from members across the sector. “We’re seeing this trend among BPO companies,” he said. Evolution, not extinction? When generative AI tools like ChatGPT first burst onto the scene in 2022, anxiety spread through call centres and back-office operations that automation would obliterate entry-level jobs. Four years later, those fears have not completely come to pass. But the industry is changing. “It’s clear that AI did not ‘take over’ the Philippine BPO industry the way many had feared,” said Virgel Binghay, a professor at the University of the Philippines’ School of Labour and Industrial Relations who specialises in productivity. “What happened instead is a quiet but steady reshaping of work. AI now helps with call summaries, suggested responses, quality checks and routine back-office tasks.” Industry leaders broadly agree with that analysis, with an important qualifier: the winners will be the organisations that can adapt their people and processes, not just adopt new tools. “What we’re seeing in 2026 is a shift in how work gets done,” said Jack Madrid, president and CEO of the IT & Business Process Association of the Philippines. “AI is helping teams become faster and more consistent, but people are still responsible for decisions, quality and outcomes. Going forward, success will depend less on the technology itself and more on how well organisations adapt.” Even so, adoption has been slower and more uneven than some AI enthusiasts expected. Overall uptake has been constrained by gaps in digital infrastructure and skills, funding limitations and limited awareness of advanced technologies, according to a study by the Philippine Institute for Development Studies. Madrid described AI adoption as “under way, but still at an early to mid-stage”, estimating that only about one in eight businesses in the sector had deeply embedded the technology into their core business strategy, operations and culture. “At this point, AI is primarily being used to augment work and improve productivity, rather than replace jobs outright,” he said. “The emphasis is on redesigning tasks and workflows, which reinforces the need for continuous reskilling.” From management’s point of view, AI augments human capability. But from a worker’s perspective, this can feel like more targets, more surveillance and more pressure to perform. Bajala now works at a different company, the name of which he asked to withhold due to a non-disclosure agreement, where a similar AI tool called Nexidia employs speech and sentiment analysis to provide real-time performance feedback. “For example, within a call, a script would pop up giving you clues on what to say, positive scripting to help you with your scores,” he said. The pressure is constant, with workers monitoring their metrics obsessively – adjusting their speech patterns and conversation rhythms to satisfy algorithmic expectations rather than customer needs. Value over volume AI is not the only force reshaping the BPO sector. The Philippines is also trying to move up the outsourcing value chain: a shift that could change what jobs look like, who gets hired and how quickly workers can climb the corporate ladder. Although the country has long been recognised as a leading outsourcing hub, it faces rising competition from countries such as India and Malaysia that can compete on cost, large workforces and strong skills. That squeeze is pushing firms to sell more specialised, higher-value services rather than growing simply by adding to headcount. “The industry is still here, but growth is no longer just about hiring more people,” Binghay said. “Looking ahead, AI will handle more repetitive work, while human workers focus on judgment, problem-solving and managing exceptions – things that machines cannot easily replace. The future of BPO is less about volume and more about value.” Madrid said his association had seen growth in specialised services that were more likely to be offered by early AI adopters, including work supporting banking and financial services, healthcare, analytics, IT and digital operations and more complex customer support functions. For many, increased productivity does not always mean higher pay Virgel Binghay, productivity specialist But this expansion tended to benefit mid-level roles rather than entry-level positions, he said, with call centres that “rely heavily on repetitive work” set to feel the impact first. “At the same time, new roles are emerging around quality, escalation and managing AI-supported interactions,” Madrid said. “Some displacement is real, but there’s also a clear opportunity to redesign jobs towards higher-value work.” Hiring in emerging AI-enabled roles was shifting towards applicants’ problem-solving abilities, domain expertise and proficiency with AI tools, he said. Binghay agreed that a transition was already under way, but said it did not always translate into better outcomes for workers. “For many, increased productivity does not always mean higher pay,” he said. “Sometimes expectations are the first to be raised over wages.” Millions exposed The Philippines’ labour market is especially exposed to disruption from AI, with some 12.7 million Filipinos – or more than one-quarter of the workforce – likely to be affected, according to a report this month from the International Labour Organization: the highest proportion in Southeast Asia. Exposure does not necessarily equal job destruction, however. “The most significant impact”, according to the report, “is likely to be the transformation of jobs, potential gains in productivity and enhanced employment quality”. But Binghay said that many of the productivity gains in BPO had yet to filter down to workers. “There are some companies that invest in reskilling and career paths, but these are still the exception,” he said. “Unless jobs, pay and progression are redesigned, AI [adopters] will feel like they’re generating more at work but earning at the same rate – and that’s a problem.” He also warned that as routine tasks were automated, companies might hire fewer entry-level workers, turning what had been a provider of mass employment for Filipinos into the preserve of a smaller, more elite talent pool. “Entry-level roles can shrink, making it harder for new workers to enter,” Binghay said. “If companies aren’t careful, this creates a smaller, more elite workforce. But this is not what should happen.” Madrid pushed back against the idea that AI would simply wipe out entry-level roles, saying it was more accurate to think of those jobs being redesigned into AI-enabled positions. “Hiring will remain, but with greater focus on digital literacy, adaptability and critical thinking rather than purely transactional skills,” he said. “This shift presents an opportunity to redesign early-career roles to be more engaging, skills-oriented and aligned with long-term career progression.” He argued that early exposure to AI could help workers build stronger digital foundations and problem-solving skills, making the development of a more robust mid- to senior-level workforce “a natural next step”. “Close collaboration among industry leaders, educational institutions and policymakers can cultivate a resilient workforce pipeline that supports innovation, competitiveness and inclusive growth,” he said. Filipinos’ strengths As the Philippines seeks to reposition itself in the global outsourcing market, industry experts believe its people’s inherent strengths – empathy, communication skills and cultural adaptability, for example – can be augmented rather than replaced by AI. “Many local firms are using AI to strengthen customer experience, especially in voice services where empathy, communication and cultural fit still matter,” Binghay said. “That said, countries like India and Malaysia are also moving fast with the same technologies.” Madrid agreed that AI could scale these human qualities without replacing them, but warned that competitiveness would increasingly hinge on speed and infrastructure. For Binghay, competitive advantage cannot come solely from automation. “The real edge comes from combining AI with human skills, strong service quality and trust,” he said. “Cost alone is no longer enough.” Yet workers like Bajala say the industry’s biggest vulnerability may not be that AI exists, but whether people are being equipped to work with it. “Some companies hold discussions or awareness events about AI, but actual training or reskilling programmes to prepare workers for AI-related roles are still lacking,” he said. “This has been a major internal debate for us. Who is responsible for preparing Filipino workers – the government, employers or the workers themselves?” In May last year, President Ferdinand Marcos Jnr approved funding to upskill 340,000 BPO workers annually in anticipation of job losses linked to AI. The government also rolled out an updated National AI Strategy Roadmap in 2024, intended to help bridge the adoption gap. Madrid said more must be done to ensure the Philippines maintained its competitive edge, including stronger public-private partnerships and expanding innovation beyond Metro Manila by building regional hubs across the country. “AI supports this shift by enabling more complex, higher-value work,” he said. “But it is intended to serve people, not replace them.” Binghay stressed that companies could not afford vague reassurances during this period of transition. He urged them to work with the government to redesign jobs, create real career paths and invest in skills programmes and education. “There is no one-sided solution,” he added. The government says new jobs will be created, but so far, there’s no clear plan Renso Bajala, employee advocate But all the reassurances, government initiatives and boosterish talk in the world will do little to ease workers’ anxieties. They want concrete answers. “The government says new jobs will be created, but so far, there’s no clear plan on how that transition will actually happen,” Bajala said. “We’re asking: where is the road map? How will displaced workers move into new roles? Who funds retraining? Filipino workers are adaptable, but job loss is real, and the question remains: what replaces those jobs? Until there’s a concrete plan, the uncertainty will continue.”

Philippines’ AI reckoning puts 13 million jobs on the line

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}The US$30 billion outsourcing sector is fighting to adapt, leaving millions of workers with a stark choice: upskill or be left behind

The US$30 billion outsourcing sector is fighting to adapt, leaving millions of workers with a stark choice: upskill or be left behind