Artificial Intelligence Threatens Philippines’ Outsourcing Dominance

The Philippines, long hailed as the call centre capital of the world, is confronting an unsettling shift as artificial intelligence begins to automate roles that have lifted millions into the middle class.

Lisa, a content writer for 15 years, was made redundant eight months into a role that was about to become permanent. Before her dismissal, she was asked to edit AI-generated material produced by a public relations agency. She and her colleagues also trained the AI on the company’s writing style. “I feel like I dug my own grave,” she told the BBC, speaking anonymously. “We were the ones who trained the artificial intelligence that replaced us.”

Lisa is among several former outsourcing employees who recounted similar experiences to the BBC, all requesting anonymity due to confidentiality agreements tied to severance pay and a small industry network.

The outsourcing industry, known locally as business process outsourcing (BPO), employs roughly 1.9 million people and generates $40 billion annually—about 10% of the Philippine economy. It grew from early-2000s promotions of an English-speaking workforce, tax incentives, and infrastructure investment, attracting giants like Accenture, Concentrix, and Teleperformance.

Now, the sector is disproportionately vulnerable to AI. The International Labour Organization estimates that 12.7 million Filipinos—more than one in four workers—are in occupations exposed to generative AI, the highest share in Southeast Asia. Many roles are expected to change rather than vanish, but the nature of service jobs in the Philippines heightens the risk.

Jack Madrid, president of the IT and Business Process Association of the Philippines (IBPAP), acknowledged that AI is being adopted. More than two-thirds of IBPAP members are running AI pilots, he said, and “agentic AI has the potential to automate at a much more accelerated pace.” He stressed that most affected workers have been redeployed, and noted that hiring slowdowns also reflect weaker global demand and uncertainty over offshoring decisions.

Another former content writer, Mary (not her real name), said her employer promoted AI as a productivity tool, but it created extra work. “We had to edit more, fact-check more because the data AI produced was inaccurate,” she told the BBC. “Technically it was more work for us.”

Major outsourcing firms have announced plans to integrate AI while retraining staff. Teleperformance, the world’s largest call centre operator, told the BBC it sees AI augmenting human workers by handling routine interactions, moving agents into more complex roles. Accenture has pledged billions in AI capabilities and workforce training, saying generative AI will reshape almost every job rather than eliminate positions. Concentrix, the largest BPO firm in the Philippines, says its AI systems will remain under human oversight and that it will train employees accordingly.

Yet some Filipino managers are uneasy, according to Paul Quintos of the University of the Philippines-Diliman. “There’s tremendous pressure from foreign clients to adopt AI,” he said, describing it as a major cost-cutting measure. He also warned of “AI washing,” where layoffs are attributed to AI even when companies are responding to weaker demand or economic slowdowns.

Labour groups told the BBC that existing redundancy laws offer no guidance on how companies should introduce AI or consult workers. The sector is non-unionised, leaving employees with little formal say.

The government acknowledges the challenge. Leandro Aguirre of the Department of Information and Communications Technology said, “To be completely honest, I think we’re slightly behind. We have to catch up.” A programme aims to upskill more than 300,000 outsourcing workers, but Aguirre said the Philippines may need to rethink its reliance on foreign investment and nurture local AI companies. He rejected sweeping new legislation, favouring adaptation of existing laws on labour, privacy, and consumer protection.

The model that turned the Philippines into an outsourcing powerhouse is not ending, but it is being reshaped—and may leave some workers behind.