New technologies present challenges and opportunities for the Philippines' business process outsourcing sector

 

As with other business process outsourcing (BPO) hubs around the world, the Philippines is gearing up to face the significant challenges and opportunities presented by recent advances in artificial intelligence (AI) and robotic process automation (RPA). This new wave of technology will likely be a major disruptor for the industry in the years ahead, with predicted outcomes ranging from the disastrous to the golden. For many companies, AI and RPA represent promising opportunities to boost revenue, increase service provision and move the sector up the value chain to more skilled and higher-paying business. However, the impact on jobs may be substantial as well, at least in the short to medium term.

Sector Influence

At the more pessimistic end of the gamut, a 2016 report by the International Labour Organisation (ILO) suggested that 89% of all jobs in the Philippines’ BPO and call centre trades were at “high risk” of future automation. This was the highest figure among the five ASEAN member states of Vietnam, Cambodia, Thailand, Indonesia and the Philippines that were surveyed. One reason for this risk is the high ratio of voice-based service activity in the country, with some 80% of the sector composed of contact centres.

Indeed, one of the competitive advantages that the Philippines is able to offer is its large pool of friendly, English-speaking operators. However, trial runs of intelligent automation, such as AI and other systems that are able to learn from data patterns – such as chatbots and natural language programming machines – have already demonstrated that automation can replace many human BPO operators, particularly those working in relatively straightforward areas, such as online retail.

At the same time, RPA is increasingly being used by large corporations to automate back-office processes in human resources, accounting and even marketing. Such systems can be on 24/7 with lower long-term costs and fewer errors. Advances in translation technology could also make English-fluency increasingly redundant, as AI bots address users directly in their own language.

Possible Outcomes

The ILO report and other studies drawing similar conclusions have worried the government and sector organisations. The Information Technology and Business Process Association of the Philippines (IBPAP) forecasts that 40,000-50,000 low-skilled or process-driven jobs in the industry will be eliminated over the next five years due to the increased deployment of AI. Yet some sector players believe that AI and RPA represent major new avenues for growth. “While the perception is often of AI as a threat, over the last three years it has actually given our company the ability to increase volume in existing centres and has provided more bandwidth, enabling us to do more in certain areas,” Felma Magnata, associate vice-president AI and RPA can also allow human resources to be transferred to more value-creating activities, enabling the industry to migrate into more skilled areas, such as knowledge process outsourcing and IT-business process management. This requires a considerable upscaling of the current workforce, however, which is now the focus of government and industry bodies. The Department of Science and Technology is working on developing an AI programme, for example, while IBPAP has been bringing together academic institutions with government and business partners to develop training programmes that will create a larger pool of potential employees. The goal is to supply the workforce with graduates capable of working in areas such as data analytics, data mining and machine learning.

If the right formula is found, IBPAP provides a more optimistic forecast than the ILO, suggesting that by 2022 some 1.8m people could be working in the sector, up from 1.3m in 2017. However, the kind of work demanded of these more highly skilled graduates is much more specialised and requires more abstract thinking than the profile of most current contact centre jobs. Yet, those tasks will reward employees with both a higher income and a greater international reputation.

Share

You have reached the limit of premium articles you can view for free. 

Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.

If you have already purchased this Report or have a website subscription, please login to continue.

The Report: The Philippines 2018

BPO chapter from The Report: The Philippines 2018

Cover of The Report: Philippines 2018

The Report

This article is from the BPO chapter of The Report: Philippines 2018. Explore other chapters from this report.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart