By German Pardo, Based in a Bloomberg article.
The Philippines, long recognized as the world’s call center capital, is undergoing a seismic shift. As artificial intelligence (AI) continues to advance at a breakneck pace, the outsourcing industry that has been the backbone of the country’s economy is feeling the pressure. The experiences of Filipino call center workers offer a preview of the challenges and opportunities that white-collar workers worldwide are likely to face as AI becomes an integral part of our professional lives.
The Changing Landscape of the Philippine Call Center Industry
The Philippines’ outsourcing industry, which is projected to generate over $38 billion in revenue this year, has been a critical economic driver, providing jobs to millions and significantly contributing to the country’s GDP. However, the relentless push to reduce labor costs, the same force that initially brought back-office roles to the archipelago, is now driving companies to adopt AI tools to stay competitive.
Over the past year, many of the major players in the industry have introduced AI “copilots” to work alongside human operators. These AI systems perform tasks such as summarizing previous customer interactions, analyzing sentiments, and providing real-time contextual responses. While this may sound like a boon for efficiency, it has also sparked fear among workers who worry about being replaced by machines.
The Human Cost of Automation
For some workers, the rapid deployment of AI has been a harsh awakening. Christopher Bautista, a 47-year-old veteran of the call center industry, saw his role in tech support increasingly taken over by AI before being placed on “floating status”—a euphemism for being laid off without pay but still technically employed. Bautista eventually left the industry for a sales job, but his story is not unique. While job losses in the industry are currently isolated, experts warn that this may not be the case for long.
Avasant, a global outsourcing advisory firm, estimates that up to 300,000 jobs in the Philippine business process outsourcing (BPO) sector could be lost to AI over the next five years. However, the firm also notes that AI could create up to 100,000 new jobs in roles such as training algorithms and curating data, offering a glimmer of hope in an otherwise bleak outlook.
The Double-Edged Sword of AI
The BPO sector is a cornerstone of the Philippine economy, providing a source of income for millions of Filipinos, many of whom do not have a university education. The government’s vision for the industry was to use it as a stepping stone to move the country up the value chain, propel citizens into the middle class, and create other white-collar jobs. However, the rapid advancement of AI has disrupted these plans.
Historically, predictions of the call center industry’s demise were premature. Earlier technological solutions, such as basic text bots and voice menu systems, were often clunky and inadequate. But today’s AI tools are far more sophisticated. Companies like Klarna Bank AB have reported that AI bots now handle two-thirds of customer service interactions, equating to the work of 700 full-time agents. OpenAI’s ChatGPT-4 can now troubleshoot complex issues in real time, a feat that was unthinkable just a few years ago.
The implications for the Philippines’ BPO sector are profound. The country has built its market-leading position not only on cost but also on the quality of its English-speaking workforce, which is culturally attuned to the West. However, if AI can neutralize these competitive advantages, companies may start to look elsewhere for even cheaper labor, potentially moving operations to emerging markets like Egypt or Ghana.
Government and Industry Response
In response to these challenges, the Philippine government has chosen to embrace the AI revolution rather than resist it. The government has established an AI research center and launched multiple training initiatives to enhance the skills of the sector’s 1.7 million employees. “If you don’t upskill, obviously, AI will replace you,” said National Economic and Development Authority Secretary Arsenio Balisacan, encapsulating the urgency of the situation.
At the same time, companies are experimenting with AI to improve efficiency and reduce costs. At [24]7.ai’s contact center in Manila, ChatGPT is being used to train new hires by simulating various customer personas. This AI-driven training program has reduced the time it takes for new agents to become proficient from 90 days to just one month. However, the company’s co-founder and CEO, PV Kannan, warns that the future role of human agents will likely be reduced to “middleware,” as AI takes on more responsibilities.
Other major players, such as Concentrix Corp., have also rolled out AI tools across their operations. These tools assist human agents by summarizing customer interactions, analyzing sentiments, and flagging non-compliant behavior. Chris Caldwell, CEO of Concentrix, acknowledges that while AI will create new roles, it will also disrupt traditional jobs. He emphasizes that the industry must adapt quickly, as technology is evolving at a faster pace than many countries are prepared to handle.
The Impact on Workers and Society
The rapid adoption of AI in the BPO sector has sparked both fear and hope among workers. While some see the potential for new job opportunities, others worry about their future in an industry that has provided them with financial stability and a path to the middle class. The uncertainty surrounding AI’s impact on jobs is compounded by the lack of clear government policies and safeguards to protect workers.
In Manila’s BPO tech parks, where cafes, karaoke rooms, clinics, and recruitment hubs cater to the thousands of young Filipinos seeking jobs in the industry, there is a palpable sense of anxiety. While the industry continues to attract new entrants, the specter of AI looms large. For many, the prospect of losing their jobs to automation is a real and pressing concern.
Despite these fears, the industry shows no signs of slowing down. Local trade associations predict continued growth in both headcount and revenue over the next few years. However, the question remains whether the government and industry are moving quickly enough to prepare workers for the AI-driven future.
AI Solutions for a Sustainable Future
As AI becomes increasingly integrated into the BPO sector, several solutions can help ensure that workers are not left behind:
- Upskilling and Reskilling Programs: The government and industry should invest heavily in upskilling and reskilling programs to prepare workers for new roles in the AI-driven economy. This includes training in data annotation, algorithm development, and AI system management.
- AI-Ethics and Regulation: Policymakers need to establish clear guidelines and regulations to ensure that AI is used ethically and that the benefits of AI are distributed equitably. This includes protecting workers’ rights and ensuring that AI does not exacerbate existing inequalities.
- Public-Private Partnerships: Collaboration between the government, industry, and educational institutions is essential to create a robust ecosystem that supports the development and deployment of AI technologies while safeguarding jobs.
- Social Safety Nets: As AI continues to disrupt traditional industries, it is crucial to strengthen social safety nets to support workers who may lose their jobs. This includes unemployment benefits, retraining programs, and job placement services.
- AI and Human Collaboration: Rather than viewing AI as a threat, companies should explore ways to use AI to augment human capabilities. This includes using AI to handle repetitive tasks, allowing human workers to focus on more complex and value-added activities.
Conclusion: A New Chapter for the Global Workforce
The story of the Philippines’ call center industry is a microcosm of the broader global challenges posed by AI. As AI continues to advance, industries around the world will need to adapt to new realities. The key to navigating this transition successfully lies in proactive planning, investment in human capital, and a commitment to ensuring that the benefits of AI are shared by all.
The experiences of Filipino call center workers serve as a powerful reminder that while AI offers tremendous potential for improving efficiency and creating new opportunities, it also poses significant risks. By taking a balanced approach that embraces innovation while protecting workers, we can harness the power of AI to create a more prosperous and equitable future for everyone.