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Manila Bulletin devider Business devider The Economy devider Philippines risks missing AI boom as BPO jobs face automation threat

Philippines risks missing AI boom as BPO jobs face automation threat

Published Aug 13, 2026 04:53 pm

The Philippines risks falling behind the artificial intelligence (AI) boom as it benefits less from the surge in AI-related electronics exports while its massive business process outsourcing (BPO) industry faces growing exposure to automation, according to think tank Capital Economics.

In a report last Wednesday, Aug. 12, Capital Economics senior Asia economist Gareth Leather said the country is neither benefiting significantly from the increase in AI-related electronics exports nor well positioned to capture the productivity gains from wider AI adoption.

“The Philippines risks falling behind in the AI revolution,” Capital Economics said.

The report noted that electronics exports have surged across much of Asia over the past year as companies increased production and raised prices of semiconductors and other components used in AI infrastructure, with particularly strong growth in Taiwan, South Korea, Singapore, and Malaysia.

By contrast, Capital Economics said Philippine electronics exports have risen at a much weaker pace.

The think tank also noted that the Philippines ranked 43rd out of 47 economies in its AI Economic Impact Index, with a score of just 21 out of 100. The index assesses economies’ ability to innovate, adopt, and benefit from AI, with the Philippines ranking at the bottom among the Asian economies covered.

Manila Bulletin reported last February that the Philippines also ranked last among the Association of Southeast Asian Nations (ASEAN)-5 economies covered by the index, behind Singapore, Malaysia, Thailand, and Indonesia. The country was among the bottom five globally, alongside Mexico, South Africa, Ukraine, and Argentina.

Capital Economics said the bigger economic risk lies in the country’s BPO industry, which directly employs around 1.8 million workers, generates roughly $40 billion in annual export revenues, and accounts for around seven to eight percent of gross domestic product (GDP).

Many services provided by the industry, including customer support, back-office administration, finance and accounting, routine information technology (IT) support, and other repetitive cognitive tasks, are activities that AI is increasingly capable of automating, it noted.

Around 70 percent of Philippine BPO revenues remain linked to voice-based services, where AI-powered chatbots and voice assistants are rapidly improving, according to Capital Economics.

While AI is not expected to eliminate these jobs immediately, industry estimates cited by the think tank suggest that around one million BPO-related jobs in the Philippines could be vulnerable to automation by 2030.

Capital Economics contrasted the Philippines with India, which has developed a broader technology base through global capability centers focused on software engineering, product development, and higher-value business functions.

The think tank noted that the Philippines has more resilient niches, including complex healthcare BPO and higher-value customer support, where regulatory requirements and the need for human judgment offer some protection. However, these account for only around 20 percent of the industry, while the majority of revenues remain concentrated in routine customer experience and back-office functions that are more exposed to automation.

Capital Economics warned that without the deeper pool of technical talent and IT capabilities available in countries such as India to absorb workers into higher-value roles, “AI is more likely to substitute for Philippine BPO workers than complement them.”

The warning comes as the Philippines seeks to attract AI, semiconductor, advanced manufacturing, and other high-value investments through its participation in the United States (US)-led Pax Silica initiative.

The Philippines and the US are developing a nearly 1,619-hectare (ha) economic security zone in New Clark City in Tarlac province, envisioned as the first AI-native industrial acceleration hub under Pax Silica. The facility is expected to accommodate investments in critical mineral processing, semiconductor design and manufacturing, AI infrastructure, high-performance computing, energy, and digital infrastructure.

The Philippines joined Pax Silica in April as the alliance’s 13th member. The initiative seeks to strengthen supply chains spanning critical minerals, energy inputs, advanced manufacturing, semiconductors, logistics, and AI infrastructure. - Danielle T. Bayani

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Capital Economics artificial intelligence (AI) business process outsourcing (BPO) Pax Silica New Clark City
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