The call center capital of the world is suffering from competition from artificial intelligence, which is driving outsourced workers out of the market

Known as the mecca of call centers, the Philippines is currently undergoing a transformation through the adoption of artificial intelligence. Workers in the outsourcing industry face new challenges as they compete with AI, which is taking on more and more of their responsibilities. This drive to reduce labor costs has led many companies to adopt AI tools to stay competitive. 

The Philippines faces uncertainty about its readiness for the impact of AI on the labor market, as the government lags in planning and politicians and individuals express concerns about job losses.

AI offers a person the place of “co-pilot”

In recent months, most major industry players have introduced various forms of AI co-pilot to help operators perform certain tasks, such as summarizing previous customer contacts. This avoids lengthy explanatory conversations and increases work efficiency.

This process requires the use of advanced technologies: speech recognition, content processing, sentiment analysis and providing contextual responses in real time. What would have seemed like science fiction a few years ago is now a reality for many Filipinos.

For some workers, the rapid adoption of AI has been a severe test. The illustrative story of a 47-year-old specialist who worked in a call center for almost 20 years and watched the evolution of AI, which over time took on more and more responsibilities. Last year, he and his colleagues were transferred to a “floating status” without work and salary. Six months later, he resigned and moved to the sales department. The man is forced to regretfully agree that AI is cheaper and more efficient.

Algorithm training and data curation – future professions instead of those displaced by artificial intelligence

Although such stories are still isolated, the number of workers in the industry is still growing. However, consulting firm Avasant predicts that up to 300,000 outsourcing jobs in the Philippines could be lost to AI in the next five years. Meanwhile, AI could create up to 100,000 new jobs in areas such as algorithm training and data curation.

The BPO sector in the Philippines is a key source of employment and a significant contributor to GDP. It provides opportunities for Filipinos without a university degree to work at home instead of abroad. The government had hoped that the sector would help lift the population into the middle class, but the development of AI has overtaken these plans.

In the past, technology for call centers was insufficient, but now things are changing. For example, Klarna Bank AB reported in February that AI bots perform two-thirds of customer service operations, equivalent to the work of 700 agents. In May, OpenAI Inc. demonstrated ChatGPT-4, which effectively solved customer problems.

The need for continuous training and social protection to stay afloat

The threat to back-office jobs such as customer service and technical support in the Philippines is clear. Experts urge politicians to prepare for change to avoid a disruptive transition. They believe that social security and taxation systems must evolve to accommodate the benefits of AI.

The Philippines has chosen the path of technological revolution, actively introducing new AI tools. The government has created an AI research center and is implementing training initiatives to upskill 1.7 million workers. The secretary of the National Administration of Economy and Development noted that without advanced training, AI will replace workers, which is a challenge for the country.

In the contact center in Manila, traditional agents and new technologies coexist. On one floor, agents are persuading customers to stay mobile, and on another, ChatGPT is training new hires to help them deal with difficult customers. Co-founder PV Kannan notes that AI training has reduced onboarding time for new hires from 90 days to a month. He believes there will always be a need for human agents, but the role of humans is changing, which could lead to fewer jobs.

When and if AI will disrupt the industry

The question of how quickly AI will disrupt the industry, and whether it will disrupt it at all, is currently debated. Some players deny the influence of AI. Yes, Concentrix Corp. is actively implementing AI that helps agents and analyzes conversations. Its CEO believes that this is just the beginning and the technology is developing faster than in other countries. He argues that artificial intelligence will create new roles – including data annotation and correction – for which many workers will be well-suited. 

Local trade associations predict growth in the number of employees and revenues in the coming years. Experts point out that many companies are interested in setting up or expanding business in the Philippines because of rising costs in the US. At the same time, it is important to improve the qualifications of the workforce within one to two years due to the high cost of integrating generative AI.

Many people want to work in the industry despite its drawbacks, such as disorientation, night shifts and verbal abuse from customers. The Philippine back office industry continues to grow, with many companies interested in outsourcing due to rising costs in the US. In Manila’s technology parks, people pass tests and interviews, getting jobs with salaries starting at 13,300 pesos a month. But there are signs of change and concern, as in the case of a 32-year-old employee who lives two hours from Manila.

All the adults in the household work in call centers. A woman who works on a hotline saves money for a house and can afford a babysitter. She is aware of the rapid changes in the industry as her husband moved to work at an AI startup. The BPO industry in the Philippines is growing, but there are risks due to competition from cheaper countries.

Experts note that new bots are constantly learning and understanding the context, accent and customer, so soon customers will not be able to distinguish them from humans. Although technology is advancing, it is still far from perfect. For example, an Air Canada chatbot falsely assured a passenger of a discount that did not exist, leading to a lawsuit.

Amazon.com Inc. has gained attention with its cashless Just Walk Out system, but stores still rely on human labor to tag data and verify transactions. In April, Amazon announced the removal of this system from its stores in the United States.

Analysts note that while customers are concerned about the risks of AI, while appreciating its effectiveness, contact centers are ready for change, and in some companies AI is already handling every fifth call. Some argue that the challenges are related to data and human behavior rather than technology. It is predicted that almost half of working time will be occupied by models and bots with artificial intelligence. 

For the Philippines, the government has yet to set a budget to prepare for AI adoption, and some politicians are concerned about the slow pace. the government is being urged to develop scenarios, including worst-case scenarios, as the country is ill-equipped to protect workers from the effects of AI. 

Tatyana Morarash