The Philippine Information Technology-Business Process Outsourcing (IT-BPO) industry brings to mind a familiar picture – agents, awake at three o’clock in the morning, doing anything from checking up on a client’s hospital records, to troubleshooting their laptops. One usually imagines this as a voice service – making or receiving calls from predominantly overseas clients.

The billion-dollar industry rests on the shoulders of Filipinos remotely servicing clients locally and abroad, in anything from healthcare, IT management, finance, animation, gaming, and more.

While IT-BPO became a key industry in the Philippines on the back of voice services, outsourced services increasingly cover non-voice, like running support chats, or backoffice work. The advent of Artificial Intelligence has also raised the question of how much of these services will fall to automation over the next few years.

These, along with recent economic pivots, have altered the landscape of what once seemed like a market permanently on the upswing. Now, with a million-strong workforce and with a contribution of 10% to the country’s economy, the IT-BPO industry faces a reckoning.

Then and now

The BPO industry exploded onto the scene in the 1990s and early 2000s, with the arrival of call centers run by industry players like Accenture Global Resource Center, and Convergys.

In the golden days of voice services, it quickly became apparent that Filipinos had a knack for the primarily American market, with a predisposition towards US culture and the accent to match.

In the early 2010s, the Philippines overtook India as the no. 1 provider of voice services worldwide. It wasn’t necessarily because Filipino labor was cheaper. Aparup Sengupta, chief executive of Aegis Global, chalked it up to Filipinos being “a unique combination of Eastern, attentive hospitality and attitude of care and compassion mixed with what I call Americanization.”

Almost a decade later however, the industry has slowed down.

Local compound annual growth rate, which had hovered at between 15% to 17% over the last six years, is down to 9%. According to Rey Untal, president and chief executive officer of the Information Technology and Business Process Association of the Philippines (IBPAP), this trend may continue well into 2022.

Revenue growth confidence among industry leaders dropped from97% in 2016 to 89% in 2017.

Experts have pointed to upheavals in the local political scene.

Back in the 2000s, the Arroyo administration granted tax incentives to US BPOs setting up shop in the Philippines through the Philippine Economic Zone Authority (PEZA). More than fifteen years later, the reportedly upcoming second tranche of the Tax Reform for Acceleration and Inclusion (TRAIN) law could alter these incentives.

Under the proposed TRAIN 2, companies registered as BPOs as well as all as other companies enjoying the 5% Gross Income Earned (GIE) incentives, will be saddled with net income tax of up to 25%.

In early 2018, Senator Bam Aquino called for a senate investigation of the TRAIN law following reports that higher taxation will cause massive layoffs.

“The BPO sector is a major source of livelihood for Filipino families,” he said. “We cannot afford to give away job security and job opportunities, especially with the rising prices of goods.”

But while economic challenges have given clients pause, another factor poses an even greater cause for disruption. The advent of Artificial Intelligence systems has altered the landscape, and is poised to do so at an exponential pace.

The cheaper and faster services provided by Robotic Process Automation (RPA) has taken the international IT-BPO industry by storm. This puts low skill jobs, previously performed by contact center workers, like encoding and simple processing, on the chopping block.

AI-powered translators, applications, robotic processing, chat bots, and the like, are set to take over 40,000 to 50,000 process-driven jobs in the near future. Due to this, the Indian BPO industry’s work force is seen to drop by 14% in 2021.

Looking forward

What remains certain is that the demand for outsourced services will remain – the cost of outsourcing remains more economical, and the variety of services that can be performed over an internet connection continues to grow.

This has kept industry heads optimistic despite the challenges.

In 2017, the local BPO industry saw USD 23 billion in revenue. Benedict Hernandez, chairman of the Contact Center Association of the Philippines (CCAP), sees IT-BPM bringing in another USD 40 billion in revenue by the end of 2022.

Growth may be sluggish in comparison to recent years, but the first quarter of 2018 saw as many as three newly registered BPO companies every week.

The revenue from IT-BPO is also seen to outpace the revenue brought in by OFWs by this year.

“We think both OFW remittances and the outsourcing sector will continue grow. But by 2018, revenues from the outsourcing sector will outstrip revenues from OFW remittances,” said Joey Cuyegkeng, ING Bank Manila senior economist.

The 2022 Roadmap of the IT-Business Processing Association of the Philippines (iBPAP) makes an even bolder claim – that the local IT-BPO industry will cover 15% of the total global outsourcing market by the end of 2022.


A change in the landscape necessitates a change in how the industry operates. On the heels of technological upgrades, agents have to move up the value chain.

While many major outsourcing companies intend on making a 43% investment in robotic automation in the next couple of years, putting at risk the low skilled jobs that have previously made up majority of the industry, advances in technology have also opened the kind of services that can be done online.

ASEAN Briefing recognizes the emerging value of Knowledge Process Outsourcing. Increasing value is being placed on roles that play to more specific skill sets, like Market Research, Fraud Analytics, Equity Research and Investment, Web Design and Development, Project Management Research and Development, Medical Transcript Preparation, and Legal Processes.

In the Philippines alone, an estimated 700,000 medium and high skill jobs could be created by 2022.

New opportunities have also presented themselves, in an era where traditional voice services no longer hold the same sway. Social media management services, including real-time customer engagement services like live chat and e-mail support, has increased over the past five years. This mirrors a growing dependence on multi-channel communications. After all, why would a customer order something over the phone, when they can push a few buttons on an app?

The outsourcing companies who survive the transition stand to win big.

“There is definitely an important integration that we need to carry out for AI,” said TELUS International Philippines director for brand, marketing and culture in the Philippines, Carlos Giammattei. “I think the BPO industry is very well alive and kicking and we will be in the next 5 years.”

“We have seen data on the fact that BPO companies that ride the digital wave will get an edge in the next 3 years and will be able to adapt to these market needs,” he adds.

In the face of all these changes, there remains the question of what makes Filipinos excel in this industry. Has it only ever been a question of the kind of English we speak? That alone no longer gives Filipinos an edge.

Filipinos are known for their dedication and concern for others – personality traits that have yet to be captured by automation.

The Philippines-based Visaya Knowledge Process Outsourcing has long recognized the pluck Filipinos bring to IT-BPO. But faced with changes in the industry, they also understand the need to be flexible.

On one hand, this entails upgrading to higher value added work, by training up their current agents to cover services as of yet outside the purview of AI. More pointedly, they’re recruiting specialists in healthcare, IT, and finance to perform the same services they normally would, just over an internet connection.

This means next time a patient from the United States needs to ask a question about their healthcare, they may find themselves in contact with a certified nurse on the other end of the line.

There’s more than one way to channel the uniquely Filipino culture of caring than a bright greeting for the client at the other end of the line.

Part of this dedication includes evolving with changing needs and the means to deliver services. At the very least, it’s certainly an advantage in an era when the IT-BPO industry is no longer represented by call center workers, but an entirely different breed of outsourced agent.