How AI has impacted the IT-BPM industry and what comes next

The information technology and business process management industry (IT-BPM) has supported the economy for more than three decades. Recently, however, artificial intelligence has impacted the IT-BPM industry in profound ways. Ironically, AI has become the industry’s greatest threat while also providing its greatest opportunities. AI’s overall effect is more nuanced than most think. Let me explain.

Contrary to the belief that AI is obliterating jobs, it is in fact propelling the growth of the IT-BPM industry. Look at the statistics: industry revenues increased from $26.7 billion in 2020 to $40 billion in 2025. Employment expanded from 1.32 million workers in 2020 to 1.9 million today. In other words, during the very period of aggressive AI adoption, the IT-BPM industry added 570,000 jobs and generated $13 billion in additional revenues. This tells us that AI is not shrinking the industry. It is reshaping it.

To appreciate the magnitude of AI’s impact, take a look at how the revenue mix has evolved. In 2020, voice contact centers accounted for 52 percent of revenues, equivalent to $13.9 billion. Non-voice BPM services – including finance and accounting, human resources, procurement, content moderation, legal process outsourcing and various back-office functions – contributed around 20 percent or $5.3 billion. Health care management generated eight percent or $2.1 billion. IT services and software development accounted for 12 percent or $3.2 billion. Shared services and global capability centers contributed five percent, while creative services such as animation, gaming and digital content generated three percent. Six years ago, the industry’s competitive advantage rested on low labor cost and the large English-speaking workforce.

Today, the picture looks markedly different. The contribution of voice services has declined from 52 percent of revenues to 42 percent. Non-voice services have increased from 20 percent to 25 percent. Health care information management has grown from eight percent to 11 percent. IT services and software development have expanded from 12 percent to 17 percent.

In absolute terms, voice services now generate roughly $16 billion; non-voice BPM contributes approximately $9.5 billion; health care information management generates about $4.2 billion and IT services and software development account for approximately $6.5 billion.

What does this tell us? It indicates that the industry’s growth over the past five years has come from higher-value, knowledge-intensive activities. And AI has been a major catalyst behind this shift.

The sub-sectors disrupted by AI include data entry, medical transcription, back-office processing and basic customer support. Meanwhile, those whose demand are on the rise are health care information management, finance and accounting outsourcing, cybersecurity services, software engineering, analytics, cloud services, legal process outsourcing and AI-enabled professional services.

AI’s implications can be understood in five important ways. First, it automated many routine tasks such as customer inquiries, simple transaction processing, data entry and transcription work. Second, AI has significantly increased worker productivity. Productivity improvements range from 20 to 40 percent in contact centers, 30 to 50 percent in software development, 40 to 60 percent in documentation-related functions and 80 percent in quality monitoring. Approximately 67 percent of Philippine IT-BPM operations already use AI in one form or another.

Third, AI has accelerated the migration toward higher-value services. Filipino workers are now tapped for their judgment, expertise, creativity, regulatory knowledge and critical thinking. Fourth, AI has altered hiring requirements. Employers increasingly seek workers proficient in data analytics, cloud computing, cybersecurity, AI operations, business intelligence and automation technologies. English proficiency remains important, but is no longer sufficient.

Fifth, AI has created entirely new categories of work. Prompt engineers, AI trainers, AI auditors, AI quality analysts, conversation designers, AI operations specialists and human-in-the-loop reviewers are becoming increasingly important occupations within the ecosystem.

Looking ahead

The opportunities are enormous. At the current growth rate of eight to 10 percent, the industry could exceed $100 billion in revenues within 10 years. However, if growth can be accelerated to 15 percent, revenues could reach $162 billion. This could transform the economy entirely. However, achieving it requires a fundamental shift in strategy.

Foremost, the Philippines must move decisively up the value chain to become the world’s premier hub for AI-augmented services. How can this be done? The country should aggressively expand health care information management, particularly in medical coding, revenue cycle management, health care analytics and clinical documentation.

It should be globally competitive in cybersecurity. It should position itself as a center for analytics, data engineering, AI governance, model validation and AI safety services. It should expand software engineering and cloud services. It should deepen specialization in financial services, legal services, procurement, supply chain management and other knowledge-intensive functions. It should be a major hub for AI development and high-level tech work.

Most importantly, it must develop local companies that create and sell their software and AI products globally, rather than just enabling foreign companies doing so.

Several reforms will be necessary to support this transition. A national AI upskilling initiative capable of training at least one million workers over the next five years is imperative. Universities must modernize their curricula to align with emerging trends in AI, cybersecurity, data science and software engineering.

Investments in digital infrastructure, data centers, power reliability and broadband connectivity must accelerate. Regulatory frameworks governing AI, digital trust and data privacy must provide clarity and predictability.

Also, policies to attract tech-savvy talent from abroad should be implemented. Venture capital formation, technology entrepreneurship and software product development should be actively encouraged.

The countries that thrive in the AI era will be those that combine skilled human capital with advanced technologies to deliver superior outcomes. The Philippine is well positioned. It just needs to evolve and reform. I hope the DTI is listening.

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E-mail: [email protected]. Follow him on Twitter @aj_masigan