Outsourcing keeps growing despite the AI threat
SYDNEY, AUSTRALIA — Despite predictions that artificial intelligence (AI) would gut the outsourcing industry, global contact-center employment is forecast to grow from 15.3 million agents in 2025 to 16.8 million by 2029, as automation costs, technical limitations, and process complexity continue to sustain human labor demand even as AI suppresses an estimated 1.9 million individual roles over the same period.
Sam Altman walks back AI job elimination prediction
Sam Altman, Chief Executive of OpenAI, said by May 2026 that he was “delighted to be wrong” on AI-driven job displacement, reversing his July 2025 position that customer support roles would be “just like totally, totally gone.”
The Philippines business process outsourcing (BPO) sector produced $40 billion in export revenue with 1.9 million workers in 2025 and is forecast to reach $42.3 billion and 1.96 million workers in 2026.
Its 2028 targets, set in 2022 at $59 billion and 2.5 million jobs, have been revised downward to a range of $43.3 to $50.5 billion and 1.85 to 2.14 million workers.
A 2026 survey found 91% of customer service leaders reported executive pressure to implement AI, while MIT research cited in the HCAMag analysis found that 11.7% of United States wage value is already automatable with current AI tools, far below the disruption threshold AI advocates projected.
The Philippines outsourcing sector is tracking toward $42.3 billion in 2026, not the industry collapse AI predictions implied, even as automation is set to suppress approximately 1.9 million contact-center roles globally by 2029.
Automation costs and complexity preserve the human outsourcing case
“Full automation will be prohibitively expensive for most organizations,” said Patrick Quinlan, Senior Director Analyst at Gartner.
Jack Madrid, President and Chief Executive of the IT and Business Process Association of the Philippines (IBPAP), said the industry must “review where we are and be honest about what we can,” acknowledging that growth targets set in 2022 required a downward revision.
AI resolution costs are forecast to exceed $3 per interaction by 2030, a threshold that narrows the economic case for full replacement of human agents in volume-dependent customer service operations.
The revised IBPAP targets still project growth in Philippine BPO headcount through 2028, indicating the sector expects human labor demand to persist even at the lower end of the revised forecast range.
The immediate AI threat to outsourcing is role-level, not industry-level, with entry-level voice and data functions bearing the heaviest displacement risk while complex, judgment-dependent tasks continue to absorb demand.
The persistence of outsourcing demand reflects a structural reality: BPO operators handle the long tail of business processes that automation reaches last, not first.
Leading BPO operators that build AI-adjacent capabilities, including agent oversight, quality assurance, and exception handling, are better placed than those competing directly with the functions AI is replacing.
The forecast growth in global contact-center headcount to 16.8 million by 2029 suggests offshore staffing providers retain a growth runway, even accounting for the 1.9 million individual roles automation will suppress within that expansion.
Related news
- Philippine IT-BPM cuts its growth targets on AI · 17 Jul
- AI drives agentic process outsourcing shift, says tech exec · 25 Feb
- CTO confidence in scaling AI falls to 48%: report · 27 Jun
Disclosure: Outsource Accelerator uses AI tools in the backend of its editorial workflow. Every article is reviewed and verified by a human editor before publication.
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