Philippines IT-BPM SMEs tap AI to boost productivity, skills: study

MANILA, PHILIPPINES — Philippine small and medium-sized enterprises (SMEs) in the information technology and business process management (IT-BPM) sector are increasingly turning to artificial intelligence (AI) to boost workplace productivity and develop human capital, according to a study by the Asian Institute of Management. 

While overall AI readiness in the Philippines currently lags behind its neighbors, Filipino workers are already beginning to integrate AI tools into their daily tasks, even without formal strategies from company leadership

Client demands, digitalization gaps shape AI adoption

The October 2024 study, Harnessing Artificial Intelligence for Workplace Productivity and Human Capital Development among SMEs in the Philippines: Insights from the IT-BPM Sector, found that SMEs are taking a “wait-and-see” approach to AI adoption.

For outsourcing and creative agencies, AI integration is heavily influenced by stakeholder values, particularly explicit requests or buy-in from their clients.

“Some SMEs have already begun using GenAI for administrative tasks, basic research, and creating templates. There is also potential to eliminate redundant or ‘in-between’ tasks,” the researchers noted.

However, despite all this progress, robust digitalization still remains a formidable task. The problem is that most companies are still dependent on legacy systems with no better platform to work with.

“While digitalization is a prerequisite for AI adoption, respondents have observed that some clients from the Philippines continue to hold on to legacy systems and have not fully embraced cloud-based systems,” the study explained.

“This is where strategic thinking and relationship building come in,” said Ranel Ram Cheng, one of the researchers of the study, in an exclusive interview with Outsource Accelerator.

“After all, there may be underlying reasons why clients hesitate to upgrade their data infrastructure. IT-BPM firms can take this as an opportunity not just to sell their products per se, but also their expertise, their knowledge, and even their ways of working that could be transferable to their potential clients,” Cheng added.

This gap limits the ability of firms to fully leverage AI and underscores the need for capacity building and better data management.

Agile workforces and human-centric AI drive IT-BPM growth

The study demonstrates that both AI governance and workforce training programs hold critical importance. 

Policymakers have launched the National AI Strategy Roadmap together with the Philippine Skills Framework for Analytics and AI (PSF-AAI) to establish guidelines for AI adoption.

“AI adoption at the enterprise-level is driven in part by the values of its stakeholders,” the study emphasized, which means that cultural and organizational readiness play a key role in how firms implement AI.

Human workers have to work alongside AI systems as they need to handle decision-making functions and monitoring tasks. 

“When we talked to our respondents, there is a general sentiment that Filipinos, especially creatives and artists, are able to translate warmth into their actual work,” Cheng said.

“AI outputs are often seen as too cold or lacking in their ability to connect and so this is where Filipino workers can put their own twist to their own creations,” Cheng added.

Companies should create work environments that allow employees to test AI systems while educational institutions need to develop students who meet industry standards. 

This human-centric approach to AI, or “humanizing” AI, is essential for creating high-value jobs and maintaining competitiveness.

“When we talk about localization, the Philippines faces unique challenges and so the question could be, how might we use available or emerging technologies such as AI to solve these challenges?” Cheng said.

“From a social innovation standpoint, AI is not a silver bullet to solve all our problems, but it could be another tool for people to utilize in improving their lives and their communities. An understanding of these specific problems or consumer demands requires human empathy and human insight at its core, which the efficiency that AI provides can only complement,” Cheng further explained.

As the Philippines aims to become an IT-BPM services hub, AI implementation by SMEs will reshape the country’s outsourcing industry. Local companies enhance their productivity through AI workflow integration and talent development programs enabling them to provide clients with more innovative and efficient solutions. 

The outsourcing industry will transform through these changes which create demand for service providers who possess advanced digital skills to compete in international markets.