Growing AI adoption to impact revenues of Philippine BPO industry — BSP report

The Philippine economy is facing challenges as the business process outsourcing (BPO) sector grapples with domestic constraints on artificial intelligence (AI) adoption, while the travel industry continues to feel the effects of a slow return of Chinese tourists, according to a report from the Bangko Sentral ng Pilipinas (BSP).

The BPO sector, a cornerstone of the Philippines’ export revenue, is expected to grow at a slower rate in 2024 and 2025 “consistent with latest trend driven in part by domestic constraints in AI adoption.”

This lag has constrained the industry’s competitiveness, capping the sector’s revenue growth trajectory at single digits, the report showed.

Meanwhile, the recovery of the tourism sector, another significant contributor to the country’s services exports, has been sluggish. The delayed return of Chinese tourists—formerly a substantial market—has weighed on travel receipts.

Growth in tourism revenue is projected at 15 percent in 2024, well below pre-pandemic levels, reflecting the broader trend of subdued international travel demand.

These dual pressures highlight the need for strategic reforms to leverage technological advancements in BPO and to revitalize tourism, both critical to bolstering the Philippines’ external sector resilience amid global uncertainties.