The Philippines at the AI crossroads: What the country and its industry leaders must do now

By Yu Ming Chin

OUR COUNTRY’s outsourcing empire is now facing a reckoning. Artificial Intelligence (AI) is already encroaching on the Philippine economy: inside the contact centers, back-office operations, financial services firms, and the shared service centers that employ nearly two million Filipinos and anchor more than 8% of the country’s GDP. The rules of competition are changing faster than most organizations have prepared for.

London-based Capital Economics’ February 2026 report placed the Philippines at 43rd out of 47 countries in its AI Economic Impact Index, with a score of 21 out of 100. Among our ASEAN peers, the Philippines ranked last. The good news is that this gap serves as a decision point. I am proud to share that The National AI & Skills Summit — hosted by Viventis in partnership with the Department of Information and Communications Technology (DICT) — will bring together the leaders who can make those decisions: CEOs, policymakers, technology innovators, and educators charged with building an AI-ready Philippines.

THE BPO PARADOX: GREATEST ASSET, GREATEST RISK
The BPO and IT-BPM (business process outsourcing and information technology and business process management) industry is a national success story and is also at risk of being superseded by AI. The IT & Business Process Association of the Philippines (IBPAP) projects $42 billion in revenues and nearly 1.97 million employees by the end of 2026. The Philippines accounts for close to one-fifth of the global outsourcing market, with a formidable reputation in English proficiency, cultural affinity with Western clients, high emotional intelligence, and an innate capacity for customer empathy — qualities that multinational companies have valued and paid for over two decades.

But the same characteristics that built that industry are now being studied and replicated by AI. Repetitive, predictable, high-volume processes can already be handled by advanced AI technologies. Jack Madrid, President and CEO of IBPAP, has framed the challenge clearly: the industry can no longer rely primarily on labor arbitrage. The next phase must emphasize what he calls “AI-enabled, human-in-the loop service delivery” where Filipino talent provides judgment, oversight, compliance, orchestration, customer service management, and domain expertise around AI systems, rather than competing with them.

Almost 50% of BPO firms have jumped at the opportunity and are already embedding AI into their operations, and over 70% are targeting high AI maturity by 2028. IBPAP itself has committed to investing at least $25 million annually in skills development to future-proof the workforce. The shift is underway but transition would be critical, with leaders underscoring reskilling at the forefront.

WHAT OTHER ASEAN COUNTRIES ARE ALREADY DOING
To understand the urgency of what our county is facing, it helps to look across the region at what other nations are committing to right now.

Singapore has positioned AI as the centerpiece of its national economic strategy. In its 2026 budget, the government committed S$37 billion toward research, innovation, and enterprise including AI and quantum technologies, a new National AI Council, and a new AI Park as a dedicated hub for key stakeholders. An additional S$1-billion investment in its National AI Research and Development Plan runs through 2030.

Malaysia has created the National AI Action Plan 2030, developed through its National AI Office (NAIO), covering technology development, talent, governance, infrastructure, and sustainable investment. They allocated over PM150 billion to the Ministry of Digital, Malaysia Digital Accelerator Grant, and SME financing and guarantees to help businesses digitize and automate.

Vietnam, which the Philippines still narrowly trails in AI readiness scores, has accelerated its own digital strategy. Thailand has established dedicated AI governance frameworks. Indonesia, the region’s largest economy, is investing heavily in digital infrastructure to close its technology gap.

Overall, the Philippines ranked 49^th globally in the Government AI Readiness Index by Oxford Insights showing strength in policy capacity (84.50) and governance (70.84), but scoring critically low in AI infrastructure (48.11) and development and diffusion (42.46).

The country has the right policy intentions, but what we urgently need is execution at scale.

THE PHILIPPINES’ STRUCTURAL ADVANTAGES
Our country enters the AI era with a differentiated asset base that no other country in Southeast Asia can fully replicate. As mentioned earlier, the Philippines has strong English proficiency and cultural alignment.

For AI-enabled services that require human supervision, client interaction, and cultural sensitivity for the Western market, this remains an irreplaceable advantage. The scale and domain depth in services shows that we have the institutional infrastructure, talent, and global client relationships that newer competitors cannot quickly replicate, with 170 and growing Global Capability Centers (GCCs). With AI’s continuous acceleration, more young, AI-curious Filipino employees want to gain new digital skills related to AI and machine learning.

The emerging GCC momentum continues given our combination of talent density, cost competitiveness, English proficiency, and cultural alignment. Moreover, untapped provincial talent shows that we are beginning to move beyond Metro Manila. More GCC clients are increasingly open to provincial locations, signaling that the country’s talent pool is wider and deeper than its urban counterparts.

WHAT MUST CHANGE: THE STRATEGIC AGENDA FOR COUNTRY AND INDUSTRY
Given the competition and the opportunity, what must the Philippines do urgently to win its place in the global AI economy?

1. Reframe the national AI narrative from consumer to competitor. The Philippines has produced good policy documents but what has been missing is a unified national narrative that is broadcast by the government, industry, and education together that treats AI not as a risk to be managed, but as a competitive platform to be built. DICT Secretary Henry Aguda, whose keynote “From Vision to Execution: Building an AI-Ready Philippines” anchors the summit, represents exactly the kind of public-private alignment this reframing requires. AI must be declared, funded, and executed as critical national infrastructure and not treated as an innovation lab experiment.

2. Build a three-layer National Skills Architecture. A single upskilling initiative will not close the AI skills gap and what we need is a three-skills layer of architecture. The first layer is broad AI literacy: the ability of every Filipino worker, student, teacher, and public servant to understand what AI does, how to use AI-powered tools, and how to operate safely alongside AI systems. The second layer is intermediate and advanced AI-adjacent capability: software development, data analytics, systems analysis, workflow redesign, AI integration, and sector-specific deployment skills. The third layer is specialist AI talent: researchers, model developers, ethics practitioners, and domain-specific AI architects who can position the Philippines as a hub for higher-value AI-enabled work rather than just a consumer of models built elsewhere. IBPAP, TESDA (Technical Education and Skills Development Authority), CHED (Commission on Higher Education), and the Analytics & AI Association of the Philippines (AAP) are already building components of this architecture.

3. Accelerate the GCC play. If the Philippines is to capture value from AI rather than simply absorb its disruption, the GCC opportunity is the most immediate lever. GCCs represent the transition from transactional outsourcing to strategic, AI-integrated operations. They pay higher wages, demand higher skills, drive deeper knowledge transfer, and represent the kind of higher-value work that insulates the country from the commoditized end of AI disruption. Industry leaders, in collaboration with IBPAP and the Board of Investments, must aggressively market the Philippines’ AI-readiness credentials to GCC decision-makers globally.

4. Move from pilots to enterprise-wide AI deployment. The Philippines’ enterprise AI gap is not in awareness or intent, it is in execution. Sprout Solutions’ 2025 State of AI report found that 89% of Philippine businesses consider AI adoption critical to competitiveness. Yet a large proportion remains in pilot mode, running limited proofs-of-concept that never graduate to core operations. Alorica Asia President Bong Borja, MAP President Donald Lim, RCBC Chief Innovation Officer Lito Villanueva, and DICT Secretary Henry Aguda will headline the summit’s CEO Roundtable with a discussion that moves beyond experimentation to ask what it actually takes to embed AI in mission-critical operations. A sustained productivity uplift represents a competitive advantage, but only for those enterprises that move from pilot to enterprise deployment.

5. Establish governance frameworks that enable rather than obstruct. To close the AI governance gap, our country must enact clear, enabling regulatory frameworks for data, AI use, and digital services that are distinct enough that enterprises can invest with confidence. This includes straightforward data governance frameworks that allow handling of sensitive client data with defined and trusted parameters. Ethical AI guidelines must be developed in partnership with industry so that responsible AI use becomes a market credential rather than a compliance burden. Lastly, streamline digital infrastructure investment rules to attract the data center, connectivity, and compute infrastructure that AI operations require.

6. Forge unbreakable industry-academe bonds. No country becomes AI-competitive without an education system that regenerates talent as fast as AI reshapes work. The Philippines faces a structural lag: university curricula typically operate on multi-year update cycles while AI tools and job requirements shift quarterly. The summit’s education pillar anchored by TESDA, CHED, PCORP (Private Sector Jobs and Skills Corp.), and IBPAP addresses this with urgency. The objective is not merely to introduce AI into the classroom but to forge working partnerships between industry and education institutions that keep curricula, credentials, and career pathways synchronized with the actual skills being demanded by employers.

With these insights, I’ve realized that the Philippines is not lagging because it lacks talent, ambition, or cultural assets; but because the collective decision from government, industry, and education to treat AI as a national economic priority rather than a technology trend has not yet been made with sufficient speed, scale, or investment.

The National AI & Skills Summit 2026 is the moment for Philippine leaders to make a commitment in the form of decisions: funding, partnerships, workforce investment, governance, and the ambition level the country is willing to declare. The summit will be full of people who carry the mandate and the responsibility to decide whether the Philippines leads or follows in AI. The window is open. The question is, whether the country will move through it together, with urgency and purpose, before it closes.

The National AI & Skills Summit 2026 is hosted by Viventis Search Asia in partnership with the DICT, with support from IBPAP, Management Association of the Philippines, Analytics and AI Association of the Philippines, Contact Center Association of the Philippines, Financial Executives Institute of the Philippines, Makati Business Club, and Philippine Society for Talent Development.

Yu Ming Chin is the executive director of Viventis Search Asia.