Call center apocalypse fails as flesh beats AI economics

They were supposed to be the first casualty of the AI boom.

In 2023, Goldman Sachs, the World Economic Forum, and McKinsey all released reports saying the business process outsourcing (BPO) sector was going to be hit hard by generative AI (genAI). Human customer service agents were on borrowed time.

Image credit: Timmy Loen

The reports warned that AI could eliminate up to 300 million jobs globally and automate 30% of US work hours by 2030.

In the Philippines, the anxiety was palpable, and local headlines helped spread the panic. The BPO sector is one of the country’s economic powerhouses, employing 1.7 million Filipinos in 2024, and is expected to generate US$40 billion in revenue this year.

The country is second in the world to India, which employs 4 million people in a sector that’s worth US$50 billion.

See also: As Philippine call centers weigh genAI, jobs hang in the balance

But the collapse hasn’t happened. Instead, the number of people employed by the local BPO industry is growing. According to the IT and Business Process Association of the Philippines (IBPAP), full-time employment in the sector grew by 7% to reach 1.8 million by late 2024.

IBPAP president Jack Madrid projects this will grow to 1.9 million full-time employees by the end of 2025.

In a statement to Tech in Asia, the organization noted that while 23% of BPO firms are shifting toward AI-centric roles, the tech is driving “evolution in skills and roles” in the industry rather than leading to “large-scale reductions in employment.”

IBPAP president Jack Madrid / Photo credit: IBPAP

So what happened to the talks of job cuts a year ago? The answer is easy. Right now, AI costs more than humans.

That’s not the only answer, but profits seem to be the key factor holding back more widespread adoption among BPO firms.

Human labor still cheaper and reliable

AI closing in on the costs