AI landed with a big bang in September 2022 with the launch of ChatGPT. Since then, myriads of AI applications have rolled out non-stop. AI adoption is gaining momentum including for my company.
But the video below really hit the mark on the dire threat AI poses on the Business Process Outsourcing (BPO) industry. It could be existential.
The video is a recording of an AI making a sales call to a guy who was interested in a Tesla. The AI engaged in a back and forth conversation without the guy, even realising that he is talking to an AI. The AI was so good that it managed to arrange an appointment for the guy, at a specific time and date, to test drive a Tesla at a dealer closest to him.
Amazing!
But let’s just think about this for the moment and the potential of this AI technology to upend the BPO industry.
The Philippine BPO industry contributes nearly $30 billion to the economy each year. It is estimated that 1.3 million Filipinos were employed in over 1000 BPO companies in 2019, and that figure is showing 8-10% growth every year. There are also an estimated 1.5 million Filipino freelance workers on various digital platforms.
It is estimated that the Philippines holds 10-15% of the global BPO market. Its services are oriented to the USA, and also serve Europe and nearer neighbours, such as Japan, New Zealand, and Australia.
Typically, the Philippine BPO sectors focus on back-office operations (HR, finance, and IT) and front-office operations, such as customer support and call centers. Other processes that are commonly outsourced include: Data mining and input; Transcription services; Software development; Animation services and game development.
The specific impact of AI on the Philippine BPO sectors can be substantial and transformative. Substantial is because of the likely large number of employee displacements it will cause. Transformative is because of the different skills sets and the upskilling that it will require.
Here’s how AI might affect the BPO sectors:
- Back-Office Operations (HR, Finance, and IT):
o Data Mining and Input: Voice-generated AI can automate data entry tasks, extracting relevant information from voice inputs and populating databases. This reduces the need for manual data entry and improves accuracy and efficiency.
o Transcription Services: Large language model AI can be used for automatic transcription of audio files, speeding up the process and reducing costs associated with manual transcription services.
o Software Development: AI-powered tools can assist developers in generating code snippets or automating certain aspects of software development, leading to increased productivity and faster turnaround times.
o Finance and HR Processes: Voice-generated AI and large language model AI can streamline finance and HR processes, such as invoice processing, payroll management, and employee onboarding. Automated systems can handle routine inquiries and administrative tasks, allowing human resources to focus on more strategic aspects of their roles. - Front-Office Operations (Customer Support and Call Centers):
o Customer Support: Voice-generated AI and large language model AI can power virtual assistants and chatbots that provide 24/7 customer support. These AI-driven systems can handle common customer queries, resolving issues faster and reducing the workload for human agents.
o Call Centers: AI-powered Interactive Voice Response (IVR) systems can efficiently route calls, reducing wait times and improving customer experiences. Large language model AI can enhance call center agents’ responses by providing real-time insights and suggestions during customer interactions. - Data Mining and Analytics:
o AI-driven data mining tools can extract valuable insights from large datasets, enabling businesses to make data-driven decisions quickly and efficiently.
o Large language model AI can help with natural language processing tasks, allowing businesses to analyze and understand customer feedback, sentiment, and market trends more effectively. - Animation Services and Game Development:
o AI-generated content: AI-powered tools can assist in creating animation sequences, backgrounds, and characters, potentially speeding up the animation process and reducing production costs.
o Game AI: Large language model AI can enhance the gaming experience by providing more realistic and dynamic in-game interactions with non-player characters (NPCs) through natural language understanding and generation.
The way I see it, the impact of AI on the Philippine BPO industry will be two folds. On the one hand, it will result in increased efficiency, cost savings, and expanded service offerings. It is hard to say however, how this will impact the $30 billion revenue that the Philippine BPO industry is currently generating.
On the other hand, and as AI adoption becomes widespread, the BPO industry will need less people. The challenge then is to address job displacements and transition costs both at the business level and industry wide level.
What is glaring though is the need for the Philippine government and industry stakeholders to act now. The Philippines probably has a window of about 2-3 years. The Philippines needs to focus on fostering an ecosystem that promotes skills development, upskilling and innovation to harness the full potential of AI while creating a workforce that can adapt to the changing landscape of the BPO industry.
DigiLabs
26 July 2023
