Artificial Intelligence: Threat or opportunity?

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CHRIS FERAREZA

I was intently listening to Dr. Diosdado “Dado” Banatao, the chairman of Philippine Development Foundation, when I was taken aback by his statement about the country’s business process outsourcing (BPO) sector. According to Dr. Banatao, most of the estimated 1.3 million Filipinos working in the BPO industry will be displaced over the next two years by artificial intelligence (AI) technology currently being developed for BPOs.

I have been reading and hearing about AI displacing professionals in the future. But it was only during the regular luncheon meeting of the Rotary Club of Makati last week, where Dr. Banatao was our guest speaker, did I consider it very seriously. Hearing it directly from a fellow Filipino, who is internationally recognized as an expert in AI through his ventures in Silicon Valley, made it more compelling.

Honestly, it made me really curious about what could happen soon. I thought to myself, if this could happen in such a short period of time to the Philippine BPO industry, why wouldn’t it happen to practicing certified public accountants (CPA) like me and other professionals? How much time do we have left before AI renders us “obsolete?” Should I be alarmed? Is there anything I could do to prepare and survive the inevitable?

Understanding AI
Before jumping to conclusions, we should first carefully understand the information that Dr. Banatao shared and what AI truly is.


AI, as defined by Encyclopedia Britannica, is the ability of a digital computer or computer-controlled robot to perform tasks commonly associated with intelligent beings. An article published by Forbes in January 2017 cited ten powerful examples of AI that we already enjoy today. These are Siri, Alexa, Tesla, Cogito, Boxever, John Paul, Amazon.com, Netflix, Pandora, and Nest. Look for them on Google – another AI product – when you have time.

To Dr. Banatao, “speed is always what AI means.” According to him, “it can make businesses branch into a lot of other things as fast as they can.” He also said that only the easier tasks relative to the brain can be done by AI so far.

This is quite comforting because that means professionals, such as CPAs, lawyers, engineers and doctors, could not easily be displaced by AI because of our decision-making capabilities and judgment. But we cannot afford to rest on our laurels; we should evolve constantly as continuous learning is still a must.

Potential Consequences of AI
Displacing about 1.3 million Filipinos in the BPO business is a serious threat to an industry that, according to Dr. Banatao, is worth about $50 billion today. However, he also estimated that using AI would help the Philippine BPO industry double its size to $100 billion.

That would seem to be a great opportunity for the people involved. But what are the implications of displacing this huge number (a conservative estimate) of Filipinos who are mostly the breadwinners of their families? Assuming that on average, each of them supports four family members, which would mean 6.5 million (6 percent of the population) would directly be affected.

Apart from looking at the BPO industry, let’s also consider the possible impact of AI to our overseas Filipino workers (OFWs). Based on the 2016 survey published by the Philippine Statistics Authority on April 27, there are about 2.2 million OFWs. The effect on OFWs may not be as impending, but if AI could also easily replace them by the nature of their work, approximately a further 11 million (11 percent of the population) of our fellow Filipinos would be affected.

Focusing on these two sectors alone will already give one an idea that AI is a serious threat. And it wouldn’t stop at those two sectors. The chain reaction that would ensue could be as follows:

A lot of the buildings dedicated for the BPO sector will be idled; and,

Assuming that the government would not be able to provide alternative sources of livelihood to these sectors:

Only a few capitalists would benefit from the expected decline of the BPO while million others would see their purchasing power diminished;

Housing developers, whose target market are BPO workers and OFWs, would lose their buyers; and,

Since most of those properties are probably mortgaged, current and future portfolios of financing companies would also suffer.

So perhaps, the other important question that needs to be asked is whether our government officials have already considered this threat and whether they have taken steps to address it.

Taking advantage of AI
The following observations of Dr. Banatao about the Philippines are very revealing about the readiness to take advantage of AI:

The Philippines missed largely on the whole software industry;

His companies found only 20 Filipino AI-savvy engineers out of the more than 100 million population of the country; and,

Universities under the Commission on Higher Education are not concentrating on the right work and effort on AI.

As an outsider in the tech industry, but whose country is facing a serious AI threat, this bit of information is disconcerting. Without enough capacity and capability to take advantage of the opportunities in AI, the Philippines still has a long way to go before it could harness the full potential of AI. And because of that, AI may currently be more of a threat rather than an opportunity.

Chris Ferareza is a partner, Audit & Assurance, and in-charge of Training at P&A Grant Thornton. P&A Grant Thornton is one of the leading audit, tax, advisory and outsourcing firms in the Philippines, with 21 partners and more than 850 staff members. For your comments, please email chris.ferareza@ph.gt.com or PAGrantThornton.marketscomm@ph.gt.com. For more information about P&A Grant Thornton, visit our website www.grantthornton.com.ph.

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