Sam Altman said customer support would be "totally gone." So why is the Philippines' outsourcing sector still growing?
For the past two years, a lot of boardrooms have worked from a simple assumption: generative AI would do to call centers and back-office outsourcing what Business Process Outsourcing (BPO) did to on shored call centers, and do it fast. That assumption traces back to one widely repeated line. In July 2025, OpenAI chief executive Sam Altman told a Federal Reserve audience that some job categories were "just like totally, totally gone," singling out customer support as the clearest example.
Eleven months later, Altman was telling a different story. Speaking to audiences across Asia in May 2026, he said he was "delighted to be wrong" about how fast and how completely AI would displace jobs. For any HR leader planning workforce strategy around outsourced or offshore teams, that reversal is worth remembering. The loudest predictions about AI and jobs tend to age quickly, and not always in the direction people expect.
What the data shows
The Philippines remains the world's largest hub for voice-based outsourcing, and its industry body's own numbers are a reasonable proxy for the sector's health. The IT and Business Process Association of the Philippines says the industry closed 2025 with roughly $40 billion in export revenue and about 1.9 million workers, and is forecasting $42.3 billion in revenue and 1.96 million workers by the end of 2026. That's growth, not collapse.
The longer-range picture tells a different story, though. The industry's original 2028 roadmap, published in 2022, called for $59 billion in revenue and 2.5 million jobs. It now expects somewhere between $43.3 billion and $50.5 billion, and between 1.85 million and 2.14 million jobs, a real cut to the growth trajectory even if the near term still looks solid.
IBPAP president and chief executive Jack Madrid attributed the revision to AI adoption, shifting buyer behavior and rising global competition. Speaking to reporters at a briefing in July, he put it plainly: "We need to review where we are and be honest about what we can achieve realistically, and those are the numbers today."
Anyone who has followed HRD's coverage of how AI is reshaping jobs rather than simply eliminating them will recognize the pattern. It also lines up with independent research from analyst firm Cavell, which found demand for human contact-center agents globally is still projected to grow, from 15.3 million in 2025 to 16.8 million by 2029. That headline number hides something worth flagging: Cavell's own modeling suggests automation will suppress roughly 1.9 million additional agent roles that would otherwise have been created over the same period. Growth and displacement are happening at the same time.
Why the economics aren't as simple as they sound
Gartner published one of the more useful correctives for HR and procurement teams weighing an AI-versus-offshore business case back in January. The firm predicts that by 2030, the cost per resolution for generative AI in customer service will exceed $3, more than many business-to-consumer offshore human agents cost today.
"Customer service leaders are determined to use AI to reduce costs, but return on those investments is far from guaranteed," said Patrick Quinlan, a senior director analyst at Gartner. "Full automation will be prohibitively expensive for most organizations; instead, leading organizations will use AI to drive customer engagement rather than to cut costs."
The pressure to automate isn't easing because of that, though. A separate Gartner survey of 321 customer service leaders found 91% report pressure from their own executives to implement AI in 2026, up sharply from prior years. HR leaders are stuck between that executive pressure and a cost picture that's more complicated than most business cases assume.
The part that's actually disappearing
Offshoring versus onshoring isn't really the question. What's eroding is the entry-level rung specifically. Basic data entry, routine account queries and simple document processing (the "tier one" work that has traditionally been how school leavers and career-changers got a foot in the door) is the part of the job most exposed to automation. HRD has reported on this pattern showing up in hiring data for young workers more broadly, and MIT-linked research has estimated roughly 11.7% of total U.S. wage value is already technically automatable with current AI systems, concentrated in exactly these administrative and customer-facing functions.
If the entry rung disappears faster than new junior roles appear, organizations lose a pipeline they've relied on for years, whether that talent sits on their own payroll or a vendor's. For heavily regulated jurisdictions, outsourced headcount also often sits outside formal consultation and redundancy processes. That played out when Commonwealth Bank of Australia wound back an offshore contractor arrangement after an AI rollout, cutting hundreds of jobs without a formal layoff process appearing on CBA's own books.
A regulatory wildcard
American HR and compliance teams should also be watching Congress. The bipartisan Keep Call Centers in America Act and a companion House bill, the HIRE Act, would require employers to notify the Department of Labor before moving call-center work offshore, publish a public registry of companies that do, and strip federal grants and contracts from those on it. Both bills were introduced in mid-2025 and remain stuck in committee, with no vote recorded as of mid-2026. Neither is close to becoming law, but both signal where political appetite is heading, particularly for regulated industries like financial services and healthcare that already face public scrutiny over offshoring.
Where this leaves HR
The outsourcing industry isn't being shredded. It's being sorted, increasingly by task complexity rather than geography. Simple, scriptable work is genuinely at risk wherever it sits. More complex work, judgment calls, exception handling, anything that requires empathy, is proving stickier than the 2025-era predictions assumed, and in some cases it's moving to offshore hubs precisely because AI tools let less-experienced staff there handle it competently.
For HR leaders managing outsourced or offshore relationships, the useful questions aren't "should we reshore?" or "should we automate?" They're smaller and more concrete: which specific tasks in our outsourced contracts are entry-level and script-based, what happens to the people doing them, and does our vendor governance account for AI-driven headcount changes the way it would account for a layoff on our own books? Recruitment process outsourcing providers are already rethinking their value proposition around exactly this question. The rest of the outsourcing industry is likely to follow.
