As 67% of local business process outsourcing (BPO) firms integrate artificial intelligence, the Philippine economy stands at a critical juncture. The core debate is no longer whether AI will alter the landscape, but whether increased efficiency will expand the industry or hollow out its foundations.
At the recent Sessions: Disrupt event hosted by The Independent Investor and LEAP Studios, Breaking Ground founder and host John Dang sat down with Maharlika Investment Corporation CEO Rafael “Joel” Consing Jr., KMC Savills Co-Founder Michael McCullough, and Navegar Senior Associate Bharat “Bart” Keswani to debate Jevons’ Paradox and the future of Filipino talent.
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Rethinking Jevons’ Paradox in the BPO Sector
Jevons’ Paradox suggests that as technology makes resource consumption more efficient, overall demand actually rises rather than falls. However, applying this economic theory to outsourcing reveals complex realities.
“The analog of coal is not human agents; it’s in fact compute and tokens,” explained Joel Consing Jr., CEO of Maharlika Investment Corporation. He noted that as compute power rises over time, the need for humans to add value to resolved tickets steadily diminishes. “You will have a situation where revenue is rising, but you are cutting people. When you talk about Jevons’ Paradox for BPOs, the question is not whether it exists, but rather, are we on the right side of the Jevons’ Paradox trade?”
The Value Capture Dilemma
With tech giants capturing massive capital through hardware and foundation models, panelists addressed whether the financial benefits of AI will remain within the Philippines or flow overseas.
Michael McCullough, Co-Founder of KMC Savills, pointed out the national deficit in hardware ownership. “How does the Philippines benefit from this? Whereas Nvidia is now worth $5 trillion, how does the value stay within the country?” McCullough asked. He added that because the country does not produce chips or host GPUs, the cost of adopting AI functions essentially as “another tax,” with capital flowing directly to the entities controlling compute power.
Margin Compression vs. Operational Efficiency
While clients demand lower prices due to AI, BPO operators are leveraging automation to streamline internal operations, quality control, and workforce recruitment.
Bharat “Bart” Keswani, Senior Associate at Navegar, highlighted that BPOs can deploy AI to make managing operations far more efficient, particularly when finding talent and cross-referencing output against proprietary knowledge bases. However, he cautioned against expecting higher pricing power. “In terms of being able to charge more, I don’t think BPOs will be able to pass that onto the customer,” Keswani noted. “Businesses are comparing BPOs to outsourcing to AI. There is margin pressure, but you will be able to make your operations more efficient.”
Pilot Theater vs. True ROI
Distinguishing between superficial AI trials and genuine productivity gains remains a key differentiator for operators.
McCullough emphasized measuring success through time saved rather than novelty. He shared that internally, his firm tracks ROI by looking at workflow time savings and cost reductions. “Internally, we are seeing it,” McCullough remarked, pointing out an unexpected upside: “Now that we are developing high-quality code, there is more code we want to write, so we are hiring more developers.”
The Long-Term Human Cost and Education Deficit
The conversation turned to the systemic risks facing the next generation of workers, highlighting how early childhood development and education directly tie to future competitiveness.
Consing delivered a stark warning about the long-term impact on the labor pool, cautioning that the foundational advantage of articulate Filipino talent is at risk. “That role is going to be taken over 15 to 20 years from now by kids who are 10 years old today—the same kids experiencing brain stunting and not getting proper nutrition,” Consing urged. He closed with a sobering assessment for traditional knowledge work: “Anything that can be done with a mouse, a keyboard, and a computer—you will lose that job to AI.”
Keswani noted that this structural shift extends far beyond local borders. “I think this is not a problem unique to the Philippines. Even in the US, people are asking that same question—AI is so much better than my job, what is the working class going to do?” Keswani reflected. “This is more of a philosophical question the whole world has to answer.”
Special thanks to Engkanto Brewery for keeping our guests refreshed with their globally acclaimed craft beer throughout the evening.