Artificial intelligence has raised fears that millions of jobs could eventually disappear as companies automate tasks once performed by people. In the Philippines, few industries face as much scrutiny as the business process outsourcing sector, where hundreds of thousands of workers handle customer service, technical support and other functions that AI systems can increasingly perform.
But technological disruption is hardly new. Machines have replaced workers for centuries, from textile workers during the Industrial Revolution to telephone operators in the 20th century.
Economist Jesus Felipe believes that history offers an important perspective on what could happen next.
Felipe, Distinguished Professor at the Carlos L. Tiu School of Economics of De La Salle University, examines this issue in his study, Could Pope Leo XIV and Karl Marx See Eye to Eye? The paper discusses Pope Leo XIV’s encyclical Magnifica Humanitas, particularly its views on artificial intelligence, employment, wages, capital, profit and inequality.
Felipe agrees with many of Pope Leo XIV’s concerns about AI, especially its potential effect on workers. But as an economist who studies long-term economic development, he also places today’s concerns within a much longer history of technological change.
“As an economist who often looks at long-run data, I am optimistic about the role of technology,” Felipe writes.
His argument is straightforward. Technology has repeatedly made certain occupations obsolete, but that did not stop economies from creating new industries, jobs and sources of income.
Felipe points to Johannes Gutenberg’s printing press in the 15th century, which eventually displaced scribes who copied manuscripts by hand. He also cites the replacement of human telephone operators with automatic dialing systems during the 20th century.
Few people today would argue that society should have rejected those innovations simply to preserve the occupations they displaced.
AI could represent the latest chapter in the same process.
Why Philippine call centers are vulnerable
The concern is particularly relevant to the Philippines because much of the country’s BPO industry developed around tasks that can now be automated.
Felipe notes that customer service employment in the United States has already started to decline and could continue to fall as more tasks shift to AI systems. He cites estimates that almost half of customer service roles could be affected by 2030.
For the Philippines, the risk could be greater.
“Globally, the steepest job cuts are expected to hit countries like the Philippines, where many Western companies have outsourced their most easily automated work,” Felipe writes.
This observation goes directly to the economic model that helped make the Philippines one of the world’s major outsourcing destinations.
For years, the country benefited from a large English-speaking workforce and labor costs that were competitive relative to developed markets. Companies could transfer customer service and administrative work to Philippine call centers and lower their operating expenses.
AI changes that equation because companies may no longer have to choose between a higher-cost worker in one country and a lower-cost worker somewhere else. For some tasks, the alternative could increasingly be software.
Felipe notes that technology companies already promote AI-powered call center tools as a way to reduce labor costs. That contradicts the common argument that AI will merely assist employees and make them more productive rather than replace them.
Today’s call center agent could become tomorrow’s telephone operator. Felipe makes an even more provocative prediction about the future of the industry.
“In the next decades, and definitely 100 years from now, our great grandchildren will read in history books that still during the first quarter of the 21st century, thousands of humans worked in places called call centers where they would pick up the phone to solve customers’ questions and complaints,” he writes.
He argues that future generations could view these jobs much the same way people today view telephone operators from the beginning of the 20th century. This does not mean every BPO job will suddenly disappear.
The larger issue is the direction of technological change. Tasks that are repetitive, standardized and easy to codify are more exposed to automation than work that depends heavily on judgment, specialized expertise or complex human interaction.
Felipe’s broader point is also more optimistic than the usual warnings about AI-driven unemployment.
“Yes, these jobs are being lost today,” he writes, but “society at large will gain in the medium to long term.”
The greatest danger may not simply be that AI eliminates some call center positions. Economies have survived previous waves of technological displacement.
The issue is whether the Philippine economy can create sufficiently productive new jobs for workers whose existing occupations become automated.
Felipe’s study draws a parallel with David Ricardo, who reconsidered his initially optimistic view of machinery during the Industrial Revolution. Ricardo eventually acknowledged that technological progress could reduce demand for labor in the short run as businesses replaced workers with machines. Felipe describes this in modern terms as “capital-biased technological change,” where output can rise even while demand for workers and wages comes under pressure.
This debate from two centuries ago sounds remarkably familiar today. AI may eventually create economic benefits that exceed the jobs it destroys. History provides many reasons to believe that this is possible.
But the transition can still be painful for the people whose jobs disappear first.
For the Philippines, that makes the challenge bigger than protecting call centers from AI. The country will need workers who can move from tasks that machines can increasingly perform toward occupations where human skills remain valuable.
The call center industry may therefore be approaching a turning point. The question is no longer simply whether AI can answer a customer’s call.
It is whether the Philippine economy can create the next generation of jobs before technology makes too many of the old ones obsolete.
