The Philippine software industry must pivot from a labor-intensive outsourcing model to a knowledge-driven, high-productivity ecosystem as artificial intelligence (AI) reshapes global demand, according to Jonathan de Luzuriaga of the Philippine Software Industry Association.
De Luzuriaga said the shift is becoming urgent as AI adoption accelerates, forcing investors to reassess traditional service delivery models. “The Philippine IT-BPM industries are producing very good outputs. For software alone, it is a USD5 billion per year industry employing roughly 150,000 to 160,000 developers,” he said, adding that the rise of AI since late 2023 has made transformation unavoidable.
While large-scale job displacement has yet to materialize, he noted that uncertainty is prompting global firms to delay or rethink investments. This “wait-and-see” stance, he said, underscores the need for the Philippines to move up the value chain rather than rely on volume-driven outsourcing.
At the core of the transition is building an AI-ready workforce. The industry group is piloting AI-native curricula in several Metro Manila schools, combining stronger computer science foundations with practical AI tools to boost developer productivity.
The initiative forms part of a broader roadmap through 2028, which targets adding up to one million workers—half of them outside urban centers.
However, scaling talent development beyond major cities remains a challenge, particularly given infrastructure gaps across the archipelago.
De Luzuriaga said the Philippines, long competitive in contact centers, healthcare information management, and animation, is well-positioned to expand into higher-value software development and digital services.
With 120,000 to 140,000 IT graduates produced annually, he said the country has a strong talent base to support this transition.
“The opportunity now is to move beyond labor-focused outsourcing,” he said, “and position the Philippines as a knowledge-driven technology hub in the AI era.”
