OVERSEAS Filipino workers (OFWs) and the business process outsourcing (BPO) sector continue to power the Philippine economy, but both are at a crossroads as global trends challenge their sustainability, according to an economist.
Marco Miguel Javier, vice president for Economics and Market Research at BPI Global Markets, said OFW remittances remain a lifeline, with inflows hitting US$35 billion in 2024, supporting consumption and cushioning external shocks. However, he cautioned that their contribution to the economy is gradually shrinking.
“Remittances are still strong, but their share of gross domestic product (GDP) is declining. The pace of labor migration is slowing, and other countries are also beginning to rely less on foreign workers. In the long run, we cannot assume that remittances will grow at the same pace,” Javier said during the Mandaue Business Month Summit 2025.
For the first half of 2025, cash remittances climbed 3.1 percent to $16.75 billion from $16.25 billion in the same period last year. The United States remained the top source, followed by Singapore and Saudi Arabia. Personal remittances, on the other hand, in the first six months reached $18.67 billion, up 3.1 percent year on year.
Javier noted that as the Philippine economy becomes more consumption-driven, remittances still account for a large portion of household spending. But reliance on overseas income makes the country vulnerable to shifts in global labor demand, immigration policies and economic slowdowns in host nations.
At the same time, the country’s outsourcing industry, another key growth driver, is undergoing disruption. Javier said artificial intelligence (AI) is beginning to pressure low-value call center operations, raising questions about future job security in one of the country’s biggest employment generators.
“The outsourcing sector is evolving. Routine call handling and basic transactions can now be managed by AI. But this opens the door
for Filipinos to move up the value chain, particularly in health care, IT services, creative industries and higher-end customer engagement,” he explained.
The Information Technology and Business Process Management (IT-BPM) sector employs 1.7 million Filipinos and generates nearly $40 billion in annual revenues. While the industry is preparing for AI integration, Javier said upskilling will be crucial to ensure the workforce remains competitive.
“The opportunity is there. The Philippines has a young, English-speaking workforce and a reputation for adaptability. But if we don’t invest in training and transition, the risk is that jobs will shift elsewhere,” he said.
Despite these uncertainties, Javier maintained that the Philippine economy remains resilient, with growth projected at 5.6 percent in 2024 and 5.8 percent in 2025, still among the fastest in Asia. Domestic consumption, which makes up 75 percent of GDP, continues to drive expansion, supported by steady remittances and IT-BPM revenues.
Still, he warned that over-reliance on consumption without stronger investments, exports and infrastructure could leave the economy vulnerable to external shocks.
“Remittances and outsourcing will continue to be the twin pillars of the economy, but we cannot be complacent. The challenge is to future-proof these sectors and diversify our growth engines,” Javier said. / KOC