By Fernando C. Fajardo, Cebu independent economist/political analyst; former Neda 7 assistant director; USC assistant professor
When venture capitalist Vinod Khosla warned ahead of the India AI Summit that IT services and BPOs could “almost completely disappear” within five years because of artificial intelligence, many dismissed it as Silicon Valley exaggeration.
But Cebu cannot afford to ignore this warning.
For our city and region, the IT-BPM industry is a central pillar of economic growth. From Cebu IT Park to Cebu Business Park, thousands of young professionals power voice support, finance and accounting services, healthcare information management, software support and back-office operations for global firms. The industry has shaped our skyline, driven condominium demand, strengthened retail and food services and expanded the middle class.
If AI disrupts this model, the implications for Cebu are profound.
For nearly two decades, IT-BPM has been one of Central Visayas’ strongest growth engines. It provides quality employment, absorbs talent from nearby provinces and generates stable export revenues. Indirectly, it fuels transportation, housing, banking and consumer services. Entire sub-economies — from 24-hour dining to ride-hailing demand — depend on the rhythms of BPO work schedules.
The traditional outsourcing model is built on labor arbitrage: skilled Filipino workers delivering services at lower cost than counterparts in developed economies. AI, however, offers automation arbitrage. Once deployed, AI systems operate 24/7 with minimal marginal cost and increasing accuracy over time.
Customer service chatbots, automated accounting systems, AI-powered coding assistants and machine-driven claims processing are no longer experimental. They are operational realities being integrated into global corporate systems.
Cebu must confront a difficult possibility: what happens if global clients no longer need thousands of offshore agents because AI can perform routine tasks faster and cheaper?
Entire industries rarely disappear; they evolve.
AI will likely reduce demand for repetitive, rule-based tasks. Entry-level voice support and back-office processing may decline. But new roles will emerge — AI supervision, model training, quality auditing, cybersecurity, compliance monitoring, data governance and higher-level client engagement that requires empathy and complex judgment.
The question for Cebu is whether we transition quickly enough.
If automation outpaces workforce reskilling, displacement will occur faster than adaptation. This is particularly concerning for young workers whose skills are concentrated in routine service functions and who may not yet possess advanced digital capabilities.
Cebu has real advantages: English proficiency, cultural alignment with Western clients, a young workforce, competitive labor costs and reputable universities producing business, IT and engineering graduates.
However, our ecosystem remains oriented toward service execution rather than technological creation. We host operations, but we rarely design core AI systems or own proprietary platforms. If AI development remains concentrated abroad and automation tools are deployed centrally by multinational firms, Cebu risks being a downstream casualty rather than an upstream innovator.
Technological capability determines economic resilience. Cities that master new technologies attract investment; those that merely supply labor become vulnerable to substitution. The difference between being a user of AI and a builder of AI will define the next phase of regional competitiveness.
Cebu cannot wait for market forces alone.
First, aggressive reskilling. Universities and training centers must integrate AI literacy, data analytics, cybersecurity and automation management into mainstream curricula. Short-cycle certification programs for current workers should expand rapidly, especially for mid-career professionals at risk of redundancy.
Second, move up the value chain. Encourage firms to base higher-complexity functions in Cebu — analytics consulting, AI oversight, regulatory compliance, financial modeling and digital transformation services — rather than purely transactional roles.
Third, strengthen industry-academe-government coordination. A regional AI transition roadmap for Central Visayas should be crafted, aligning incentives toward technology-intensive investments, research collaboration and startup incubation.
Fourth, encourage local innovation. Cebuano entrepreneurs should be supported in building AI-enabled solutions for global markets. Venture financing networks, technology parks and university research partnerships must be expanded to nurture a genuine innovation ecosystem.
Khosla’s timeline may be aggressive. Technology adoption often takes longer than predicted due to regulation, integration costs and institutional inertia.
But the direction is clear.
AI will not wait for Cebu to prepare. The real danger is complacency — assuming that because IT-BPM built our prosperity, it will indefinitely sustain it.
Cebu’s strength has always been adaptation. From trade to manufacturing to tourism to outsourcing, each transition required foresight and policy alignment.
If we begin now — reskilling our workforce, upgrading industry capability, investing in digital infrastructure and positioning Cebu as an AI-augmented services hub rather than merely a labor destination — we can convert disruption into opportunity.
If we delay, automation may not erase the industry overnight. But it could steadily erode its foundations, weaken household incomes, dampen real estate demand, strain local government revenues and slow urban growth.
The time to prepare is not five years from now.
It is today.