Cost reduction, competitive pressure driving AI adoption in Philippines

MANILA, Philippines —  The need to reduce costs and pressure from competition are key drivers for artificial intelligence (AI) adoption among companies in the Philippines, but limited use cases and scalability challenges are obstacles to fully leveraging the technology, according to IBM.

The Asia-Pacific AI Outlook 2025 report commissioned by IBM showed that 47 percent of organizations in the Philippines have cited the need to reduce costs and automate key processes as an important factor driving AI adoption.

Apart from lowering costs, AI adoption in the country is also being driven by competitive pressure (47 percent) and labor and skills shortages (45 percent).

While businesses see reasons to adopt AI, challenges also remain.

In particular, 43 percent have cited limited use cases that have been defined as a challenge.

“On AI adoption, the market still wants to look and see a lot more visible use cases,” IBM Philippines president and country manager Aileen Judan-Jiao said.

She said this does not mean, however, that companies in the country are not using AI.

“Have they started to do it? Are they doing the pilots? They are. But they’re very quiet adopters,” she said, noting companies want to be careful and be able to measure the impact before announcing they are using the technology.

She said companies want to make sure they have tested the use of technology first.

“It’s important to make sure that they have trust in the equation,” she said.

Other challenges to AI adoption in the Philippines are difficulty in integration and scaling (40 percent) and the lack of an AI strategy (37 percent).

Jiao said industries in the Philippines that are using AI include the financial industry, as well as manufacturing to improve productivity.

She said the transport industry and the government are also beginning to adopt AI.

For organizations in the Philippines already investing in AI, the report showed that enhancing customer experience will be a primary focus (23 percent) in 2025.

AI investments of Philippine organizations in 2025 will also center on back-office business process automation (18 percent) as well as employee experience and productivity (17 percent).

In the Asia-Pacific, investments in AI are aimed at improving customer experience (21 percent), back-office business process automation (18 percent) and sales automation and customer lifecycle management (16 percent).