Digital Progress and Trends Report 2025 : Co-worker, Coach, or Competitor? - How AI is Transforming the Future of Digitally Delivered Services : Case Study 3

Overview & Synopsis

The rapid advancement of artificial intelligence (AI) is reshaping the global landscape of outsourced digitally delivered services (DDS), raising questions about the evolution of the human workforce in this industry. Characterized by large pools of relatively low-cost, lower-skilled workers performing routine tasks, DDS industries - such as contact centers and business process management (BPM) - are now facing a potential technological inflection point. This study complements the Digital Progress and Trends Report (DPTR) 2025 by addressing a gap in the research on AI use at work in export-oriented DDS and developing economies more generally. It combines a literature review with qualitative insights from two case studies of firms producing and exporting DDS in the Philippines and Uzbekistan. It highlights how firms and workers use and develop AI tools, the impacts they are seeing, and the barriers they face in scaling up AI adoption. The case studies include semi-structured interviews with representatives of 40 digital services export firms, 20 workers, and 15 government and other private sector stakeholders in the Philippines and Uzbekistan. In the Philippines, interviews were conducted in firms employing more than 30,000 contact center and BPM workers, 9,000 health care services workers, more than 7,000 workers in information technology (IT) services and software development firms, and about 100 workers in animation and game development in offices in metro Manila, Taguig, Ortigas, and Iloilo. In Uzbekistan, interviews were conducted in firms that employed more than 1,200 employees in contact centers and BPM, more than 800 employees in IT services and software development, and more than 300 employees in specialized logistics services in Tashkent, Urgench, Jizzakh, Samarkand, and Khiva. This report is structured as follows. The background and literature review section briefly introduces DDS, reviews the literature on AI’s impact on this sector, and lays out an analytical framework for understanding the impacts of AI on productivity, employment, outsourcing opportunities, and wages. The country cases section zooms in on the case study countries, offering a brief history of the evolution of their DDS and outlining their characteristics as digital services exporters and the use of AI across subsectors. The policy considerations and summary section tackles barriers to AI adoption and policy relevant risks, pinpoints key areas for a policy response to AI’s impacts and outlines a high-level policy action framework to support policy makers as they navigate this landscape in the coming years.