There’s About to Be a Ton of Warm Bodies to Throw at Offshore Accounting Outlets in the Philippines

Perhaps you’ve seen this article published by the totally trustworthy-sounding Philippine Daily Inquirer the other day about how the Philippines — abbreviated PH in the headline — is struggling with a shortage of accountants. OH NOES. A recap:

The Philippines is experiencing a shortage in accountants, a predicament that will likely worsen given the declining number of students taking accounting-related courses coupled with other emerging trends that seem to be taking a chunk out of the talent pool of traditional accounting firms.

Marvin Galang, co-founder of financial mobile app built for freelancers called Beppo, said on Friday that they found alarming the results of a survey showing that there is a 41-percent decline in student enrolment in local accounting programs.

“Subsequently, we also saw a decline of 35 percent in the number of [certified public accountant] examinees from 2019 to 2023,” Galang said during a conference focused on the local accounting industry.

Check out this response to my tweet of that article:

I would strongly disagree and suggest some fact checking. As the second largest employer of accountants in the Philippines we get over 4000 applications a month. A bit of scare mongering….

— Nick Sinclair (@nickqsinclair) August 22, 2024

I wrote about a potential shortage of accounting talent in the Philippines way back in 2023. That article contains a couple figures that were up-to-date as of publication time: namely a decrease in candidates sitting for the Philippines certified public accountant exam, a notoriously difficult exam with a pass rate below 35%. No worries though, Filipinos can now sit for the US CPA exam without even getting on a plane. Please, contain your rejoicing.

In both our article and the Inquirer one, there’s an important distinction when the word “shortage” is used. That is, onshore firms in the Philippines are having trouble finding talent. And it’s pretty clear why if you do the math. If you’re a Filipino who knows your debits from credits then you’re far better off working for an offshore outlet than you’d be working for a Philippines firm because your salary is double or more. Compare a starting salary of ₱15,000 (about $267 USD) at a Philippines firm to Php 45,000 ($800 USD) doing grunt work for a firm in the US, UK, or Australia. And the outsourced offices have karaoke!

Anyway, yesterday I saw this Bloomberg article on Twitter: The World’s Call Center Capital Is Gripped by AI Fever — and Fear. The headline pretty much gives it away but the gist is that AI is quickly embedding its capable tendrils into the robust business process outsourcing industry in the Philippines. Because of course businesses that are already paying poverty wages to people in poorer countries are going to save even more money not having to pay wages at all. Did we expect any less?

Avasant, an outsourcing advisory firm that works extensively in the Philippines, estimates that up to 300,000 business process outsourcing (BPO) jobs could be lost in the country to AI in the next five years.

“This poses a once-in-a-lifetime risk and opportunity for the industry in the Philippines,” said Akshay Khanna, managing partner at Avasant, whose analysis estimates AI could also create up to 100,000 jobs in new roles like training algorithms or curating data. “It’s not all doom and gloom.”

It’s hard to overstate the importance of the BPO sector to the Philippines. It’s the country’s biggest source of private sector jobs and the biggest sectoral contributor to gross domestic product. Socially, the centers are a source of decent money for non-university-educated Filipinos that doesn’t require them to work abroad. The government had been banking on the industry to help it move up the value chain, propel its 100-million-plus citizens into the middle class and kickstart the creation of other white-collar jobs. But AI arrived before that’s happened.

You see where I’m going with this?

According to Glassdoor, the average salary for a BPO in Manila is ₱18,612, so only slightly more than an entry level job at a Philippines accounting firm (LOL, of course working at a call center pays better…of course it does). Lack of education isn’t a problem because the companies outsourcing to US firms offer their own training programs and can have ex-call center grunts hitting the spreadsheets in months or even weeks.

Yeah, they’re not going to have any problem finding warm bodies to throw at US bitch work. And you know the firms will be more than happy to send it over there while continuing to charge clients US fees.