Despite the potential of AI to improve productive capacities in the workplace, the Philippines continues to lag behind its neighbors in terms of AI readiness and the low rate of digitalization among its enterprises. There is indication, however, that Filipino workers are now using AI tools at work, even without clear strategies from company leadership. This paper explores how SMEs in the Philippines are harnessing AI for workplace productivity and human capital development. This research employed the case study approach to add nuance and a grassroots perspective on AI adoption in an emerging economy like the Philippines, specifically focusing on the case of the IT-BPM sector, which is expected to contribute toward increasing high value-adding services and creating more jobs.
Results show that SMEs in the country have adopted a “wait and see” behavior in terms of AI adoption, while demonstrating that AI adoption at the firm-level is partly driven by the values of its stakeholders. They also hold a pragmatic view that although the country’s AI industry may take a while to develop, the Philippines can build a niche in terms of AI integration, localization, and “humanizing” AI. However, digitalization remains to be a major roadblock and a persistent talent gap needs to be addressed. Implications on ongoing efforts to strengthen AI governance and develop human capital in the country are discussed, with emphasis on the need for better regulation and capacity building.