AI Customer Service: Klarna, Sierra, Decagon and BPOs — 2026-09-02

Top developments

Philippines revises 2028 revenue target to $50.5B amid AI shift

The International Business Process Outsourcing Association of the Philippines (IBPAP) lowered its 2028 revenue projection to $50.5 billion, down from previous higher estimates, citing AI automation as a significant reshaping force rather than an existential threat. This revision reflects a strategic pivot where the industry accepts slower growth in traditional voice support while expanding into higher-value digital services. The association emphasizes that while AI reduces the need for routine tasks, it creates opportunities for skilled roles in AI training and complex problem resolution.

India’s IT-BPM hiring drops 26% in H1 FY27 due to AI adoption

India’s IT-BPM sector is projected to add fewer than 70,000 net staff in the first half of fiscal year 2027, a 26% decline compared to previous periods, as artificial intelligence disrupts the mass-recruitment model. This slowdown coincides with major layoffs at giants like TCS, which cut over 12,000 jobs, signaling a broader industry move toward efficiency over headcount expansion. Clients are increasingly demanding payment for results rather than hours worked, forcing vendors to automate routine processes to maintain margins.

Offshore call center employment defies AI displacement fears

Contrary to predictions of mass unemployment, overseas call center employment in India and the Philippines continues to grow, driven by what economists call the "Jevons paradox." Apollo chief economist Torsten Slok notes that technology reducing the cost of each customer interaction has fueled an expansion in overall demand, requiring more human agents for complex queries. This trend suggests that while AI handles volume, humans remain essential for high-touch, nuanced customer service interactions.

Local view

The Print reports on a new "hidden workforce" in Gurugram and Noida, where lakhs of low-paying jobs are being created not for customer service, but for data labeling and AI training. This sector is effectively becoming India’s new BPO, shifting labor from answering phones to teaching machines how to see and understand.

Manila Bulletin highlights comments from NEDA Secretary Arsenio Balisacan, who argues that fears of AI causing massive job losses in the Philippine IT-BPM sector may be overstated. He suggests that the industry’s adaptability and the continued need for human empathy in service roles will mitigate the worst-case scenarios of automation.

Context & numbers

• Global Market Size: The Customer Care BPO market is projected to reach USD 115.16 billion by 2034, growing from USD 65.34 billion in 2025, driven by AI automation and cloud-based contact centers.
• Pricing Models: Intercom’s Fin AI charges a flat $0.99 per resolution with no platform fees, citing an average resolution rate of around 71%. Competitors like CoSupport AI offer $0.59 per resolution with claims of 90% automation.
• Philippine Industry Status: The Philippines’ outsourcing industry is projected to hit $42 billion in revenue in 2026, employing 1.9 million workers as it transitions to AI-augmented roles.
• Indian Tech Layoffs: Oracle is cutting approximately 3,000 jobs in India, while Microsoft has placed about 500 employees on performance improvement plans as budgets shift toward newer skills like AI development.

On the radar

• Genesys CX Report: The newly released Genesys 2026 State of CX report warns that "AI alone won't fix broken CX," emphasizing the critical role of agentic orchestration and human agents in defining successful AI-powered customer experiences.
• Klarna’s Ongoing Evolution: While Klarna previously reversed its full-AI strategy to rehire humans, recent commentary suggests a hybrid model is becoming the standard, with companies focusing on "human connection" enhanced by tech rather than replaced by it.