Narayan AmmachchiThe Philippine business process outsourcing (BPO) industry is shifting away from traditional hourly billing as artificial intelligence (AI) changes the economics of customer service operations.
Charging clients based on the number of hours agents work is becoming less practical in AI-powered contact centers, according to BPO advisory firm PITON-Global in an article published by BusinessWorld.
The reason is that autonomous systems can now resolve customer queries much faster and at far lower cost than human agents.
“The vendors who resist it are not protecting their margins — they are protecting their inability to deliver,” said Ralf Ellspermann, CSO at Piton Global.
Under the outcome-based pricing model, BPO firms are paid for completed results — such as resolved customer tickets, retained subscribers, or verified transactions — rather than the number of hours agents spend handling calls.
The shift, however, is putting pressure on BPO providers. Companies must spend heavily on AI systems even as faster resolution times reduce revenue earned under hourly contracts.
Under traditional agreements, a Philippine customer service representative typically billed clients between $12 and $16 per hour. AI-assisted systems can now cut the cost of each customer interaction to between $0.50 and $1.50, reducing costs by as much as 88%, according to the advisory firm.
Piton Global cited the example of a global e-commerce company handling 1.2 million customer contacts each month. After moving from hourly billing to a phased outcome-based contract, the company reportedly lowered its cost per resolved interaction from $4.80 to $1.20 within six months, while the vendor’s investment in AI rose by 340%.
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