How Southeast Asia’s SMEs can prevail above tech disruption

ACROSS Southeast Asia, services make up a growing share of gross domestic product. According to the World Economic Forum’s Future of Jobs in South-Eastern Asia report, the service trade already accounts for 70 percent of Singapore’s GDP and is rising rapidly in the Philippines and Thailand. But that success now faces a turning point, as generative AI begins taking over tedious tasks traditionally handled by large workforces.

This doesn’t necessarily spell doom. It opens the door to AI-augmented roles, where employees collaborate with AI assistants to boost productivity and value creation. The new mandate for white-collar work is to ask: “What becomes possible now that AI can handle what I used to do?”

As a productivity multiplier, generative AI is fundamentally reshaping knowledge work, especially in service-led economies such as the Philippines’ business process outsourcing sector. A 2024 Accenture report showed that companies implementing AI-led processes can achieve 2.4 times greater productivity than their peers. By allowing small and medium enterprises to do more with fewer resources and scale efficiently, generative AI is leveling the playing field. Amid aging workforces and talent shortages, AI assistants trained on internal knowledge repositories — such as policies, manuals and communications — can help preserve institutional knowledge and provide personalized training for staff.

DIGITAL GAP Generative AI is fundamentally reshaping knowledge work, especially in service-led economies such as the Philippines’ business process outsourcing sector. AI-GENERATED GRAPHICS

Still, introducing new technologies requires appropriate competencies to maximize their benefits.

The new skill divide

The World Economic Forum reports that 60 percent of employers worry about a widening digital skills gap that could hinder their ability to prepare for an AI-driven landscape. About 92 percent of employers in the region expect strong growth in demand for cybersecurity and networking skills, while 83 percent foresee increased need for resilience, agility and adaptability by 2030 — well above global averages.

In this early cycle of generative AI adoption, demand is rising for AI trainers who teach AI systems how to interpret tasks, as well as AI ethicists and governance professionals who ensure development aligns with human values and regulations. Prompt engineering has emerged as a sought-after competency among nontechnical professionals who must leverage AI responsibly in their work.

The roles and skills in demand are those centered on human judgment, strategic oversight and creativity — capabilities that must be strengthened to stay ahead of automation.

What SMEs must prioritize

Here’s something I often tell business leaders: AI won’t replace you, but someone who knows how to use AI might. That’s true for individuals and even truer for companies.

SMEs that delay adoption risk falling into an “AI divide,” missing out on competitive gains and exposing themselves to compliance risks. A recent Deloitte report found that 78 percent of SMEs in the Asia-Pacific region already use at least one AI tool, recognizing that it allows them to achieve more with fewer resources. Early adopters are already realizing efficiency gains that compound over time.

However, without clear internal policies, AI adoption can become a double-edged sword. Known as “shadow AI,” employees trying to boost productivity may use free, unsanctioned tools such as ChatGPT for work, uploading sensitive business or customer data. This exposes companies to data leaks, intellectual property loss and potential violations of privacy laws such as the Philippine Data Privacy Act.

A forecast by Precedence Research predicts fivefold growth in the global AI governance market between 2025 and 2034. Consequently, the role of data protection officers in the Philippines may evolve into data and AI governance officers to meet these emerging needs.

Steps to enterprise AI adoption

When piloting AI, start by addressing one clear, low-risk pain point where generative AI can have a significant impact — such as automating product descriptions or responding to FAQs. Consider a 30-day pilot on one workflow.

Select a trusted, paid AI tool — not a free one where data may become public — and allocate around P5,000 to P10,000 for a business subscription. Measure the tool’s effectiveness by tracking time saved on routine tasks. Most businesses begin to see results within two weeks. If the tool delivers promising returns, develop a simple governance checklist covering data use, potential risks and corresponding controls.

Capability building: A holistic approach

Successful AI integration doesn’t end with tools; it requires embedding technology into the organization’s operations. This means cultivating the right knowledge, skills, processes and culture.

Without a talent-first strategy, organizations risk low adoption rates and underutilization — or worse, ending up with a “tool zoo” of unintegrated, insecure and underperforming platforms.

At the high end of the services economy, firms like Accenture are retraining employees and retooling roles that can be enhanced with AI. The company reported a 7 percent revenue increase, aims to save $1 billion through restructuring, and plans to hire for new roles — a shift signaling that future success depends on capability, not just competency.

The bottom line for SMEs

The good news about AI is that businesses don’t need deep pockets or large teams to start. The most important step is the first one: begin with a single use case, measure its impact and complement it with clear internal policies and capability development.

With the right mix of experimentation and governance, those who start now will leapfrog their competition tomorrow.

Alvin Toh is co-founder and chief marketing officer of Straits Interactive, an edtech company that empowers institutions to develop new generative AI tools through its “capability-as-a-service” software, which delivers governance, risk and compliance solutions that enable trusted business and responsible marketing in data protection and privacy.