A new study by Amazon Web Services (AWS) reveals how artificial intelligence is reshaping the Philippine business landscape. While AI adoption is rising rapidly, startups are innovating faster than larger enterprises, creating what experts call a “two-tier AI economy.”
Here are eight key findings from the report:
1. AI adoption is accelerating at record speed
In 2024, 80,000 Philippine businesses adopted AI—averaging more than nine every hour. Overall, 250,000 businesses, or 21 percent of all enterprises nationwide, are now using AI, reflecting a 50 percent annual growth rate.
2. Startups are more advanced than large corporations
Nearly half of local startups (45 percent) use AI, with 40 percent already building AI-powered products. By contrast, 41 percent of big enterprises use AI, but only 7 percent have reached advanced, transformative use cases.
3. AI is boosting business performance
Of the companies that adopted AI, 64 percent reported higher revenues, averaging an 18 percent increase. At the same time, 66 percent saw cost savings, averaging 22 percent, proving AI’s economic value.
4. Most companies still rely on basic applications
Despite high adoption, 78 percent of businesses use AI mainly to improve efficiency and streamline processes. Only 11 percent are at an intermediate stage, and just 8 percent are fully integrating AI into decision-making and product development.
5. Skills shortage is the biggest obstacle
About 57 percent of businesses cite a lack of digital talent as the top barrier to AI expansion. With AI skills expected to be required in 61 percent of jobs within three years, only 26 percent of firms feel adequately prepared.
6. Funding gaps and regulatory risks are slowing progress
Almost half of startups (48 percent) highlight access to venture capital as crucial for growth. Meanwhile, 42 percent of businesses worry that upcoming AI regulations may slow adoption, while 40 percent fear higher compliance costs.
7. Compliance is becoming increasingly expensive
Companies estimate that $19 of every $100 spent on technology already goes toward compliance-related costs. Furthermore, 72 percent expect compliance expenses to rise within the next three years, creating added pressure on budgets.
8. Collaboration is the key to unlocking AI potential
The study recommends three steps to avoid a two-tier AI economy: investing in digital skills, maintaining innovation-friendly regulations, and accelerating government-led AI adoption in critical sectors like healthcare and education.
AWS has been investing in the Philippines since 2016, from building cloud infrastructure to funding startups and training over 100,000 Filipinos in cloud skills. The company says it remains committed to supporting the country’s AI-driven growth.