Artificial intelligence (AI) adoption is accelerating in the Philippines, with new research from Amazon Web Services (AWS) showing that startups are leading in innovative uses of AI compared to larger enterprises. The study, conducted in partnership with Strand Partners and titled “Unlocking The Philippines’ AI Potential,” surveyed 1,000 business leaders and 1,000 members of the public across the country.
According to the report, 80,000 businesses in the Philippines adopted AI solutions in 2024, bringing total adoption to 250,000 companies—representing 21% of all businesses. This marks a year-on-year growth rate of 50%. Among those that have implemented AI, 64% reported an average revenue increase of 18%, while 66% expect cost savings averaging 22%.
The survey found that most Philippine businesses use AI for basic tasks such as improving efficiency and streamlining processes. Advanced applications remain limited: only 11% of businesses have reached an intermediate stage of adoption and just 8% have fully integrated AI into product development or decision-making.
Startups are adopting advanced AI capabilities more rapidly than established firms. The study noted that while both startups and large enterprises are using AI at similar rates (45% for startups and 41% for large companies), a third of startups have reached the most transformative level of integration compared to only 7% of large enterprises.
“It is an interesting phenomenon we are seeing with AI adoption coming out of the study results in the Philippines. While 21% of businesses reported they have adopted AI, most of the deployments remain basic despite the rapid adoption of the technology over the past year,” said Nick Bonstow, Director at Strand Partners. “Larger enterprises are also at risk of being left behind by the nimbler, faster-paced startups. The resulting ‘two-tier’ AI economy could have lasting implications on a country’s future economic development. Celebrating AI adoption numbers alone masks the deeper challenges many businesses face across the Philippines.”
Skills shortages and regulatory concerns were identified as key barriers to further progress. More than half (57%) cited a lack of skilled personnel as a challenge to expanding their use of AI. This skills gap may affect competitiveness as demand for AI literacy increases; it is expected that within three years, over half of jobs will require some knowledge of artificial intelligence but only about one quarter of businesses feel prepared with their current workforce.
Funding remains important for startup growth, with nearly half reporting access to venture capital as crucial. Regulatory uncertainty was also cited: over two-fifths worry that new rules could slow innovation or increase compliance costs. On average, businesses estimate that $19 out every $100 spent on technology goes towards compliance-related expenses—and nearly three-quarters expect these costs to rise.
The AWS report suggests three actions to help bridge gaps: investing in digital skills programs tailored by industry; ensuring regulation supports innovation while remaining clear and predictable; and accelerating digital transformation within government services like healthcare and education.
AWS has operated locally since 2016 and has made several infrastructure investments including Amazon CloudFront (2014), AWS Outposts (2021), Amazon IVS Points of Presence (2022), and an AWS Local Zone in Manila launched in 2023. In addition to pledging US$230 million globally last year for startup support—including teams working on generative AI—the company committed another US$100 million to expand its Generative AI Innovation Center. AWS says it has upskilled more than 100,000 Filipinos through initiatives like AWS Skill Builder since 2017.
“Businesses in the Philippines are keen to innovate with AI, and the high level of adoption underscores a tremendous potential for the Philippine economy. However, the research shows how serious barriers remain, especially for larger enterprises, to deepen their use of AI,” said Precious Lim, Country Manager, AWS Philippines. “To maintain the Philippines’ competitive edge in the global AI stage, it is essential that the government and private sector take the right steps in addressing the challenges businesses face. At AWS, we remain committed to supporting the broad adoption of generative AI, through our infrastructure investments and skills training initiatives.”