MANILA, Philippines—August 19, 2025—Amazon Web Services (AWS), an Amazon.com company, today released new research revealing that while artificial intelligence (AI) adoption continues to accelerate in the Philippines, there is a growing gap between startups and large, more mature businesses in the depth of their AI adoption. This AI gap between large enterprises and nimble startups risks creating a two-tier AI economy in which tech-driven startups innovate more rapidly and outpace their more established competitors.
AI adoption is gaining momentum. In the Philippines, 80,000 businesses adopted AI solutions in 2024 — averaging more than nine every hour. A total of 250,000, or 21% of Philippines’ businesses have already adopted AI, showing a year-on-year growth rate of 50%. The productivity and economic potential of AI adoption is promising. 64% of Philippines’ businesses that have adopted AI reported an increase in revenue, at an average increase of 18%, while 66% expect an average of 22% in cost savings.
To better understand the scope of AI and where companies of different scales might be headed, AWS collaborated with Strand Partners to conduct the AI adoption survey in the Philippines. The “Unlocking The Philippines’ AI Potential” study surveyed 1,000 business leaders and 1,000 nationally representative members of the public in the Philippines.
Widespread but basic adoption of AI across businesses in the Philippines
While AI adoption is increasingly widespread in the Philippines, most businesses are not yet harnessing its most advanced uses, underscoring the need to deepen AI adoption to unlock the Philippines’s full AI potential. 78% of businesses in the Philippines remain focused primarily on basic use cases, like driving efficiencies and streamlining processes using AI – rather than innovation like developing new products or disrupting industries. Just 11% of businesses in the Philippines have advanced to the intermediate stage of AI adoption, and only 8% have reached the most transformative stage of AI integration, where AI is no longer just a tool but a core part of product development, decision-making, and business models.
Startups, in particular, are enthusiastic and innovative in their use of AI in the Philippines, adopting AI’s most advanced uses far more rapidly than more established companies. 45% of startups in the Philippines are using AI in some way, of which 40% are building entirely new AI-driven products with AI, leveraging the technology to its full potential. While 41% of large enterprises are using AI, only 7% have progressed to the most transformative stage of AI use, significantly outpaced by the one-third of startups (33%) who are doing so.
“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.”
AI Skills Gap, Regulatory Uncertainty Are Main Barriers to Deeper AI Adoption
A lack of skilled personnel is the leading reason that 57% of businesses in the Philippines say is preventing them from adopting or expanding their use of AI. Many of the businesses reported having the technology and the vision, but are unable to find the people to bring it to life. This puts the Philippines’s global competitiveness at risk and restricts economic potential, as AI literacy is expected to be required in 61% of jobs in the next three years, and only 26% of businesses feel prepared with their current workforce’s skillset. Funding is also a particularly important factor for startups in the Philippines, with 48% saying access to venture capital is crucial in creating an environment for growth.
The research also found that 42% of businesses are concerned about the slowdown of AI innovation and adoption from the potential introduction of new AI regulation, and 40% are worried about an increase in compliance costs. Businesses in the Philippines estimate that $19 out of every $100 spent on technology goes towards compliance-related costs, and 72% of businesses expect these compliance costs to increase further in the next three years.
The Path Forward for AI Innovation
The report uncovered three priority actions to overcome these barriers and unlock the full potential of AI across startups and large enterprises to avoid the emergence of a ‘two-tier’ AI economy. Firstly, invest in and build industry-specific digital skills programs to develop a digitally-skilled workforce to drive AI-led innovation and growth. Secondly, maintain clear and streamlined pro-growth regulation that is predictable and innovation-friendly, to help drive deeper AI adoption across all businesses. Lastly, with 52% of businesses saying they are more likely to adopt AI if the government leads, it will be critical to accelerate digital transformation in the public sector, especially in healthcare and education, and use public procurement to drive innovation.
AWS has been at the forefront of the Philippines' digital transformation journey since establishing its local presence in 2016. Through strategic infrastructure investments including Amazon CloudFront (2014), AWS Outposts (2021), Amazon IVS Points of Presence (2022), and the AWS Local Zone in Manila (2023), AWS has built a robust foundation for ultra-low latency workloads across the country. Demonstrating its commitment to innovation, AWS pledged US$230 million globally in 2024 to nurture startups, including Philippine teams developing cutting-edge generative AI solutions, while adding US$100 million to expand its AWS Generative AI Innovation Center. The company's dedication to developing local talent is evident in its successful upskilling of over 100,000 Filipinos in cloud technologies through programs like AWS Skill Builder, AWS Academy, and AWS re/Start 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.”
About Amazon Web Services
Since 2006, Amazon Web Services has been the world’s most comprehensive and broadly adopted cloud. AWS has been continually expanding its services to support virtually any workload, and it now has more than 240 fully featured services for compute, storage, databases, networking, analytics, machine learning and artificial intelligence (AI), Internet of Things (IoT), mobile, security, hybrid, media, and application development, deployment, and management from 114 Availability Zones within 36 geographic regions, with announced plans for 12 more Availability Zones and four more AWS Regions in New Zealand, the Kingdom of Saudi Arabia, Taiwan, and the AWS European Sovereign Cloud. Millions of customers—including the fastest-growing startups, largest enterprises, and leading government agencies—trust AWS to power their infrastructure, become more agile, and lower costs. To learn more about AWS, visit aws.amazon.com.
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