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Industry and government officials said Wednesday that
the Philippine business process outsourcing (BPO) industry would not
likely suffer from US President Barack Obama’s crackdown on
outsourcing among American companies.
Also, an international
information and communication technology (ICT) research firm noted
that Obama’s tax plan would neither kill outsourcing activities
nor improve the US economy as a whole.
Jonathan de Luzuriaga, Business
Processing Association of the Philippines (BPAP) executive director
for industry affairs, told The Manila Times through e-mail that the
local outsourcing sector was closely monitoring this development,
although he said that based on recent reports, industry leaders
maintain that “there is little or no effect of such pronouncements
in their respective growth plans.”
“Outsourced jobs are usually
jobs that the US workforce is not keen on getting into in the first
place, and it is a constant challenge for them to fill up these
requirements,” de Luzuriaga explained.
On Monday, Obama announced that
the US government would squeeze offshore havens and US firms’
ability to profit from outsourcing jobs in a bid to save $210
billion.
“We are looking at this
pronouncement more of an internal US taxation reform initiative that
is intended to cover for its increased deficit rather than stopping
the flow of work to other countries like the Philippines,”
Monchito Ibrahim, Commission on Information and Communications
Technology (CICT) commissioner, told The Times in a separate e-mail
message. “With a globalized economy, measures like this will not
stop companies to move work to places where it can be done cheaper,
better and faster if it is the only way they can become competitive
and be able to sustain growth even during downturns.”
Ibrahim said the commission and
the outsourcing association have actually anticipated the US move,
as this was a consistent position of Obama even when he was just
campaigning for the presidency.
“This is why, today, we are
focusing our promotions to new markets like Europe, Japan and
Australia,” Ibrahim said.
De Luzuriaga added that outsourcing
association has been long bent into tapping other markets for
prospective clients besides the US. While the US remains the top
source of local outsourcing ventures, markets in Asia, Australia and
Europe provide new opportunities, he added.
Economic evolution
In a statement also on Wednesday,
global ICT research and advisory firm XMG Inc. said, “Offshoring
is a manifestation of an ongoing and long-term economic evolution.
It will not go away. It cannot effectively be outlawed.”
Latest research done by XMG shows
that the global economic slowdown created a “significant spike”
in outsourcing destinations, such as the Philippines, as outsourcing
helps firms reduce operating costs and maximize productivity levels,
the company said.
Ibrahim agrees. “In this
downturn, survival is foremost in the minds of companies. If
outsourcing is the best way for them to survive, it will actually
protect jobs [that can not be outsourced] back home.”
According to XMG: “The Obama
proposal of ending US companies’ ability to defer taxes on profits
made overseas will further dampen and squeeze net profitability
levels, but not to the point that it becomes the tipping point for
repatriating work back to the US or putting the brakes to offshore.
The US scenario of ongoing shortages of highly skilled labor for IT
and BPO, an aging workforce and the unavoidable high cost of
operating in the US continue to make the offshoring a viable
business strategy.”
--Ben Arnold O. de Vera
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