How President Trump May Hurt (or Help) the Philippine BPO Industry

President Trump and the Philippine BPO Industry

There have been various news coverage on the election of Donald Trump, and how Trump’s “America First” policies could negatively impact our country’s thriving business process outsourcing or BPO industry. Many are concerned of possible US legislation that could discourage companies from further outsourcing. Or that they’ll make offshore services more expensive through some form of “border tax”. Analysts estimates well over 50% of BPO revenues emanating from the US or US companies. And some industry stakeholders, especially BPO employees, are frankly scared.

WHAT EXACTLY IS THIS THREAT?

The Philippines, by many metrics, have already taken over India as the number one destination for business process outsourcing. Most of the outsourcing comes from English-speaking countries and the US – the biggest revenue source. And the math is simple. We are the recipient of these jobs, and in the US, many are getting the pink slip as a result. Put in another way, what could have been a new job opening in America is now being staffed here in our shores.

Immigrants in America can claim that they take on the menial tasks the locals aren’t willing to do. But that same argument will not get us anywhere.  Certain products may require many plants within a supply chain to all move back. However, it may not be that complicated for business support services.  So is it simply a matter of time before Trump turns his attention towards us?  It’s not just our BPO industry that is at stake here. Construction and real estate (building landlords, residential housing developments, real estate agents), hospitality (restaurants, bars, fitness clubs), our auto industry, the insurance and mutual fund companies are also at risk. It’s all interconnected.

BUT IS IT ALL GLOOM AND DOOM? NO.

Trump simply wants to keep as many jobs in America and create even more, same as any leader would want for his/her own country. But he also says he’s a believer in trade for as long it’s “fair” trade. That being said, our total net exports (exports less imports) to the US was less than $900 million in 2013, as per official US trade data. While this figure has likely increased since it pales in comparison to Mexico’s 2015 net exports to the US of $49 billion. Or China’s, at $336 billion.  And considering Donald Trump is the author of the “The Art of the Deal”, I strongly believe he will be looking for a win-win solution.

“Cutting a deal” sure sounds like us needing to sacrifice or give up something. It won’t be a cakewalk, but the trade off, or kapalit in Filipino. It’s not about American companies simply putting the brakes on process outsourcing because it benefits no one. Industry leaders have or will undoubtedly make it clear, to both governments, that having more free (or “fair” trade as Trump would call it) is a win for all, rather than restricting trade that would negatively impact not just us, but also the American companies and consumers who ultimately benefit from lower business costs.

OUR CUT OF THE PIE

But what can we bring to the negotiating table? Well, let’s not forget we are a fast-growing population of over 100 million; in short, we are a big, big market.  For example, America is a big exporter of agricultural produce and they would certainly be happy to increase their exports to us.   I’m certainly no expert on bilateral trade negotiations, but offering to lower import tariffs on US produce could be one. And cutting a deal doesn’t have to be limited to tariffs and trade; perhaps we can throw taxes into the mix?  American corporations, in general, are subjected to final taxes of around 15 to 25% on dividends, interests, and royalties. Lowering these rates could be welcome news for US investors.

What I’m simply saying is we have a lot of cards up our sleeves too.

TAKEAWAY

Our government and business leaders fully understand the magnitude of the BPO industry’s contribution to our economy. Hence, I’m reasonably optimistic all parties will do what it takes to reach a deal that ultimately benefits businesses and consumers in both countries.

More importantly, I’m of the view that as our BPO industry further cements its leadership position over the remaining part of this decade, we can eventually set ourselves apart not for our lower labor costs but solely for our expertise and unparalleled service excellence.

Leave a Reply

Your email address will not be published. Required fields are marked *