IT-BPO players remain bullish: Despite threat of US anti-outsourcing bill

MANILA, Philippines - Major players in the information technology – business process outsourcing sector are unfazed by the reelection of US President Barack Obama that could result in the revival of talks on the passage of anti-outsourcing legislation in the US Senate.

 Benedict Hernandez, president and chief executive officer of the Business Processing Association of the Philippines (BPAP), said in a statement that companies in the US would continue to benefit amid the anti-outsourcing legislation pending before the US Senate.

 “While there has been speculation that anti-outsourcing legislation may be revisited, the Philippine IT-BPO industry will continue to support the US economy and American businesses to help ensure they are among the most competitive in the world while freeing up resources to create more jobs in the US,” Hernandez stressed.

 Last July, the US Senate failed to pass the Bring Jobs Home Act that aims to eliminate tax breaks for US companies outsourcing services and manufacturing jobs to other countries and provide a 20 percent tax deduction on costs associated with closing outsourced operations and transferring jobs to the US.

 However, Hernandez pointed out that numerous studies have shown that outsourcing has little negative impact on job losses and in fact fosters job growth in companies that outsource business processes.

 He cited a study conducted by economist Matthew Slaughter of Dartmouth’s Tuck School of Business wherein in the hiring practices of 2,500 US multinationals, nearly two jobs are created in the US for every job outsourced.

 “Outsourcing business services to the Philippines helps make American companies more competitive and profitable. Profitable companies hire more workers, both here and in the United States,” he said.

 A report by the Everest Group showed that the revenues of the global IT-BPO market is expected to reach at least $220 billion this year from only $35 billion in 2009.

 “Demand for global IT-BPO services is huge and continues to expand at a rapid rate,” he said. “Outsourcing is a win-win proposition, and we believe that both American and Philippine companies—and American and Filipino workers—will continue to benefit from the opportunities it provides,” Hernandez added.

 BPAP sees the strong growth of the industry being sustained next year with a 20 percent growth in revenues to $16 billion next year from the projected $13.6 billion this year and employment generation to 926,000 from 772,000.

 Under the Roadmap 2016, the local BPO industry expects to register a compounded annual growth rate of 20 percent in revenues hitting $25 billion by 2016 or about 10 percent of $256-billion global IT-BPO market share and 1.3 million direct hires.

 According to research and consultancy firm Everest Group, the global offshore services market is growing at a healthy pace, and will more than double by 2016 to $250 billion. Gartner reports that by 2016, the Asia-Pacific market for BPO excluding Japan would reach $9.5 billion.