BPAP welcomes US Senate rejection of anti-outsourcing bill

MANILA, Philippines - The Business Processing Association of the Philippines (BPAP) has welcomed the rejection of an anti-outsourcing bill by the United States Senate.

If passed, the bill would have eliminated tax breaks for 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.

At least one senator, Orrin Hatch (R-Utah), claimed that there is no tax break for outsourcing, referring to the Bring Jobs Home Act.”

“It’s devoid of serious content because it is of political rather than economic priorities,” he said.

The bill failed to muster the votes required to end a Republican-led filibuster and bring it to a final vote. The vote was 56-42. Sixty votes were necessary to end the effort to kill the bill.

“Outsourcing business services to the Philippines helps make American companies more competitive and profitable,” said Benedict Hernandez, BPAP president and CEO.

“Profitable companies hire more workers, both here, and in the United States,” he added.

Numerous studies have shown that outsourcing has little impact on job losses; instead, outsourcing can free up resources to create more jobs at home.

“Dartmouth’s Tuck School of Business economist Matthew Slaughter, in a study of the hiring practices of 2,500 US multinationals, found that for every job outsourced, nearly two new jobs are created in the US,” said Hernandez.

In an earlier study, Slaughter found that American jobs created by subsidiaries of foreign multinationals almost doubled over a generation, employing 5.4 million US workers, almost five percent of private-sector employment, and paid them 31 percent more than American competitors.

“Outsourcing is a win-win proposition, and we are glad to see that both Philippine and American companies and our respective workers will continue to benefit from the opportunities it provides,” Hernandez said.

In 2011, the Philippines’ IT-BPO industry generated more than $11 billion in revenue and employed almost 640,000 Filipinos.

By 2016, it is expected to grow to $25 billion in annual revenue and employ 1.3 million, according to an industry roadmap.