Over 1 million BPO jobs at stake if US firms say goodbye to Philippines

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philippines_bpoEconomists and senators warned that Philippine President Rodrigo Duterte’s cheeky “goodbye” to the US was not the smartest move in a country where more than a million of service jobs are tied to many large US companies that operate business process outsourcing (BPO) there.

It would rather be a shot in the own foot to turn away from the US in economic terms, particularly in large urban areas like Manila and Cebu City where many young people rely on call center jobs, they argue.

Estimations are that about 1.2 million Filipinos would lose employment if US BPO operations pull out of the Philippines.

Many of them are huge multinationals, including IBM, Microsoft, Amazon, American Express, JP Morgan, Wells Fargo, Accenture and Citibank, just to quote a few, operating call centers with service hotlines and other back office processes.

The BPO industry is the second largest source of foreign income for the Philippines after overseas workers’ remittances, generating $22 billion in revenue in 2015. By one estimate, 77 per cent of BPO services are done for US companies. According to earlier forecasts, by the end of this year the sector would employ 1.3 million people in the Philippines, according to the country’s IT and Business Process Association.

“I am concerned especially over the economic backlash. The US is still the biggest trading partner of the Philippines, and also the BPOs are a cause for concern,” said Senator Joseph Victor Ejercito.

“This matter should have been studied thoroughly. We could pursue an independent foreign policy without necessarily cutting ties with the US,” he said.

Gary C. Alejano, an opposition congressman, warned of serious economic effects of cutting ties with the US.

“It could impact our economy in terms of the investments and opportunities that we are enjoying right now like the growing BPO industry with US companies as its main client,” he said, adding that overseas foreign workers in the US comprise some 35 per cent of remittances to the Philippines. “I don’t think China could match that.”

However, Communications Secretary Martin Andanar is confident that there would be no effect on the BPO sector as it was “in the best interest of US businesses to keep their BPO operations here,” as they would benefit from cheaper labour cost in the Philippines compared to the US.

He also noted the capability of Filipino BPO workers to speak English in American, British and Australian accents, which gives them a competitive edge over other countries in the region, and also India, its main BPO competitor.

Apart from the BPO sector, the Philippine sugar industry could be another casualty of a divorce from the US, since the sugar quota to the US might also be adversely affected.

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Economists and senators warned that Philippine President Rodrigo Duterte's cheeky "goodbye" to the US was not the smartest move in a country where more than a million of service jobs are tied to many large US companies that operate business process outsourcing (BPO) there. It would rather be a shot in the own foot to turn away from the US in economic terms, particularly in large urban areas like Manila and Cebu City where many young people rely on call center jobs, they argue. Estimations are that about 1.2 million Filipinos would lose employment if US BPO operations pull out...

Reading Time: 2 minutes

philippines_bpoEconomists and senators warned that Philippine President Rodrigo Duterte’s cheeky “goodbye” to the US was not the smartest move in a country where more than a million of service jobs are tied to many large US companies that operate business process outsourcing (BPO) there.

It would rather be a shot in the own foot to turn away from the US in economic terms, particularly in large urban areas like Manila and Cebu City where many young people rely on call center jobs, they argue.

Estimations are that about 1.2 million Filipinos would lose employment if US BPO operations pull out of the Philippines.

Many of them are huge multinationals, including IBM, Microsoft, Amazon, American Express, JP Morgan, Wells Fargo, Accenture and Citibank, just to quote a few, operating call centers with service hotlines and other back office processes.

The BPO industry is the second largest source of foreign income for the Philippines after overseas workers’ remittances, generating $22 billion in revenue in 2015. By one estimate, 77 per cent of BPO services are done for US companies. According to earlier forecasts, by the end of this year the sector would employ 1.3 million people in the Philippines, according to the country’s IT and Business Process Association.

“I am concerned especially over the economic backlash. The US is still the biggest trading partner of the Philippines, and also the BPOs are a cause for concern,” said Senator Joseph Victor Ejercito.

“This matter should have been studied thoroughly. We could pursue an independent foreign policy without necessarily cutting ties with the US,” he said.

Gary C. Alejano, an opposition congressman, warned of serious economic effects of cutting ties with the US.

“It could impact our economy in terms of the investments and opportunities that we are enjoying right now like the growing BPO industry with US companies as its main client,” he said, adding that overseas foreign workers in the US comprise some 35 per cent of remittances to the Philippines. “I don’t think China could match that.”

However, Communications Secretary Martin Andanar is confident that there would be no effect on the BPO sector as it was “in the best interest of US businesses to keep their BPO operations here,” as they would benefit from cheaper labour cost in the Philippines compared to the US.

He also noted the capability of Filipino BPO workers to speak English in American, British and Australian accents, which gives them a competitive edge over other countries in the region, and also India, its main BPO competitor.

Apart from the BPO sector, the Philippine sugar industry could be another casualty of a divorce from the US, since the sugar quota to the US might also be adversely affected.

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