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US Senate Votes, Stops Anti-Outsourcing Bill

Earlier this year, the outsourcing industry has been surrounded by the buzz that the Anti-Outsourcing Bill was proposed. Throughout the course of the proposition of the said law, it has been the center of political discussions between Democrats and Republicans. The bill was proposed to encourage American companies to host their contact centers within the boundaries of the United States instead of looking for outsourcing solutions providers outside the United States, particularly in India and in the Philippines. It has been known to most people who have been following the industry that the Philippines has been considered as the top destination for businesses who are looking for call center services, outshining India, its top competitor.

Recently, news broke off that the Anti-Outsourcing Bill has been blocked by the Senate of the United States with a 56-42 vote. In the event that the bill pushes through, it would definitely have a massive effect on the economies of both India and the Philippines. Also, it could also cost companies a percentage of their budget as there will be penalties should they wish to pursue off-shoring. As protection to American companies, those who will opt to have their operations within the United States will be provided with a 20 percent tax deduction on costs. But would the 20 percent be enough to match the amount of savings, and also the other benefits, that outsourcing companies pitch to their clients?

The Business Process Association of the Philippines (BPAP) has already voiced out its opinion on the said Anti-Outsourcing Bill before when it was proposed and now, they have once again released a statement regarding the Anti-Outsourcing Bill; this time, welcoming the news that it has been rejected.

Benedict Hernandez, president and CEO of Business Process Association of the Philippines, said that "outsourcing business services to the Philippines helps make American companies more competitive and profitable." This is primarily the reason why there are outsourcing companies who have become the trusted and preferred outsourcing partner of businesses across the globe.

There have been groups in the United States that create advocacies, such as the No Tax Breaks NY, that stand against contracting outsiders for call center services such as inbound customer support or outbound customer support. This is because they claim that outsourcing middle or back office jobs hurts their unemployment rate. However, according to the article cited earlier, there have been studies that debunk the notion that outsourcing pushes the unemployment rate in the United States to go up. In fact, the study by Matthew Slaughter suggests that for every job being outsourced, American firms create two jobs in the United States.

It may seem impossible to restrain businesses from outsourcing because of the benefits outsourcing services vendors provide their clients. Also, businesses are keen to keep their monetary resources at a healthy level and outsourcing restrains them from depleting their resources as one of the primary benefits of outsourcing is having the same level of work quality but at a cost-effective business model.

Author: Jamee C.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.