Trade war: Bad for the outsourcing industry?

The G20 or Group of Twenty (an international forum for the governments and central bank governors from 19 countries and the European Union) held in Japan ended with the world’s largest economies (USA and China) declaring a truce in their trade war. 

While the truce could be a welcome development, we have to remember that it is just a truce.  If we say, truce, it simply means, temporary or “a short interruption in a war or argument”. 

Therefore, it can either be seen as a significant step towards a permanent treaty or agreement or it could be a prelude to a full blown trade war.  

However, knowing fully well President Donald Trump’s flip-flopping propensities on important issues, what he claims now as a truce could be just a ploy to appease his loyalists in the USA who are slowly drifting to the other side of the political fence. 

The political reality though was that President Trump’s victory in 2016 election could be attributed to his call during that year’s campaign to bring back jobs to the United States of America. 

Therefore, whether there was a truce or none at all, still, he will, most likely, go for this initiative to lure back disillusioned supporters. Hence, the American-owned BPOs’ continuous stay in the country isn’t guaranteed. 

Precariously for us, this is an initiative where President Obama and President Trump agree. To recall, such idea of bringing back outsourced jobs to the USA was also President Obama’s campaign promise in his reelection bid in the 2012 Presidential Election. Remarkably, in early 2012, he enjoined American businessmen to invest in America at the White House “Insourcing American Jobs” Forum.  Then, the forum focused on “the increasing trend of insourcing – where companies are bringing jobs back to the USA and making additional investments in America”. 

Curiously, one of the attendees in such 2012 forum represents an industry that has been bringing in the needed dollars in the country, NOVO 1’s CEO Mary Murcott. Scarily, in a startling revelation, Miss Murcott stressed that “many American companies that began using offshore call centers 10 or 15 years ago (17 or 18 years ago, by now) are bringing those call centers and contact centers back home, but nobody seems to want to talk about it.”  

Though we might just brush aside her claims as a mere discourse or an act of patriotism, Miss Murcott maintained that American companies “can save 15 percent by bringing their contact centers back to America from India and the Philippines.”

Sadly, we can’t help but also agree with Miss Murcott that what is left for call centers now are the “hard calls”. The “easy calls” or those that are easy to resolve are efficiently handled by the company’s website or by phone via interactive voice response. As such, she is of the opinion that the Filipinos are not up to it (hard calls) because, for one, most of the agents are not familiar with the USA and its diverse culture. 

Moreover, the federal government and some states have been giving grants and incentives to those companies that will bring their operations back to the USA.

Notably and scarily too, the London-based think tank Capital Economics said, lately, that the Philippines stands to be the biggest loser in Asia, if US President Donald Trump pushes through with his threat to punish American firms outsourcing jobs. 

We can’t help but agree to this observation. Why? One of the major contributors to our economy is the IT-business process outsourcing (IT-BPO) industry. Buoyed largely by the continuously growing demand for its services from the global offshoring industry (particularly, in the voice and non-voice sectors, healthcare information management, global in-house centers, as well as, gaming and animation), it raised its trajectory further upward at a pace no other industry came close behind. 

In fact, if the trend continues, some economists and industry players believe that the IT-BPO industry shall surpass the remittances of the overseas Filipino Workers (OFWs) in due time.

Obviously, therefore, if President Trump make true his threat of bringing back outsourced jobs to the USA, this industry will certainly suffer. Considering the significance of its contribution, logically, the country’s economy will be badly hit.