The US Anti-Outsourcing Bill and Its Possible Impact on OFWs

In the opening salvo post for 2012 entitled ”What’s In Store for 2012”, a reader expressed concern on possible deleterious effects on OFWs of the possible approval of  Anti-Outsourcing Bill currently pending in US Congress.

The concern is precipitated by President Barack Obama’s support of the Bill. As reported:

“In his State of the Union Address, Obama announced his support to the pending bill in the US Congress, which would remove the government incentives for companies, which continued to outsource jobs to countries like the Philippines.”

We all know that in presidential system of government, a bill has a strong chance of graduating into a law if there support by the Chief Executive of the country.

Just to push this line of thinking further, I supposed, in answer to the comment, that if the bill passes, OFWs may be hit 2-fold: 1) the loss of opportunities for local employment with the BPOs by returning OFWs; and, 2) the likely losses on investments in condo units where an increasing number of OFWs have dabbled in.

Of course, this is not to mention the possible adverse effect on the property sector in general which has enjoyed unprecedented boom thanks to the Business Process Outsourcing (BPO) sector.

I am of course, just thinking out loud, conjuring up possible scenarios without  much thought on how likely or unlikely these scenarios will happen.

These are just concerns. It does not really mean that the said anti-outsourcing bill will eventually be approved. And if ever it will be approved, it does not necessarily mean that there really will be much of an effect on the BPOs in the Philippines or elsewhere.

Well, first things first.

In the first place, I don’t think Obama will get reelected as I mentioned in an earlier post.

There are just too many problems in the US economy right now and the tendency for people in nations beset with problems is to blame their incumbent leaders and replace them. Regardless of whether or not the problems came before the incumbency of the current leaders.

In the second place, getting the bill passed is a hard-sell even if Obama gets reelected. If getting approval for a virtual life-and-death piece such as the debt-ceiling issue (which was agreed only at the last minute way back on August 2, 2011) proved too difficult, how much more for an issue far less urgent and less important.

In the third place, assuming the Bill gets passed, on second thought, I really don’t think it will have the deleterious impact which we fear, or are concerned about.

The anti-outsourcing bill provides for the withdrawal of government incentives to firms going on outsourcing route. It is extremely doubtful whether affected firms would prefer retention of government incentives to the huge cost benefits of outsourcing.

As per BPO industry estimates:

“The cost of hiring a Filipino call center worker would only be one-fifth of the cost of hiring an American call center worker.”

The advantages of outsourcing would therefore, far outweigh the loss of benefits on withdrawal of government incentives for US companies under the bill.

With the trend towards cutting costs in every area possible and with many firms’ markets still having not recovered to pre-crisis levels, the measure is like turning back the tides of history.

I can compare it to the campaign against pirated DVDs, a hopeless and desperate effort designed more to appease affected sectors than to make any real meaningful progress for the benefit of society.

It is symptomatic of society unable to adapt or adjust to changes and insist on outdated ways of doing things.

Back to the issue of impact to OFWs, we can of course, for the sake of discussion, assume the worst case that it will have a debilitating impact on OFWs.

For OFWs retrenched or going home for good, pinning ones hopes on BPOs – while worth trying – would be a poor strategy.

For OFWs thinking of investing in condo units, it is advisable to think twice or thrice and read or review my last post, ”Should You or Should You Not Invest in a Condo Unit”.

There is no better way than being prepared. There is so much uncertainty and so much risk in the air nowadays and one needs to be constantly on guard.

Maximizing savings rate or again, being literate in investment is always the best way to be prepared.