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Philippines BPO Industry Spooked by Retracted US Expansion Plans

Industry members in the Philippines are increasingly worried about the future of call centers, with reports emerging that the U.S. BPO firms are halting expansion plans in the country.

The worry stems from a statement from Charito B. Plaza, Director-General of the Philippine Economic Zone Authority (PEZA), who revealed that foreign firms pledging to invest in the country had declined in both volume and value.

According to reports, investment pledges registered with PEZA fell 26% in 2016, because many U.S. firms are clueless as to which new protectionist policy President Donald Trump will devise next and what an impact it will have on their outsourcing activities.

“They’re worried. They are on a hold because they’d like to see what are (President Trump’s) other pronouncements,” reported Business World Online.

An earlier report from Reuters cast almost a similar picture. Citing reactions from Philippines businesses and BPO firms, the news agency reported that some trade delegations had deferred visits and potential foreign investors in the industry had been buying time by extending their due-diligence procedures.

The BPO industry is the second-largest source of income for the Philippines, employing 1.2 million people and generating $22 billion in annual revenue. The Southeast Asian country accounts for 12.6 % of the global market for BPO, particularly in call center services.

More than anything else, American firms account for nearly 70% of the outsourced jobs handled by the Filipinos, with Teleperformance, Qualfon, and Convergys being major players. Analysts say the Philippines will be hit hard, even if Donald Trump manages to return only a small number of jobs to the U.S.

Meanwhile, the country’s outsourcing lobby group, IBPAP, is doing everything it can to dispel the cloud of concern, saying it had not received any report from members about postponing expansion plans.

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For the Philippines BPO industry, the threat comes at a time it was planning to diversify beyond voice services and focus on higher-value IT support.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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