The Real Condition of Outsourcing in the Philippines

THE REAL CONDITION OF OUTSOURCING IN THE PHILIPPINES
(In response to Obama’s 2012 State of the Nation Address)

Last January 24, 2012, US President Obama delivered his State of the Nation Address from 9PM-10:17 PM (EST), in the chamber of the United States House of Representatives. The US president's State of the Nation Address was not supposed to be a concern of any Filipino citizen, especially those that have lived their whole lives in the Philippines and do not have any plans of stepping into the "land of the brave", except when it talked about inhibiting the outsourcing capacities of multinational US companies--which has become pretty much the bread and butter of the Philippine Economy. Without really getting into the truth of the matter, more than a million of Filipinos were scared of losing their jobs; a lot of breadwinners were worried of what's going to happen to their families if they lost their jobs; and many people were anxious of the immediate and adverse effects this State of the Nation Address has on their lives, specifically on the financial aspect. Are their fears justified or there’s really no ground for it?

No one can blame them if they reacted that way; after all, the media reported it as if changes would take effect the next day. Right after they heard the news, majority of the people felt that the booming industry of Business Process Outsourcing (BPO) which has provided thousands, even millions of jobs in the Philippines is now coming to an end. It's not unknown to anyone in the Philippines that the biggest chunk of recruitment, hiring, and employment in the country comes from the BPO sector; and just thinking that it would be stopped, the Filipino people can more or less already get a picture of how the economy would fair given the sudden increase of the unemployment rate.

However, scrutinizing the facts and proofs about the issue, many experts think and have agreed that the news is a bit exaggerated. Even though, the public’s concern was not unfounded, but admittedly it was unnecessary—at least at this point.

Strictly speaking, the US President did not mention the word "ban" in his speech, nor did he mention the complete "stop" of offshore outsourcing among the multinational US companies. In his State of the Nation Address, he pushed for a bill that can reform their tax codes. This is because he has realized that most companies who have outsourced offshore, actually gets a lesser or no tax deductions by doing so; and thus, to discourage them from continuing to outsource and contributing to the increasing US unemployment rate, President Obama wanted a reform on their tax regulations which would then allow these companies to have a big tax deductions and made them pay a "basic minimum tax" fee for outsourcing offshore.

Upon evaluating the president's speech further, the abolishment of outsourcing in the country is still fully dependent on the tax laws which still have to be created by the law-making body of the state. Although he has assured the congress that the moment the bill will be submitted, he will sign it right away so that it can be applied immediately. However, everybody knows that passing a bill and turning it into a law is still quite a long process to take. Thus, if indeed things would go according to the president's speech, it will buy us, at the least, 3 years to exhaust all we can in the BPO industry and for our government to create contingency plans to save our economy as well as our fellow Filipino men from the impending crisis brought by the dissolution of offshore outsourcing from the US.