Biden ‘outsourcing tax’ promise clouds outlook for BPO industry

biden outsourcing tax promise clouds outlook for bpo industry - Biden ‘outsourcing tax’ promise clouds outlook for BPO industry

By Jenina P. Ibañez, Reporter

A PROTECTIONIST stance by a Biden administration could come in the form of a tax on outsourced operations, which may dampen the prospects of the business process outsourcing (BPO) industry, the head of an industry advisory firm said.

Democratic presidential candidate Joe Biden, the apparent winner of the Nov. 3 election, has floated an offshoring tax penalty, tax credits for investment that creates domestic manufacturing jobs, and the closure of tax loopholes on foreign profits.

Outsource Accelerator Chief Executive Officer Derek Gallimore in an online interview said if disincentives to outsourcing become a “significant policy” of a Democratic government, it could have a short to medium-term effect on Philippine BPOs.

“With COVID, we’re going to go into probably the biggest economic depression the world has ever seen. So that means people will be justifying or looking to save domestic jobs, so that might motivate (Mr. Biden),” he said.

He said outsourcing, however, still has the potential to grow.

“Fundamentally I don’t think a president changes that much,” he said, adding that the pandemic could also motivate global companies that are cutting costs to consider outsourcing.

Information Technology and Business Process Association of the Philippines (IBPAP) once again reduced its revenue and employment targets up to 2022, as growth is expected to be flat for the rest of the year due to the ongoing quarantine.

The potential effects of US policy on BPOs will still depend on actual measures taken by any incoming administration, delaying any sense of clarity on which particular outsourcing sectors could be affected by reshoring.

“It’s popular for all politicians to say that we’re going to keep jobs at home,” Mr. Gallimore said, but noted that the Biden campaign promoted specific policies on offshoring.

“Whether he follows through on that is a different thing,” he said.

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