In keeping with the tradition of incoming U.S. presidents, Barak Obama has made much talk about the outsourcing of business processes to other countries like the Philippines and Indian. The average American is probably happy to hear that President Obama wants to protect US jobs from the world of outsourcing. But business leaders may not agree with this. It is hard to deny the economic advantages of using offshore firms to do work for US companies.
Firms who focus on telemarketing, lead generation, and inbound customer support find it more and more challenging to handle these business processes at home. Obama’s threat to eliminate tax breaks will probably not cause great pull-back from offshore outsourcing that is talked about.
Obama has promised to end tax breaks to companies who send work to offshore BPO companies. The new president is pushing a populist campaign promise to force American companies to keep jobs in the US, saying to US Congress: “We will restore a sense of fairness and balance to our tax code by finally ending the tax breaks for corporations that ship our jobs overseas.”
The experts say this is all part of the usual rhetoric as there is really no direct tax incentive awarded to US companies who transfer jobs to other countries. The US tax code does have a provision that allows American companies to defer income tax payments on offshore profits until they are repatriated back home, and this is one code that Mr. Obama does want to eliminate.
The Philippines does not seem worried. Their call center and business process outsourcing are as strong as ever, and government officials are predicting a 30 to 40 percent increase this year in outsourcing. Philippine business process outsourcing call centers that specialize in customer service and outbound telemarketing have historically had high growth rates and this trend should continue. As one business leader puts it “Tax breaks can’t substitute for the realities of economics”