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US Anti-Outsourcing Bill Rejected

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  • Posted: August 26, 2012

The "Bring Jobs Home Act," also known as the Anti-Outsourcing Act, has been rejected by the US Senate.  The bill's rejection was welcomed by the Business Processing Association of the Philippines (BPAP), the umbrella organization of the IT-BPO (information technology - business process outsourcing) and GIC (Global In-House Center) industry in the Philippines.

According to BPAP president and CEO Benedict Hernandez, the rejection of the bill confirms that outsourcing is a win-win situation for both American and Philippine businesses.  Outsourcing services to the Philippines, Hernandez said, help make US businesses more profitable and competitive.

The anti-outsourcing bill of the Obama administration would have taken out the tax breaks given to businesses that outsource manufacturing jobs and services to other countries.  The proposed bill would have also given a 20% tax deduction on costs related to closing down outsourced operations and transferring jobs to America.

Hernandez pointed out that profitable businesses hire more employees both in the US and abroad.  He added that several studies have demonstrated that outsourcing has little impact on loss of jobs and can, in fact, even free up company resources and help create more jobs at home.

The BPAP official also mentioned a study of the hiring practices of 2,500 US multinationals conducted by economist Matthew Slaughter from Dartmouth's Tuck School of Business, which showed that for every job outsourced, two new jobs are created at home.  The study also found that US jobs created by foreign multinational subsidiaries almost doubled over a generation, resulting in jobs for 5.4 million employees in the US.

Last year, the IT-BPO sector in the Philippines generated revenues of more than $11 billion and produced jobs for about 640,000 Filipinos.  According to industry projections, by 2016, the sector is expected to hit $25 billion in annual revenues and generate jobs for 1.3 million Filipinos.