No cause for worry for BPOs

President Duterte’s ranting against the United States is causing jitters to the country’s business process outsourcing (BPO) industry, which employs more than a million Filipinos.

Last year, the industry brought in $22 billion in revenue making it the second largest source of income for the Philippines after Filipino overseas workers.

Considering that approximately 77 percent of BPO services are for American or US-based companies, concerns have been raised that Mr. Duterte’s actions may adversely affect the BPO companies’ operations and, in the process, the families that depend on them for their livelihood.

The apprehension is understandable. This is the first time in our history that a President has publicly shown animosity toward the country that supposedly maintains special relations with the Philippines.

To aggravate matters, the President is cozying up to China which is presently engaged in a test of wills and competition for hegemony with the US in this part of the world.

Although the US government may be discomfited by Mr. Duterte’s unprecedented “anti-American” stance, it is doubtful if that sentiment is shared by the American companies concerned as to influence them into terminating or reducing their BPO presence in the Philippines.

Bear in mind that these companies chose the Philippines for their BPO requirements because of the Filipinos’ fluency in English, familiarity with Western practices, and willingness to work during ungodly hours for wages that are a fraction of that paid to their American counterpart.

Low operating costs and high profit margins are the principal reasons behind the choice of the Philippines as BPO site for American companies. If at all, historical ties or affection for their former colonial wards played a minimal role in that decision.

Thus, despite the fact that China has a repressive government and is continually at odds with the US government over human rights violations, many American companies moved their manufacturing operations to China to take advantage of its cheap labor, efficient power resources and loose regulatory requirements.

The verbal skirmishes between China and the US over territorial issues in the South China Sea, including close maritime shaves in disputed maritime areas, have not discouraged or prevented American companies from maintaining their business in China.

The profits that can be made from the disposable income of more than one billion Chinese are too good for the American companies to ignore in the name of ideology consistency or to show support for American foreign policy.

If the roles were reversed, i.e., Chinese companies are the clients of Philippine-based BPO companies and the President railed against China, it will not take 24 hours before the Chinese companies sever their business relations with the BPO companies.

It will be recalled that in 2013, shortly after the Philippines filed an arbitration case against China over its encroachment of certain islands in the South China Sea, Chinese travel agencies dropped the Philippines from their roster of tourist destinations and Chinese traders stopped their importation of Philippine fruits.

Although other reasons were cited, these moves were no doubt taken upon the instructions of the Chinese government in retaliation for the filing of the case.

The US-based clients of the BPO companies are not made of the same stuff as the Chinese companies. There are only two reasons an American company will not do business in a foreign country: First, there is a law in the US or that country that prohibits it, and second, it will not be profitable.

Bottom line, as long as it makes good business sense (read: profitable) for American companies to engage the services of Philippine-based BPO companies, they will maintain their business ties regardless of President Duterte’s antics.