Trump’s tariffs could benefit Philippine outsourcing: Colliers
MANILA, PHILIPPINES — The conflict with Mexico and Canada, two of the United States’ main suppliers, and China, one of its biggest competitors, may have advantages for the Philippine outsourcing industry and the office market, according to Colliers Philippines.
U.S. tariffs lead to cost-cutting measures
U.S. President Donald Trump has put a 25 percent tax on imports from Canada and Mexico and a 10 percent tax on Chinese goods. These protectionist measures are likely to raise production costs for many American companies, especially those that depend on imported inputs.
“A more practical alternative for U.S. companies would be to cut costs by outsourcing non-core and support functions like customer service, IT, accounting, human resources, and the like to countries where labor is cheaper without compromising the skillset needed,” said Luis Pantaleon, the negotiator for office services at Colliers Philippines.
Philippines as an attractive outsourcing destination
The Philippines is ready to welcome this increased outsourcing demand due to its readiness. Colliers Philippines listed several benefits:
- Cheap labor
- A large number of college graduates who are proficient in English
- Cultural compatibility with the Western world
- Time zone compatibility that enables round-the-clock operations
“These cost-cutting measures thus present an opportunity for the Philippines, a leading global outsourcing destination, to absorb new demand for BPO services,” Colliers said in its blog.
This trend may also be good news for the Philippine office market, particularly in Metro Manila. With a current vacancy rate of 19.8% — largely a result of the departure of offshore gaming operators — BPO companies are positioned to seize better lease terms made available by providers.
But Colliers also urged for caution, pointing out, “A particular concern and it would be good to monitor this, is the side of protectionism that aims to protect jobs in America, which could cause outsourcing to slow down.”
To build on this opportunity, Colliers is advising the Philippine government to improve tax incentives, simplify regulations, and collaborate with the private sector to extend high-speed internet infrastructure. These steps will strengthen the Philippines’ position as a premier outsourcing center in the world.
