Outsourcing will endure U.S. count

American businesses in the Philippines do not have apprehension over the outcome of the United States Presidential Elections on 5 November.

“They always expand in the Philippines regardless of the administration. Therefore, there are no immediate concerns we have heard from them,” Celeste Ilagan, chief operating officer of the Information Technology and Business Process Association of the Philippines (IBPAP), said at the sidelines of a forum.

The Center for Strategic and International Studies (CSIS) study on US investments in the Philippines was the topic of the forum.

Ilagan said they remain poised in the robust growth of the IT-BPM sector, pegged at $38 billion for this year with a projected workforce headcount of 1.82 million towards the end of 2024.

“We are confident in the growth of the IT-BPM industry as well as some aggressive growth targets in terms of employment and service export revenue,” Ilagan maintained.

Based on the latest report of The Guardian on Monday (Manila time), new polling shows Kamala Harris leading among early voters in the country’s battleground states, with less than 48 hours to go in the US election and more than 77.6m votes already cast.

The Democratic candidate has an 8 percent lead among those who have already voted, while her opponent, Donald Trump, is ahead among those who say they are very likely to vote but have not yet done so, the report said.

Sector to watch out for

IT-BPM was one of the sectors to watch out for, in the study presented by CSIS’ Southeast Asia Program research fellow Japhet Quitzon.

The study indicated US businesses have outsourced services to the Philippines in the last few decades, and US investment has played a crucial role in the development of the IT-BPM sector.

“The IT-BPM sector covers a gamut of services in the Philippines, managing certain aspects of business operations for third parties. With its young, tech-literate, and largely English-proficient population, the Philippines presents an ideal location for US IT-BPM investments,” the study said.

From 2014 to 2023, the Philippines benefited from nearly $5.2 billion worth of US direct investment for professional, scientific and technical services.

Also, the study indicated that IT-BPM companies are often desirable places of employment for Filipinos.

“US-owned companies, ranging from American Express to Synchrony and Accenture, rank among the top of a ‘best workplaces’ list compiled by Great Place to Work, a platform that uses employee data to certify workplaces with good levels of trust and work culture,” the study said.

The IT-BPM sector is still concentrated in a few urban centers, with Bacolod, Cebu, Clark, Davao and Iloilo being the main hubs.

“Through the Digital Cities 2025 initiative, the government is providing basic digital literacy and skills training in more rural provinces, which will pay dividends as the Philippines continues to advertise itself as an IT-BPM hub to US investors,” according to the study.

Aside from the IT-BPM sector, the study cited other sectors the US is taking advantage of in terms of investments: renewable energy, semiconductors, agriculture, defense and aerospace manufacturing, critical minerals and electric vehicles, and logistics and shipping.

According to the study, more work must be done regarding institutional barriers to trade and investment.

In the United Nations Conference on Trade and Development’s World Investment Report 2023, the Philippines ranked sixth among its Southeast Asian peers in foreign direct investment flows.

Under the Marcos administration, the Philippines aims to improve its standing to second by 2028.

A 2022 amendment to the Public Service Act, made effective in 2023, allowed full public ownership of industries such as airports, railways and telecommunications, creating a new area of opportunity for foreign investors.

The same year, an amendment to the Foreign Investment Act allowed foreign investors to set up and fully own domestic enterprises, easing access to the market.

“In 2024, the House of Representatives and Senate debated whether to amend the constitution to promote foreign investment. But those efforts have stalled until at least the 2025 midterms,” the study said.