The proposed “Keep Call Centers in America Act” is a U.S. Senate bill that poses a significant risk to the Philippines’ booming business process outsourcing (BPO) industry. This legislation aims to reverse the trend of offshoring call center jobs by imposing penalties on companies that move operations overseas. If passed, this act could have a ripple effect on the Philippine economy, particularly on its BPO sector and the real estate market.

The Act’s Provisions and Their Implications
The core of the “Keep Call Centers in America Act” is to discourage offshoring by making it less economically attractive. Key provisions include:
Public Offshoring List: The bill requires the U.S. Department of Labor (DOL) to create and maintain a public list of employers that have relocated call center work overseas. This public disclosure could lead to reputational damage for companies.
Loss of Federal Benefits: Businesses on this list would become ineligible for new federal grants, loans, and certain contracts. This is a major disincentive, especially for companies with significant government business.

Customer Disclosure and Transfer: The act mandates that companies must disclose the physical location of a call center agent at the beginning of a call and, if the agent is outside the U.S., provide the customer with the option to be transferred to a U.S.-based agent. This provision is designed to encourage customers to demand domestic service.

These measures are intended to push companies to reshore jobs to the U.S. and could directly threaten the Philippines’ BPO industry, which relies heavily on U.S. investments. North America accounts for over 70% of the Philippines’ BPO sector’s investments, making it highly vulnerable to this kind of protectionist legislation.

Impact on the Philippine BPO Industry
The Philippines’ BPO industry, particularly the call center segment, has been a key driver of economic growth. It’s a massive employer, with over 1.9 million workers and projected revenues of $40 billion in 2025.  The “Keep Call Centers in America Act” could seriously disrupt this growth.

Threat to Job Security: The bill’s potential to reverse U.S. investments could jeopardize hundreds of thousands of jobs in the Philippines. While industry groups like the Information Technology and Business Process Association of the Philippines (IBPAP) have downplayed immediate risks, economists acknowledge it’s a clear threat to the sector’s future growth.

Forced Diversification: To mitigate the risk, the industry may need to diversify its client base beyond the U.S., targeting markets in Europe, Australia, and Asia. This also reinforces the need to move up the value chain from simple call center work to higher-value services like IT, software development, and healthcare information management.

The AI Factor: The proposed act also raises the issue of AI in customer service. It requires companies to disclose the use of AI and offer a transfer to a human agent, further complicating the outsourcing landscape and potentially accelerating the adoption of AI as a cheaper alternative to human agents.

Impact on the Philippine Office Leasing Market
The BPO industry is the primary tenant of office spaces in the Philippines. It accounts for a significant portion of the total office space demand nationwide. Therefore, any slowdown in the BPO sector would have a direct impact on the office leasing market.
Increased Vacancy Rates: A decrease in demand from U.S. BPO clients could lead to higher vacancy rates in major business districts like Metro Manila, Cebu, and Davao. Landlords might be forced to offer more flexible lease terms and lower rental rates to attract and retain tenants.

Shift to Flexible Spaces: The uncertainty caused by the U.S. legislation, combined with the growing trend of hybrid and remote work, could accelerate the demand for flexible and co-working spaces. Companies may be hesitant to commit to long-term traditional leases, preferring agile solutions that allow them to scale up or down easily.

A “Flight to Quality”: Despite the potential headwinds, the Philippine office market is showing resilience. We are seeing a “flight to quality,” where occupiers are increasingly focused on prime Grade A office assets that are well-located and offer sustainability features. This trend could continue, with landlords of older, lower-grade buildings facing the brunt of reduced demand.

For investors, choose REITs which are diversified and not overly reliant on office properties. Also check if those office buildings are in prime locations. With the recent earthquakes, being geographically spread out would be an important consideration as well.