THE Trump administration’s renewed protectionist trade stance is expected to create cost pressures on US businesses, potentially driving a surge in outsourcing demand — an opportunity the Philippine outsourcing industry is well-positioned to capture, according to the recent market outlook of Colliers Philippines.
President Donald Trump, who began his second term in January 2025, has announced new tariffs, including a 25 percent levy on imports from Canada and Mexico and a 10 percent tariff on Chinese goods. He has also removed a key trade exemption, which previously allowed duty-free shipments under $800 from these countries.
These measures are likely to increase production and operational costs for US businesses reliant on imported goods. To remain competitive, companies may explore cost-cutting strategies, including shifting non-core operations to lower-cost outsourcing destinations, Colliers said.
PH as leading hub
With a large, English-speaking workforce, strong Western cultural affinity and competitive labor costs, the Philippines remains one of the world’s leading outsourcing hubs. US companies looking to offset rising expenses may expand their outsourcing operations in the country, particularly for services like customer support, information technology, finance and back-office operations.
The business process management (BPM) industry already contributes significantly to the Philippine economy, generating billions in revenues and employing millions of Filipinos. Increased demand from US firms could drive job creation, office space absorption and higher foreign direct investments in the country.
According to Colliers, uncertainty surrounding the US elections led to a 25 percent quarter-on-quarter drop in office space transactions in Metro Manila in the fourth quarter of 2024. However, leasing activity is expected to pick up, as past US election cycles have historically led to a 40 percent increase in net office space take-up in the succeeding quarters.
With a 19.8 percent vacancy rate in Metro Manila — partly due to vacated spaces from Philippine Offshore Gaming Operators — the BPM sector could take advantage of favorable leasing conditions. Additionally, outsourcing firms are increasingly expanding to provincial cities such as Cebu, Pampanga, Iloilo, Bacolod and Davao, where talent availability and lower operating costs make them attractive locations.
Despite the positive outlook, potential risks remain, Colliers said.
Trump’s campaign rhetoric included proposals to curb outsourcing and prioritize American jobs, which could impact long-term industry growth. However, no formal restrictions have been implemented yet.
Recommendations
To sustain momentum, Colliers recommends that the Philippine government enhance tax incentives, streamline regulations and invest in digital infrastructure.
The Create More Act, along with public-private partnerships in tech and connectivity, will be crucial in strengthening the country’s outsourcing appeal.
Industry leaders are also encouraged to diversify their client base beyond the US, targeting high-cost labor markets such as Australia, Europe, the Middle East and East Asia. By tapping into new markets, the sector can hedge against potential policy shifts in Washington.
With rising production costs pushing global firms to seek efficiency, the Philippines is in a strong position to capture outsourcing demand, drive economic growth and reinforce its status as a premier destination for business services. / KOC