By Justine Irish D. Tabile, Reporter
US COMPANIES may offshore more technology roles to the Philippines and other low-cost markets as President Donald J. Trump’s revamped visa rules raise costs for bringing in foreign talent, analysts said.
The White House last week imposed a $100,000 annual fee on new H-1B visas, the program that allows companies to hire skilled foreign workers in areas such as information technology, engineering and finance. The levy, paid by employers, adds to restrictions already making it harder to secure visas for staff.
“It is going to cause more offshoring,” Jimit Arora, chief executive officer (CEO) at Everest Group Ltd., told BusinessWorld on the sidelines of the International IT-BPM Summit in Manila on Tuesday.
“Because people will not want to bring the people onshore, you drive more offshoring. And as you are driving more offshoring, you look at not just India; you also look at other geographies,” he added.
Companies already face concentration risks from their dependence on India, the world’s biggest hub for outsourced IT and business-process services, he said. The visa rules could accelerate investments from Mexico and Canada to the Philippines and India, where global capability centers (GCC) are expanding.
“You have a lot of Canadian financial institutions that use the Philippines, and the Canadian labor market is going to get tighter,” Mr. Arora said. “So those people will start putting more in their global capability centers either in India or in the Philippines.
The policy could also speed adoption of artificial intelligence as companies try to cut labor costs, he added.
Jonathan R. Madrid, president and CEO at the IT & Business Process Association of the Philippines (IBPAP), said the direct impact on the country would be modest.
“For the majority of the business process outsourcing industry or even the GCC industry, it should have a very minimal impact, if any,” he told BusinessWorld at the same event. “I took a look at the total number of H-1B visas, and less than 1% are with Filipinos.”
The US program has long been dominated by Indian workers, who account for about 70% of approvals. Mr. Madrid said that means India is likely to see a bigger boost from firms shifting offshore roles, though the Philippines could capture spillover demand for certain tech positions.
“This will have a bigger impact if we have more technology talent,” he said. “Because to have an H-1B visa implies that you have a certain level of technical skills. It is not like you are just entering the country for a general reason.”
The Philippine Chamber of Commerce and Industry (PCCI) echoed concerns about the costs, warning that these could discourage firms from hiring Filipino workers in the US.
“The additional cost of the H-1B visa will increase the cost of hiring people from the Philippines to the US, which will lessen the job opportunities there,” PCCI Chairman George T. Barcelon said in a Viber message. “This will induce more US companies to offer offshoring jobs.”
The Philippines is one of the world’s biggest outsourcing destinations, with more than 1.7 million employed in the IT and business-process management sector. Industry revenue is expected to exceed $40 billion this year, making it the country’s second-biggest source of foreign exchange after remittances.
Data from the Philippine Statistics Authority showed that 9.8% of the 2.16 million overseas Filipino workers in 2023 were deployed to North and South America. Most, however, were in lower-skilled service roles rather than the technical jobs typically covered by H-1B visas.
