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Outsourcing Trend Faces Challenges

Mounting political risks and the Trump administrations made in America rhetoric could discourage companies from shifting services work overseas.

By Susan Kelly | Updated on February 15, 2017
Over the past few decades, U.S.-based companies have shifted more and more chores previously performed in-house—from IT work and answering customer calls to finance and accounting tasks—to lower-cost locations around the world. That trend toward services outsourcing has now run up against two potential threats: increasing political risk around the globe and, here in the United States, the Trump administration’s emphasis on keeping jobs at home.

In just the last year, markers of the mounting risk have included the U.K. vote for Brexit and the U.S. election of Donald Trump. U.K. consultancy Verisk Maplecroft predicts that all regions of the world will see a decline in the stability of governments over the next three years. While the hazard is greatest in developing nations in the Middle East and Africa, European countries are also at risk, the firm said.

The Philippines, one of the world’s most popular outsourcing locations, is a high-profile example. The nation has had a hectic six months since Rodrigo Duterte became president last summer. Duterte has made combative comments about the United States, including announcing the Philippines’ “separation” from the U.S. last fall along with his preference for an alliance with Russia and China. Duterte also has supported extrajudicial killings of drug dealers and addicts in an attempt to control the nation’s drug problem, with Amnesty International estimating that 7,000 people have been killed since July.

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