Contact centre industry in the Philippines and India gears up to fight US protectionist move

NEW DELHI/MANILA - When Ms Mae Caluya looks at the future of the Philippine outsourcing industry – one of the world’s largest – she fears executives like her are in for a rough ride.

The 46-year-old senior director for operations at a call centre in Manila oversees major client accounts and workforce planning. She believes those in management roles are particularly vulnerable.

“The first to go are people like us in management,” Ms Caluya told The Straits Times, noting firms tend to retrench higher-paid executive and senior staff first to cut costs.

Her concerns have intensified following a proposal in the US that could make it harder or less attractive for American firms to outsource customer service work overseas, including to the Philippines and India, two of the world’s largest call centre hubs, where millions of jobs and billions of dollars in export earnings are linked to the US market.

The US Federal Communications Commission (FCC) is currently seeking comments from the public until June 22 to a proposal made earlier this year to encourage American businesses to bring call centre jobs back to the US and try to improve customer service at existing call centres.

Among the measures being discussed are ways to encourage and facilitate basing call centres in the US, requiring service providers to disclose the location of the call centre during customer interactions and requiring call centre workers to be proficient in American Standard English as well as trained appropriately to resolve US customers’ problems.

The move, seen by many outside the US as a protectionist non-tariff barrier, has raised concerns in India and the Philippines, where US outsourcing has, over the years, helped them create millions of jobs, increase their export earnings, develop a skilled workforce, and integrate themselves deeply into the global economy.

In the Philippines, the business process management (BPM) industry, which includes contact centre services, employs about 1.8 million workers and generates roughly US$38 billion in annual revenues.

And in India, the BPM sector’s revenue was estimated at US$59 billion for the financial year ending March 2026. The US is the biggest market for BPM service exports from both these countries.

Nearly 70 per cent of American companies have outsourced at least one business function to a range of foreign countries, driven by the need to cut costs and increase efficiency. The FCC, however, argues that this not only took jobs away from Americans, it also created a range of other problems.

This includes poor customer service because of communication barriers, bad actors who use the training and infrastructure of legitimate call centres to defraud Americans, including scammers who present themselves as legitimate customer-support providers. The FCC also flags risk to privacy, data protection and even national security because of offshoring.

Industry leaders in the Philippines and India are closely watching for any fallout on their businesses from the FCC proposal.

Jack Madrid, president and CEO of the IT and Business Process Association of the Philippines (IBPAP), said the body had submitted its position to the FCC in the consultation process and was coordinating closely with Philippine government agencies.

“We are aware of the potential implications on legitimate offshore operations and globally integrated delivery models,” he told ST.

The FCC’s public comment process does not formally solicit input from foreign governments or industry bodies, meaning IBPAP’s submission, like NASSCOM’s in India, is a voluntary attempt to influence a domestic US rulemaking that could upend a sector employing millions of Filipinos and Indians.

The issue has also drawn attention from Philippine policymakers. The Philippine House of Representatives has adopted a resolution urging the Department of Trade and Industry and Department of Foreign Affairs to engage US counterparts on the matter, while Philippine Ambassador to Washington Jose Manuel Romualdez has said Manila is working with lawmakers and industry stakeholders to seek exemptions for the country.

NASSCOM, the apex advocacy group for the Indian information technology and business process management industry, has argued against “broad location-based restrictions or arbitrary offshore caps” in its response to the FCC’s proposal.

“Our view is that the focus should be on distinguishing between trusted providers and bad actors and not on onshore and offshore delivery,” Shivendra Singh, Vice President & Head-Global Trade Development at Nasscom, told ST. “We are fully supportive of any effort that supports consumer protection and anti-fraud objectives, and are willing to collaborate on targeting illegal robocalls and bad actors.”

This proposal, if it goes ahead, could lead to forced onshoring, potentially causing unintended consequences, such as cost increases and service quality reductions for American consumers, Singh noted. “Our ask is to create a trusted offshore provider registry,” he added.

The FCC proposal is part of a wider trend of American legislative proposals, administrative actions, and policy initiatives in recent years that have sought to increase the scrutiny of high-skilled immigration programmes and encourage domestic hiring.

One was the End H-1B Visa Abuse Act of 2026, a bill currently with the House of Representatives, which seeks to impose a three-year pause on new H-1B visas and cut the annual cap on these visas from 65,000 to 25,000.

Indian workers hold the vast majority of H-1B visas, which allow American employers to hire foreign professionals for jobs that require specialised knowledge. Around seven out of 10 of these visas went to Indians in the US fiscal year ending September 2024.

Other restrictive developments include a proposed rule by the US Department of Labor to change prevailing wage methodologies, which would raise wage levels for various categories of foreign workers, increasing labour costs for employers in the US.

“While several of these measures remain proposed and not in force, taken together they reflect a directional shift toward tighter oversight, higher cost structures, and increased scrutiny of cross-border service models,” added Singh.

But many industry executives argue that artificial intelligence (AI) may pose an even greater long-term challenge to the call centre industry than US protectionist measures.

For Ms Caluya, the warning signs appeared long before the latest moves in Washington. She said companies across the sector had already been grappling with declining call volumes, shrinking hiring forecasts and growing pressure from AI tools that can now perform many routine customer service functions once handled by human agents.

“We’ve already noticed a reduction of headcounts,” she said. “The basic customer service accounts are slowly seeing less volume.”

As AI reduces the need for human agents in basic tasks, Prasanto Roy, a Delhi-based technology and public policy consultant, noted business process outsourcing (BPO) firms ought to fully pivot away from selling their services merely on the basis of cheap labour to focusing on technology-driven, high-skill, and value-added services so that they can stay competitive.

“BPOs must move from their old per-seat business model to charging based on what they actually deliver, such as charging per customer issue resolved, shifting the industry toward performance and value-based pricing models,” he said.

“And they must monetize the AI value chain by building further on it, not fight it,” he added, noting how some Indian BPOs are shifting their call agents into specialised AI roles such as data labellers, trainers and prompt engineers.

In May 2026, the Contact Center Association of the Philippines, the premier non-profit organisation for the country’s BPO sector, rebranded itself as the Customer Xperience Association of the Philippines.

This change from ‘Contact Center’ to ‘Customer Xperience’, Roy noted, reflects the “aspirational shift” toward higher-value, AI-enabled services rather than just traditional voice-based transactions.

According to Madrid, demand continues to grow for higher-value services requiring specialised expertise, including analytics, cybersecurity, customer experience management and AI-enabled support functions.

Roy added that BPOs must also factor in American concerns around protecting sensitive customer data that may need to be handled in the US by its citizens. “They must therefore go in for blended delivery models, building centres in the US for compliance, if needed,” he told ST.

Meanwhile, all this uncertainty has prompted Caluya to prepare contingency plans of her own. Back in 2024, she was retrenched by a call centre when her management post was deemed redundant.

Fearing this could happen again with the FCC proposal, Caluya is considering consultancy work or a return to academia if conditions deteriorate further. While she believes the industry will continue to play an important role in the Philippine economy, she worries most about rank-and-file workers who rely on BPO jobs as a pathway to the middle class.

“The regular agents are the ones I worry about,” she said. “Most Filipinos don’t have deep savings.” For now, Caluya advises workers to make the most of the opportunities they still have while preparing for a rapidly changing industry. “Save and embrace the job while they can,” she added.