Washington Won't Save the Offshore Bargain

For thirty years, the Philippines built an industry on a political assumption: that the United States and Europe would remain willing to let routine service work cross the Pacific, because the cost savings were worth the domestic discomfort.

That assumption is expiring — and not because of a sudden moral awakening in Washington or Brussels. It is being eroded by incentives.

The offshore BPO bargain worked because it served enough interests at once. American and European companies cut costs. Filipino workers gained formal-sector employment. Politicians in customer markets could defend the arrangement because consumer benefits were visible and domestic losses were dispersed. Nobody had to say the quiet part out loud.

AI has changed what needs to be said. As software absorbs more of the routine labor that once justified offshoring, the central question for customer markets shifts. It is no longer simply where work can be done cheaply. It is who owns the workflow, controls the data, sets the standard, and captures the margin when that work gets automated.

On those questions, neither Washington nor Brussels is neutral. They are building for themselves — and the Philippines should stop planning as though they are not.

America is building for America

The clearest signal is not a dramatic anti-offshoring statute. It is the emerging AI industrial policy that has been spelled out, in public, over the past year.

In January 2025, Executive Order 14179 made it the stated policy of the United States to “sustain and enhance America’s global AI dominance” for economic competitiveness and national security.¹ Six months later, the White House released its AI Action Plan — more than 90 federal policy actions built around accelerating innovation, building American AI infrastructure, and leading in international diplomacy and security.² A companion executive order created the American AI Exports Program, designed to sell US-origin full-stack AI packages abroad: hardware, cloud services, data pipelines, models, applications, and the standards that govern all of them.³

None of that legislation names Manila. It doesn’t need to. If AI converts customer service, finance operations, and regulated support work into software-heavy systems, the country that owns the software captures the value. The country supplying labor-hours captures less of it with each passing year.

Call centers are now a political issue

The more direct pressure is arriving through telecom regulation.

In February 2026, the FCC approved Charter’s acquisition of Cox on the condition that Charter onshore all of Cox’s offshored job functions within 18 months, aligning with its promise of a 100 per cent US-based customer sales and service workforce.⁴

That is a precedent. The FCC used merger approval to pull offshore customer-service work back onto US soil.

A month later, the FCC went further, issuing a Notice of Proposed Rulemaking on foreign call centers. Among the questions: Should providers have to disclose when a call originates outside the United States? Should consumers have the right to be transferred to a domestic representative on request? Should there be caps on the share of calls handled overseas? And, most importantly for the Philippines, should certain categories of sensitive transactions be handled only in US-based call centres?⁵

The transactions in question are those that involve passwords, multi-factor authentication, Social Security numbers, and financial account information.⁵ That provision would carve directly into the higher-value financial services and account-recovery work that Philippine BPO operators have spent years positioning as their upgrade path from simple voice support.

Congress is moving in the same direction. The bipartisan Keep Call Centers in America Act of 2025 would require advance notice before call-center jobs move offshore, create a public register of firms that do so, and restrict federal contracting and lending to companies on that list.⁶

Offshore customer-service work has moved from a procurement question to a political one. That transition rarely reverses.

Brussels chooses self-reliance

Europe is traveling a different road to the same destination.

The European Commission’s AI Continent Action Plan commits €200 billion to AI development inside Europe, €20 billion for AI gigafactories, and explicit investment in European compute infrastructure, data capacity, and AI talent retention.⁷

The Digital Operational Resilience Act, which took effect in January 2025, adds a further layer: stricter third-party risk requirements for any provider touching European financial workflows.⁸

The direction is clear enough. Europe wants more AI capability, compute, data infrastructure, and digital-risk control inside the European system. Offshore work is not banned, but it faces a higher bar. Providers must justify not just cost savings, but risk, resilience, and regulatory comfort.

What changes for the Philippines

The old model rested on two advantages: cost and tolerance.

Cost meant the savings from sending work to Manila were large enough to justify the distance and management overhead. Tolerance meant customer-market governments were content to let it happen.

AI erodes the first advantage by reducing the volume of work that needs human hours at all. Industrial policy erodes the second by reframing offshore delivery as a strategic concession rather than a neutral business decision. When both shift at once, the stability that the industry was built on starts to look less like a foundation and more like a favorable moment that has passed.

The Philippines will not lose its BPO sector overnight. The installed base is too large, the workforce too experienced, and too many workflows will remain hybrid for years. But the composition of value is already shifting.

Growth in the next phase will accrue to whoever owns the AI platforms, the workflow redesign capability, the outcome-based pricing models, and the client relationships — not to whoever occupies the most seats. If those layers are built and owned elsewhere, the Philippines keeps the execution burden while surrendering the upside.

That is the ownership problem again.

The response has to be clear-eyed

The honest response to this is not a lobbying campaign in Washington or a diplomatic appeal in Brussels. Both governments are acting rationally in their own interests. A serious state, when technology reshapes the commanding heights of an industry, tries to keep the strategic value close. The mistake would be assuming they might choose otherwise.

What the Philippines needs instead is to treat the AI transition in BPO as a national restructuring problem — not an employability initiative or a rebranding campaign. That means asking which firms receiving investment incentives are actually building Philippine capability, and which are simply extending seat counts. It means publishing better firm-level and sector-level data on automation rates, training investment, and local capital expenditure, so policymakers can see the transition as it is happening rather than after it has already occurred.

It means funding retraining at a scale commensurate with the risk, not at the scale of a pilot program. And it means creating conditions (through procurement, intellectual-property protection, and capital access) for Filipino operators to convert accumulated domain expertise into products and workflows they can own.

The old model was built on being useful to other people’s companies.

The next model has to make the Philippines more useful to itself.

The opportunities are changing. Washington will not defend the offshore bargain. Brussels will not preserve it. They are doing what every capable state does when the technology shifts: building for their own workers, their own infrastructure, their own political futures.

The Philippines should be doing the same.

Footnotes

1. The White House, “Removing Barriers to American Leadership in Artificial Intelligence,” Executive Order 14179, January 23, 2025. White House — EO 14179 ↩

2. The White House, “White House Unveils America’s AI Action Plan,” July 23, 2025. White House — America’s AI Action Plan ↩

3. The White House, “Promoting the Export of the American AI Technology Stack,” Executive Order, July 23, 2025. White House — American AI Technology Stack EO ↩

4. Federal Communications Commission, “FCC Approves Charter-Cox Combination,” February 27, 2026. FCC — Charter-Cox Approval (PDF) ↩

5. Federal Communications Commission, “Notice of Proposed Rulemaking, FCC 26-16,” March 27, 2026. FCC — NPRM 26-16 (PDF) ↩ ↩²

6. Congress.gov, “S.2495 - Keep Call Centers in America Act of 2025,” 119th Congress. Congress.gov — S.2495 ↩

7. European Commission, “Shaping Europe’s leadership in artificial intelligence with the AI continent action plan,” last reviewed April 10, 2026. European Commission — AI Continent Action Plan ↩

8. ESMA, “Digital Operational Resilience Act (DORA).” ESMA — DORA ↩