Reimagine growth at Elevate – Dallas 2025. See the Agenda.

Advisory note: navigating proposed outsourcing legislation in the US

Over the last few weeks there has been an uptick in rhetoric in the US against outsourcing and offshoring. The current administration has signaled intent to impose legislative barriers to US companies buying services overseas. Buyers and providers of IT and BPO services should prepare for potential impacts.

As an update to the developments we shared earlier, there are now several legislative proposals making their way through Congress that target offshored services. The two most prominent are the HIRE Act and the Keep Call Centers in America Act, which take different tacks to discourage outsourcing:

  • Keep Call Centers in America Act (2025): Requires advance notice before offshoring large call center operations, mandates customer disclosure of agent location and AI use, creates a public “offshoring list,” and restricts federal contracts/funding for firms using call centers abroad
  • HIRE Act (2025): Proposes a 25% excise tax on payments to foreign service providers, as well as the removal of tax deductibility; if passed in its current form, it could significantly increase the cost of offshore IT/BPO contracts

Traditional tariffs are designed for goods; services and digital delivery are difficult to tariff. Legislators are, therefore, exploring alternative instruments to penalize offshoring in the form of excise taxes on cross-border service payments, procurement and funding restrictions, mandatory disclosures, and other regulatory requirements, rather than a direct tariff at the border. It is a technical workaround to address the same political goal (encouraging jobs to stay onshore), given the impracticality of a true service tariff. In geopolitical terms, outsourcing is a discussion point in US-India relations and trade negotiations.

These proposals remain low likelihood but high visibility. The more immediate effect is reputational and operational, as boards, investors, and customers expect companies to demonstrate preparedness.

Outlook: low likelihood of passage, high visibility of risk

It is important to stress that the probability of these proposals becoming law in the immediate future is relatively low, whereas the political and public visibility is high. The HIRE Act, for instance, faces steep opposition and complexity. Critics argue it could hurt business competitiveness and raise consumer costs, and it would require significant new regulations to implement. As of now, it remains in committee, with any effective date likely pushed out if it progresses. The Keep Call Centers in America Act, despite bipartisan sponsorship, would need to pass both houses and would only take effect a year after enactment even if adopted.

However, the issue has entered the mainstream debate, which means executive teams and boards are increasingly aware of it. Media coverage and political sound bites (e.g., slogans like “Make Call Centers American Again”) have elevated negative sentiment for offshoring. Stakeholders will expect management to have a position and contingency plan. Indeed, some corporate leaders report fielding questions from board members on impact and readiness.

Bottom line: While an actual 25% service tariff or an enforced call center repatriation mandate may never materialize, the signal is clear, companies reliant on global service delivery should not dismiss the chatter outright. The prudent stance is to treat this as a risk factor to monitor and prepare for, rather than an imminent operational change. In risk management parlance, this is a low-likelihood, high-impact scenario, and one that carries reputational and business continuity implications even if it remains just a proposal.

Preparing for possible policy changes: proactive playbook

Rather than panic, organizations should respond by demonstrating foresight and resilience. Buyers can take several practical steps now to emphasize governance and board readiness.

  • 1. Scenario and financial modeling

    • Model a 2-5% cost increase and a 25% excise tax case
    • Quantify exposure by geography, vendor, and contract

  • 2. Operational flexibility

    • Stress-test geographic diversification (US, nearshore, offshore mix)
    • Confirm backup delivery options are viable

  • 3. Contractual readiness

    • Review “change in law” and cost pass-through clauses
    • Ensure contracts allow relocation flexibility without heavy penalties

  • 4. Regulatory preparedness

    • Anticipate enhanced reporting and disclosure obligations
    • Update call center scripts to disclose agent location or AI use if required

  • 5. Board and stakeholder communication

    • Prepare a one-page briefing for boards and execs on exposure and levers
    • Set up a mechanism to monitor changes as they arise

Conclusion: stay calm but be ready

The current outsourcing tariff rhetoric is more signal than reality. Technical barriers make broad service tariffs unlikely, though narrower measures (excise taxes, reporting rules, disclosure mandates) may emerge. The right stance is vigilance without alarm, reinforcing delivery resilience through flexibility, transparency, and preparedness. Above all, organizations should reassure boards and clients that the situation is under control.

Navigate market disruptions confidently

Our analysts are closely monitoring how global tech and services markets are responding to the impact of tariffs. Connect with us for forward looking planning.

Let's Connect