The Philippines’ call centres and other business process outsourcing companies can keep their tax incentives and allow their employees to work from home, the country’s finance secretary has said, settling an issue that had been hanging over the economically important sector.
The nearly $30bn industry has been lobbying for a permanent work-at-home set-up, which was implemented during Covid-19 lockdowns and is now preferred by most of the sector’s 1.4mn employees. But an investment regime under which many of the BPO companies operate requires them to have workers on site to enjoy fiscal perks.
“The tax incentives will continue, [and] they [BPOs] can opt to do it from home,” Benjamin Diokno, finance secretary, told a senate budget hearing on September 15, responding to a query from lawmakers on the issue.
The Fiscal Incentives Review Board, which Diokno chairs, met on September 14 and decided that BPO companies registered with the Philippine Economic Zone Authority can transfer their investment registration to the Board of Investments, which does not require on-site workers for companies to keep their incentives.
“So, that problem is solved,” Diokno said, adding that there will be a “smooth transfer of benefits” for some 2,000 companies.
The policy, once finalised, will give permanence to the work-from-home arrangement. But it is also seen as a threat to the country’s real estate industry, whose office sector has benefited from the outsourcing boom.
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At present, PEZA-registered BPO companies can have 30 per cent of their staff working off-site, in line with the pandemic-triggered “state of calamity” that was recently extended until December.
The IT and Business Process Association of the Philippines had been lobbying for a permanent hybrid work set-up. The group’s head had warned that without it the country could risk losing market share to India, the Philippines’ BPO rival.
The industry, which also includes IT professionals, animators and other non-voice service providers, last month unveiled a plan to create 1.1mn additional jobs from 2023 to 2028 during the administration of new President Ferdinand Marcos Jr but stressed that hybrid work is crucial to achieving such an ambitious target.
Widely regarded a pillar of the south-east Asian nation’s economy, the industry last year increased its revenue by 10.6 per cent to $29.5bn, on pent-up demand from the ecommerce and fintech sectors, which boomed during the pandemic, as well as aggressive cost-cutting drives amid the health crisis.
The IBPAP expects revenue to rise by 8 per cent to 10 per cent this year, and its worker headcount to grow 7 per cent to 8 per cent from last year’s 1.44mn.
A version of this article was first published by Nikkei Asia on September 16 2022. ©2022 Nikkei Inc. All rights reserved