With the rollout of COVID-19 vaccines and the lowering of restrictions, several major business groups in the Philippines have supported the government order to return to the office. Many BPO companies are now requiring their employees to report to the office.
And while some big corporations help this order, not all BPO companies and employees are in favor of this mandate. Some organizations like ICCAW and IBPAP have asked the government to extend the WFH setup. Similarly, many employees express distress and the possibility of resigning from the company.
But recently, the Fiscal Incentives Review Board (FIRB) released a new resolution, giving BPO companies a loophole. In this article, let’s find out about the future of remote work in the Philippines.
Why do BPO employees in the Philippines need to go back to work?
Since the pandemic, IT-BPO companies in the countries were allowed to work from home, as stated by the Fiscal Incentives Review Board (FIRB), to help protect workers against the COVID-19 virus. However, last 1 April 2022, FIRB said that IT-BPO businesses registered with the Philippine Economic Zone Authority (PEZA) need to return to office setup.
The government considers that employees’ returning to their workplace is all to help the economy recover. They said that returning to the office is an excellent catalyst for boosting consumption in the country.
In addition, Secretary Ramon Lopes of the Depart of Trade and Industry (DTI) stated that resuming on-site work stimulates spending that will help Micro, Small, and Medium Enterprises (MSMEs) in the country. And together with this order, the government will remove the tax breaks placed to BPO companies.
Do Philippine BPO Employees Want to Return to the office?
Many BPO employees are anxious due to this new regulation. They are worried about the long commute, traffic hours, rising commodities prices, and exposure to the virus. In addition, the work-from-home setup has helped them have a higher quality of life with their family and personally. Losing said benefits has caused a massive resignation to many companies, especially those jobs that can do remotely.
IT BPO companies in the Philippines ask the government to extend the previous work-from-home (WFH) setup or make it permanent. Jack Madrid, President and CEO of IT & Business Process Association of the Philippines (IBPAP) is requesting an extension of their work from home arrangement to September. In his interview with the inquirer, he mentioned that “it is not easy to transition back to the office after remote working for two years.” Yet, the FIRB was persistent in stating that their tax break would only last till March.
Still, the enterprise supporters of the government in the industry have advised outsourcing companies to follow the FIRB’s directive as failure to comply puts them to lose their tax perks. Yet, forcing employees to work back in the office could result in a high attrition rate.
What do the IT-BPO Companies Want?
One of the largest call centers in the Philippines, US-based Concentrix, has warned the government of the consequences if companies and employees lose work incentives from home setup.
Nikkei Asia interviewed the company’s Philippine country head Amit Jagga. In the interview, he stated that imposing higher taxes on employers like Concentrix will result in a substantial financial impact that will be significant and disadvantageous. It could hamper their capability to attract talent, expand, and grow employment. Said mandates could also make the Philippines a less attractive investment to many investors.
He stated, “We hope that the government would reconsider WFH or allow a hybrid approach.”
What’s the loophole to the Return to Office Order?
On 08 April 2022, the IT-BPO company’s appeal won government support. FIRB, PEZA, and DTI are working on a loophole, allowing BPO companies to maintain the WFH setup of employees.
Companies can implement a Hybrid Work setup, allowing 30% of their staff to remain working from home while 70% work in the office.
Secretary Lopez of DTI explained that since BPO companies are considered export enterprises, 70% of their sales should be from the export market. And in comparison, 30% should be sold locally. This ratio could also be a threshold for their hybrid work setup.
Yet, Secretary Lopez highlighted that some companies might run into the Bureau of Internal Revenue (BIR) regarding their local incentives. Still, PEZA Director-General Charito Plaza assured all their members that they are working on resolving the tax issues with BIR and the Bureau of Customs (BOC) that will allow a hybrid model with BPO companies.
Conclusion
IT-BPO Industry is a significant contributor to the Philippine economy, contributing $26 billion to the country’s income. However, removing the tax break and requesting employees return to the office might be at risk.
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