The IT Business Process Association of the Philippines (IBPAP) said in unequivocal terms that the directive of the Fiscal Incentives Review Board (FIRB) for the IT-business process management (IT-PBM) industry to return 100 percent to their physical offices poses a threat to their growth and remains a big challenge to industry players.
In a statement, IBPAP said "a critical risk that industry players face is increased employee attrition if the WFH/hybrid work setup is not available."
Therefore, IBPAP said that even at the risk of being meted with penalties imposed by the FIRB on companies who are unable to comply with the RTO, some of these registered business enterprises (RBEs) will choose to allow employees to continue working from home.
The penalty prescribed by the FIRB is suspension of income tax incentives for every month of an RBE’s non-compliance.
As a global leader in IT-BPM services, IBPAP said the "Philippines finds its competitive advantage in the Filipino talent, our expanding digital infrastructure, and strong government support that creates an enabling and conducive business environment. It is the harmonious combination of these factors that allows the Philippines to maintain its global leadership in the industry."
The industry continues to be a major economic pillar of the Philippines with its 1.44 million total employee headcount at the end of 2021 delivering $29.49 billion in service export revenue.
Growth prospects for 2022 and the medium-term are as bullish if favorable conditions are sustained. To retain and grow existing investments and encourage inflow of new investments, the country’s regulatory and investment policies need to be clear and consistent. Consistency and clarity in the implementation of government regulations are critical in defending our country-level competitiveness.
Terms and conditions of investment registrations must be honored and upheld, including the grant of fiscal and non-fiscal incentives. Ease and predictability of doing business is of paramount importance.
"Investors in the IT-BPM industry expect no less," stressed IBPAP President and CEO Jack Madrid.
He explained that their decision to locate in the Philippines were made based on laws, regulations, and policies they vetted versus competing locations. These firms, he said, value fiscal incentives, which often is the tiebreaker in their investment considerations. Continued profitability is key to retain their investments, expand in the country, create more jobs for Filipinos, and contribute to urban and countryside economic development including the generation of significant export revenue.
But the decision of IT-BPM RBEs to forego their income tax perks is a difficult interim measure to address the needs of their employees and meet the demand of clients who prefer WFH/hybrid work arrangements, IBAP said.
As such, the industry hopes that the FIRB will soon reconsider its decision and rule in favor of the IT-BPM industry by allowing its players the privilege of fully implementing the Philippine Economic Zone Authority (PEZA) Letters of Authority (LOA) on WFH. PEZA has allowed its RBEs to operate 70 percent on site and 30 percent WFH or work remotely, invoking PEZA's own rules and the Telecommuting Act.
While there may be investors such as Concentrix who were reported to have given up tax incentives to continue WFH/hybrid work arrangements, IBAP believes the decision was founded on the company’s commitment to prioritizing the needs of its over 100,000 Filipino employees who have expressed an overwhelming preference for a hybrid work arrangement as well as its belief that flexible work models will ultimately result in greater productivity and scale for its global customer base and long-term business viability.
"IBPAP, as the flagship organization of the IT-BPM industry in the Philippines, stands by our position on WFH/hybrid work, and the legal basis of the LOAs granted by PEZA to allow 30 percent WFH arrangement until 12 September 2022,” the group said in its statement.
“This has enabled companies to accommodate the strong preferences of its employees and execute a smooth, phased return to on-site operations in the immediate term before a permanent WFH/hybrid work policy is established," it added.