`
Amid talent supply issues, the IT and Business Process Association of the Philippines (IBPAP), the flagship organization of the business process outsourcing (BPO) industry in the country, has expressed concern over the opinion recently penned by the Department of Justice (DOJ) which orders BPO firms within ecozones to work onsite if they wish to keep their tax incentives.
IBPAP President Jack Madrid said this DOJ opinion could drive away would-be employees from the BPO industry as this “constrains” them from enjoying a flexible work environment.
“One of the reasons why I wanted to come here was to show our concern that while we welcome the opinion and clarification, the headlines are a bit of a concern because when employees read a headline like that… it could discourage them from the industry,” Madrid told reporters at a briefing on Monday.
Madrid said this after local news agencies reported on Monday the legal opinion of Justice Secretary Jesus Crispin C. Remulla which emphasized that “Section 309 of the Tax Code still prevails,” as he referred to the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act or Republic Act No. 11534, or the provision being contested by the BPO firms regarding flexibility in terms of work arrangement.
“Until the enactment of a new legislation amending the said law, business enterprises located in the economic or freeport zone must continue to conduct their activities within the zone boundaries if they wish to continue availing of their tax incentives under the CREATE Act,” Remulla said in the DOJ opinion dated January 3,2024.
The Justice chief emphasized in the opinion that “these enterprises are not prohibited from adopting a [work from home] WFH arrangement but will no longer be eligible to continue enjoying the tax incentives.”
Wary over the DOJ opinion, the head of the flagship organization of BPO industry explained that this does not sit well with the industry as the sector is currently facing talent supply issues amid targeting to cross the two-million job level in 2025.
“You’ve heard me say before that the Philippines doesn’t have a demand problem, what we have is a challenge of talent supply.”
With this, Madrid said, “When we have a talent supply problem and then they read a headline that says…that constrains them from work flexibility, this could damage the reputation of our industry and also our country because our investors also look at headlines and when they see any perception of changing the rules, it damages the country.”
Moving forward, the IBPAP head said there are several legislative proposals that are currently under consideration. In fact, he cited the CREATE More [Create to maximize opportunities for reinvigorating the Economy (Create More)] or the proposed law to enhance the said tax law, as the “most visible” legislation to settle the issue on work flexibility in the country.
“There are several legislative proposals that are under consideration now, I think you’ve heard of CREATE More that was proposed by Congressman Salceda i think that’s certainly the most visible one. Let’s await that to be discussed and approved,” Madrid said. (Related story: https://businessmirror.com.ph/2023/12/04/amcham-sees-new-tax-law-removing-red-tape/)
“Our position has been the same from the very beginning. We believe in work flexibility because that’s what investors want and it’s what our employees need. Our position at the end of the day is to listen to the voice of the employee and also to protect what has been given to our investors when they decided to invest in the Philippines,” he also noted.
In the past two years, the IBPAP chief unveiled that “There has been a gradual uptick going back to on-site. Currently, if I were to venture as to the aggregate number, we’re probably at about 60 percent onsite, but it’s not everyone. Some are 90-10, Some are 20-80, some are 50-50 but in terms of aggregate number, it’s about 60 percent because some jobs can be done 100 percent WFH but some jobs need collaboration and they need to be together in the office.”
He explained this as he noted that the BPO sector is composed of different industries that are delivering global services.
At the same briefing, Madrid unveiled that the IT and Business Process Management (IT-BPM) industry continues to grow.
“We ended last year with 1.7 million direct jobs for Filipinos. That was a growth of 8 percent over 2023. We generated well over $35 billion in revenue for the economy,” Madrid said.
For this year, he noted, “I have more good news, we project to grow another 7 to 8 percent. We should cross 1.84 million and $39 billion in revenue for 2024.”
Meanwhile, in two years or in 2025, Madrid said “This is when we will cross the two-million-job level. That’s quite significant. It took over almost 20 years to hit 1 million jobs and we’re attempting to do the second million in less than 6.”
Input your search keywords and press Enter.
