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It’s all coming back: Will the great return be a boon or bane to the IT-BPM sector?

BPO, IT-BPM, Back to office, Office real estate, Great return

Now that the IT-BPM industry is being directed to have their employees report to the office full time by April 1, 2022, many are now scrambling to transition their employees back onsite, while others are willing to bear the brunt of penalties rather than increase attrition by asking their employees to return to office so abruptly. If, however, employees start going back to work, other businesses will thrive. Although whether or not the timing is right is still a matter of debate.

 

Covid-19 disrupted the way work was done. It forced the world to adapt and accept technology as a reliable tool to accomplish work remotely – all this while in the safety of our homes.

During the start of the Covid-19 pandemic in the Philippines in March 2020, the IT and Business Process Management (IT-BPM) industry tried to continue onsite operations, but was faced challenges, such as employees’ access to public transportation and the repeated shut down of facilities to give way for disinfections when positive cases are detected. The outsourcing industry then lobbied for the approval to do remote work and was able to transition, up to 90% of their operations, to a work-from-home (WFH) setup. Although this pivot from onsite to WFH was met with new challenges, but after almost 2 years of Covid-19 pandemic, the efficiency and productivity of this setup proved to be a success.

BPO employees can now forgo the commute to their offices and reduce the risk of exposing themselves and their families to Covid-19. Although IT-BPM companies had to carry additional costs since they subsidized telecom and utility bills for their employees, the benefits far outweighed the impact on their bottom-line, proven by the continued growth and expansion the outsourcing industry recorded during the pandemic.

Even with the success of this new arrangement, the WFH setup has always been touted as temporary – just until Covid-19 cases dwindled to numbers that will be deemed manageable. The government’s aggressive vaccination program has also helped Metro Manila and other major cities see their Covid-19 numbers dip. With most of the country now under the most relaxed Covid-19 alert level, the government is looking at fully reopening the economy to spur commercial activities and drive us out of the rut and into full recovery.

The great return

Outsourcing companies, having settled quite well into the WFH setup, have their employees clamoring for this to remain as an option. The IT and Business Process Association of the Philippines (IBPAP), along with the Philippine Economic Zone Authority (PEZA), have lobbied for the extension of the WFH until September 2022. Unfortunately, the Fiscal Incentives Review Board (FIRB) under the Department of Finance (DOF) has denied the request to extend the arrangement any further. BPOs under PEZA are now required to go back to their offices by April 1, 2022.

These companies are now scrambling to transition employees and equipment back onsite. While some have started their back-to-office plans earlier anticipating a non-approval of the extension, others are willing to bear the brunt of penalties rather than increase attrition within their organizations.

With these developments, the outsourcing industry has arrived at a crossroads: continue under PEZA or de-bond from the agency. The latter, beginning to be more appealing now with the passing of the CREATE Law wherein companies, as long as they are exporting services and meet investments requirements, can take advantage of income tax holidays, zero-VAT rating status, zero importation tax on materials and equipment, and lower corporate income tax once the income tax holidays expires even outside ecozones.

Pros and cons

The hesitancy to resume onsite work is coming from employees’ preference. WFH has proven to be effective and easier to employees, which greatly reduced the difficulties of commuting to and from the office. The news that IT-BPM employees will now be required to report on-site has prompted a number of them to consider leaving their BPO jobs and transfer to other industries that allow for the permanent WFH setup. This is further compounded now by the rise in fuel cost that will greatly reduce disposable income of employees.

If, however, employees start going back to work, other businesses will thrive. Public transport will again flourish. Restaurants and other auxiliary businesses will once again see an influx of customers. The government hopes that these activities would be enough to reawaken our economy. Although whether or not the timing is right is still a matter of debate.

Business owners who have been heavily impacted by the lockdown are looking forward to reopening their stores to meet the needs of returning employees. Building owners and landlords are equally enthused to see their premises occupied again by workers.

But in order to ease companies’ return to the office – and address the reservations of their employees – office landlords will play an important role, mainly by keeping in mind that employee experience is now the number one goal of their occupiers and tenants. Specifically, office landlords should (1) Highlight their buildings’ new safety and health measures that will give employees the confidence that their overall wellness, specifically physical and mental health, is of utmost priority; (2) Assist tenants with renovations to maintain social distancing requirements; (3) Provide additional fitted office spaces that can handle the inflow of employees by partnering with service office providers or leasing out vacated spaces even for short periods; and (4) Give incentives to tenants who are returning to physical offices by providing rental concessions such as reduced rental rates or suspended rental escalations. These are just some creative ways landlords can help jumpstart recovery.

WFH is here to stay. Whether mandated or not, the pandemic has shown that technology and the private sector’s sheer resourcefulness can meet the requirements of remote work. Workers can be productive and happy in this environment, and it is undeniable that the WFH setup has helped mitigate the spread of Covid-19.

The question now is whether companies, employees, and business owners are again willing to embrace this impending change: To go beyond their comfort level and burst their 2-year-old quarantine bubble. Perhaps the old routines will come back and help us live our lives again with the virus just an ever present yet invisible threat to our lives.

 


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