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Back-to-back: Balancing the economic comeback and BPO back-to-office

BPO, IT-BPM, Back to office, FIRB, PEZA

In a decision grounded on the government’s thrust to reopen the economy and allow for more consumer activity, the Fiscal Incentives Review Board (FIRB) has directed the IT-BPM sector to start exclusively operating within PEZA-proclaimed IT Centers or buildings beginning April 1, 2022. What will be its potential ramifications for this crucial sector?

 

In response to the Philippine Economic Zone Authority’s (PEZA) request to extend the 90% work-from-home (WFH) arrangement until September 12, 2022, the Fiscal Incentives Review Board (FIRB) of the Department of Finance (DOF) issued a resolution last March 7, 2022, reiterating that registered business enterprises (RBE) under PEZA may only enjoy the 90-10 WFH threshold with no penalties levied towards their tax incentives until March 31, 2022. Thereafter, RBEs, particularly locators in the Information Technology and Business Process Management (IT-BPM) industry, must exclusively operate within the PEZA-proclaimed IT Centers or buildings beginning April 1, 2022, in line with the respective governing legislation.

The decision of the FIRB is grounded on the government’s thrust to reopen the economy and allow for more consumer activity (e.g., employees returning to the office are more likely to spend on food, transportation, and other incidental expenses) as vaccination coverage is high and severe health outcomes have been mitigated to a significant extent.

On the other hand, it is crucial for IT-BPM companies to be able to smoothly manage the transition back to the office. Public transportation is still gradually ramping up and employees need ample time to revert to a regular office schedule after 2 years of remote work. It may also take some time for companies to adjust their functions (e.g., operations, IT, facilities, etc.) to increase activities in the office. Furthermore, occupiers are facing the risk of employee attrition with some individuals developing a strong preference for remote or hybrid work, which may lead them to join other companies that allow such.

On a macro level, the competitiveness of the country’s outsourcing industry may also be at risk as it competes with other markets (e.g., India) where increased WFH allowance may provide the advantage of stronger employee retention, engagement, and performance. Ultimately, the country’s policymakers and the IT-BPM industry must work hand in hand to support each other’s respective thrust towards growth which are not distinct but rather, are tied to each other.

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Colliers view

Colliers encourages government and industry stakeholders to continue dialogue in order to arrive at the optimal work regulations in support of both economic and business growth. The IT-BPM industry has consistently been an integral contributor to the country’s economic output; it is vital that their operating environment in the Philippines remains competitive and adaptive to the evolving needs of the industry and employees.

Colliers also recognizes the government’s efforts to stimulate the economy by opening more avenues for productivity and commerce. Society has learned during the pandemic that interests which can appear to be at odds with each other (e.g., health vs. economy) may in fact be deeply integrated with one another and the key to recovery and growth is to balance the considerations of both sides.

 


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