The Philippines’ Business Processing Output (BPO) industry began in earnest in the year of 1990s, with government assistance that was overly hopeful for innovative ideas to expand more employment opportunities to its citizen. Furthermore, its contribution to the Philippine economy today ranks second only to remittances received from migration. The sector is geared toward the country’s former colonial power, the United States, as well as Europe and closer neighbors Japan, New Zealand, and Australia. Recently, the advent of digital platforms has made freelancing in the BPO industry easier. Providing access for currently known as the virtual assistant. Due to this, rating systems and worldwide competitiveness have resulted in a highly competitive and unpredictable business ranking. These networks are home to an estimated 1.5 million Filipino employees. The pandemic had greatly affected the pandemic, The BPO industry is one of the industries mainly affected by the Pandemic as it requires deliberate care of its data gathered from clients which is inherently a threat in the online setup. As a result, the BPO industry in the Philippines provided work-from-home (WFH) extensions for its employees.
For the time being, the pandemic presents as many obstacles as it does opportunities, especially when the delta variation generates fresh case counts and lockdowns. In June, one of the industry’s greatest recorded COVID outbreaks was reported at an unidentified BPO firm in the southern city of Davao, with over 400 workers testing positive. As employees protest against the government regarding their needs, resulting for the government to OKs the extension of WFH setup in the BPO industry throughout the Philippines, as we gradually recover economically.
The Effects of the Covid-19 Pandemic on the BPO Industry
When Philippine President Rodrigo Duterte enforced a lockdown last March 17, 2020, he designated BPO as a “vital” industry, along with food and health care, enabling offices to operate in a restricted capacity. Due to the 24-hour operations and tight data protection demanded by clients such as banks, the business mainly relies on massive brick-and-mortar facilities.
During Enhanced Community Quarantine periods, BPO is one of the few industries permitted to remain open, proving its importance to the country’s economic and geopolitical interests. However, due to quarantine regulations, BPO firms were unable to maintain typical personnel levels, especially at the start. In line with this, providing “COVID-resistance” is critical for BPO firms: whether it is a finance, accounting, or payroll service, whether the clients are SMEs or global corporations, they want their service providers to provide business continuity. These basic business operations cannot “stop” even amid an economic crisis and a health catastrophe, even if the company’s existence is endangered by the pandemic’s complex repercussions, since they must completely execute the functions established by legal and statutory requirements.
BPO WFH Extension in the Philippines
In a brief period, the pandemic COVID-19 has transformed corporate operations and the environment, including the expansion of “work from home” (WFH) or large-scale conversion to digital communication channels, which reinterprets the connection between “work” and “home”
In addition, Experts revealed the appeal of “WFH” from the perspective of employees has grown receptive to Filipinos, as the job-efficiency fears linked with it have shown to be mostly unfounded, and it will undoubtedly continue with us in the future.
Even once the pandemic is over, remote work will most certainly persist.
Read More: The Hybrid Work Setup – Does It Work?
Government OKs Extension of WFH Setup in IT-BPO In Ecozones
In 2021 of August, PEZA Director General Charito Plaza stated that the PEZA board in a forum suggested extending the WFH plan till the end of next year. In response to the coronavirus pandemic, PEZA issued a board decision in November last year permitting IT firms in ecozones to adopt WFH equivalent to up to 90% of total revenues by September 12 of this year.
Under the Corporate Recovery and Tax Incentives for Companies Act’s implementing rules and regulations, an investment promotion agency may apply measures approved by the FIRB to assist registered commercial enterprises in recovering from pandemics, national emergencies, and significant disasters. Unfortunately, according to the resolution of the Fiscal Incentives Review Board (FIRB), the setup shall only last until September 12, 2022
The Current Status of WFH Setup for BPO
According to Finance Secretary Benjamin Diokno, the interim green light for business process outsourcing (BPOs) enterprises to continue with the WFH or “work from home” extensions, which was supposed to expire on Sept. 12, has been extended until a definitive resolution is reached.
Accordingly, Diokno, who also serves as the head of the Fiscal Incentives Review Board (FIRB), stated in a statement that BPO businesses must maintain the 70 percent onsite-30 percent WFH arrangement until the FIRB rules on the Philippine Economic Zone Authority’s request to prolong the WFH arrangement. One of the key issues presented is how the entity shall be considered within the geographical economic zone, hence, tax perks may be affected by the decision to continue doing work from home.
A resolution requesting to prolong the distant arrangement shall be based on the State of Calamity or a declaration of an extraordinary occurrence by the President, with Rule 23 of the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) legislation IRR serving as the dominant legal foundation. Moreover, Diokno promised BPO firms that they will continue to enjoy all CREATE Act tax incentives, such as an income tax holiday or a 5% special corporate income tax in place of all taxes, such as VAT, income tax, and municipal business tax.
In line with this, all IT-business process management (IT-BPM/BPO) enterprises seeking incentives or continuing to benefit from government tax breaks while adopting a 100 percent work-from-home (WFH) arrangement must register with the Board of Investments (BOI). This arose after the Fiscal Incentives Review Board (FIRB) decided to allow Information Technology and Business Processing Management or Business Processing Outsourcing (IT-BPM/BPO) firms registered with the Philippine Economic Zone Authority (PEZA) to adopt up to 100 percent WFH arrangements while still receiving tax breaks if they transferred registration to the BOI.
This breakthrough, according to BPO organizations, will help it meet its objective of creating 1.1 million new direct employment, earning billions in income, and growing rural economic activity by 2028.
The Future of the BPO Industry in the Philippines
According to analysts, the COVID pandemic has compelled the digitalization of the economy to a degree that would have taken many years for a lot of state entities or firms that were still operating under the ‘off-line’ and face-to-face setup, without any compulsion. This abrupt transition poses a significant problem for governments, which must “follow” these developments by drafting suitable laws with flexible regulations that allow for a quick adjustment that will provide more benefits to our employees than problems.
The Philippines’ BPO business has some distinct advantages over other outsourcing markets. Low labor costs, an English-speaking and highly educated workforce, as well as cutting-edge technology and infrastructure, are all advantages that will offer the country an advantage in the future. These are highly desirable characteristics for the world’s top firms that rely on outsourcing in locations like the United States, Australia, and the United Kingdom.