THE INFORMATION Technology and Business Process Association of the Philippines (IBPAP) warned that many employees of IT and business process management (IT-BPM) firms may leave their jobs if the government pushes for a return to 100% on-site work.
This as the Fiscal Incentives Review Board (FIRB) temporarily extended the current arrangement allowing IT-BPM enterprises in Philippine Economic Zone Authority’s (PEZA) economic zones to have 30% of their employees work from home (WFH), which would have expired today (Sept. 12).
Jack Madrid, IBPAP president and chief executive officer, said the temporary extension is a “relief” for IT-BPM investors and employees.
“We’re relieved and we are also looking forward to a more permanent and much-needed solution. We are glad the Department of Finance (DoF) finally listened to the voice of the industry, the voice of the investors, and most importantly, the voice of the employees, who have been working very effectively from a location-independent setup since the onset of the pandemic,” he said during an interview on ANC’s Dateline Philippines over the weekend.
Mr. Madrid said an “overwhelming majority of Filipino workforce and the employers” have expressed a strong preference for a location-independent or hybrid work arrangement.
He expressed concern that many IT-BPM employees may leave their jobs if they are required to do full-time, on-site work.
“The initial reaction would be an increase in industry attrition because employees that my team and I have spoken to, majority of them have expressed intent to leave their place of employment if they do not have flexibility in work setup,” Mr. Madrid said.
“I worry about attrition and if attrition becomes more serious, then we will see a dip and reduction in the Philippines’ market share because it is not just the Philippines and India anymore. It is countries from nontraditional regions such as Poland, Malaysia, and South Africa that have emerged as IT-BPM locators,” he added.
On Sept. 9, Finance Secretary and FIRB Chairperson Benjamin E. Diokno issued a memorandum announcing the temporary extension of the 30% WFH arrangement for IT-BPM companies until a decision can be finalized.
The FIRB is set to have a meeting on Sept. 15.
FIRB Resolution No. 017-22, which allowed the 70% on-site and 30% WFH arrangement of IT-BPM firms until Sept. 12 while still availing of fiscal incentives, would have ended on Sept. 12 if not for the extension.
According to Mr. Madrid, the fiscal incentives given by investment promotion agencies (IPAs) such as the PEZA should be separate from the work arrangement implemented by IT-BPM firms.
Registered business enterprises, including IT-BPM firms, are required to conduct their businesses within economic zones (ecozones) in order to avail of fiscal incentives under Republic Act No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) law.
“Incentives that have been given by IPAs should be separate from our work setup. Our industry, being online, is unlike manufacturing where physical presence in the ecozone is really needed,” Mr. Madrid said.
“We have proven in the past two years that our work can be done from any location. We have not vacated our offices. The data centers are still housed there…so there is activity there,” he added.
Mr. Madrid also mentioned that the right ratio for on-site work and hybrid work depends on the IT-BPM firm, employee, and customer.
“Every company, investor, employer, and customer have their own preferences for what that optimal hybrid ratio will be. At present, for the overall (IT-BPM) industry, we are probably close to a ratio where 55-60% would be working from home, whereas 40-45% would be working on-site,” he said.
Mr. Madrid said IT-BPMs want to have full flexibility in terms of work arrangement. — Revin Mikhael D. Ochave