(Bloomberg) — Philippine outsourcing companies said a government return-to-office order threatens the growth of the industry, a key pillar of the economy.
The directive by the Fiscal Incentives Review Board for workers in economic zones to return to office “poses a threat to the industry’s growth and remains a big challenge to industry players,” the IT and Business Process Association of the Philippines said in a statement Wednesday.
The largest association of outsourcing companies issued the statement as some firms opted to give up tax perks to implement a mix of onsite and remote work for employees. California-headquartered Concentrix Corp. chose to waive tax benefits to continue a work-from-home setup, the finance department said last week, adding that this shows incentives are not a priority for investors.
Letting go of tax perks is a “difficult interim measure” to meet clients’ needs and employees’ increased preference for work flexibility, the group said. “A critical risk that industry players face is increased employee attrition if the work-from-home or hybrid work setup is not available.”
Many outsourcing firms typically get tax perks by operating in economic zones. In 2021, the industry, which employs 1.4 million full-time staff, added 120,000 new employees and posted an 11% increase in revenue to $29.5 billion. The group said it’s standing by a Philippine Economic Zone Authority directive that allows a 30% work-from-home arrangement until September, before a permanent work policy is established.
The nation’s Fiscal Incentives Review Board, headed by Finance Secretary Carlos Dominguez, has said it will suspend tax incentives for companies in economic zones who are unable to comply with a 100% return-to-office order. The ongoing tussle highlights difficulties in navigating the future of work, two years after the pandemic forced a rethink of how people do their jobs.
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