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Welcome to Inside Outsourcing: The Outsourcing Week in Review
THE WEEK IN REVIEW
Welcome to Inside Outsourcing, Philippine Edition. We cover all the happenings of outsourcing, so you know what you need to know. Let’s get into it.
After months of fracas, IT-BPM companies registered under the Philippine Economic Zone Authority (PEZA) can continue working from home – until at least December 2022.
According to Department of Finance (DOF) Undersecretary Antonette Tionko, the Fiscal Incentives Review Board (FIRB) approved the industry’s request due to the extension of the Philippines’ state of calamity. This extension means that IT-BPM companies in economic zones could continue enjoying their fiscal incentives while 70% of their employees are on-site and 30% work remotely.
At the same time, DOF Secretary Benjamin Diokno is advising IT-BPM providers to transfer their registration to the Board of Investments (BOI) to continue implementing WFH beyond the December deadline without losing their tax breaks. DOF Undersecretary and FIRB Technical Committee Chairperson Antonette Tionko explained that the incentives under the two investment promotion agencies (IPAs) “are already basically the same,” and they will assist in a smooth transition. The finance department added that they would not require companies shifting their membership to leave their facilities in PEZA economic zones. There are about 2,000 PEZA-registered IT-BPMs that may transfer to BOI. This offer, according to IT and Business Process Association of the Philippines (IBPAP), would create over 1.1 million jobs, add billions in revenue and increase economic activities in the Philippines by 2028. The industry group stated that the transfer offer signifies that the government recognized the sector’s economic contribution. IBPAP President Jack Madrid added that the promise of a smooth transition from PEZA to BOI would help the industry over the next six years.
Other government agencies are weighing in on FIRB’s momentous decision. Department of Health (DOH) OIC Maria Rosario Vergeire commented that the WFH extension would benefit the mental and physical health of the Filipino workforce. She added that expanding the WFH policy could help contain the spread of the COVID-19 virus across the country.
At the same time, the Department Of Labor and Employment (DOLE) adjusted the implementation rules and regulations (IRR) of Telecommuting Law, or Republic Act 11165, to accommodate the broader adoption of the WFH model. The revised IRR aims to protect the rights of remote workers against the diminution of their entitlements should they choose to work outside the office. The revised rules also require employees in a WFH scheme not to be classified as field personnel, except when their actual work hours “cannot be determined with reasonable certainty.” DOLE Secretary Bienvenido Laguesma also called on companies to ensure mutual consent from employers and employees before implementing a remote or hybrid work arrangement. The finance department also reiterated that service providers are only required to pay local government taxes based on the location of their head office. In a local finance circular effective, the DOF stated that contractors are not liable to pay a mayor’s or business permit fee in a city outside their headquarters. DOF Secretary Benjamin Diokno said they had issued this order to address the taxpayers’ concerns, especially outsourced workers working from their homes.
Meanwhile, commuter group The Passenger Forum (TPF) has requested the government to maximize the Telecommuting Law and provide incentives for businesses that will allow WFH arrangements. According to TPF Convener Primo Morillo, the government’s support for remote working will help them solve several problems, including the rising costs of petroleum products and the current public transportation crisis. The TPF leader also hopes that incentivizing WFH will allow businesses to take full advantage of remote workers.
Hybrid work improved Filipinos’ productivity, work-life balance, and general well-being, said tech conglomerate Cisco. According to a poll, 90% of Filipinos are generally happy, and 85% reported having a healthier work-life balance. Moreover, 92% of respondents said they have stronger family relationships, while 63% said their friendships improved. OCTA Research President Ranjit Rye said Cisco’s survey reflects the positive effects of the COVID-19 lockdowns on the health and family dynamics of workers in the Philippines.
In other industry news, BPO solutions provider Accenture Philippines launched a new facility exclusive to its Japanese market as part of its expansion strategy. Accenture Philippines Country Managing Director Lito Tayag stated that addressing the specific demands of their Japanese clients supports their vision “to provide integrated business services and solutions offering from the Philippines.” The “Japan Zone” features cloud-first solutions, artificial intelligence (AI) and blockchain, intelligent platforms, systems, operations expertise in finance and accounting, talent and human resources, and customer services. Concurrently, the BOI introduced its AI-powered virtual assistants (VAs) to attract new investors. Named Bordie and Vestie, the VAs will upgrade BOI’s Online Service System (BOSS), making it easier for prospective investors to access information quickly, register, avail incentives, submit reports, and apply for BOI endorsements. The two VAs will appear on other BOI-sanctioned chatbot platforms, websites, and other relevant mobile applications and platforms.
The Philippine government will allocate P12.5 billion (US$219 million) for the country’s digitalization programs in 2023. According to Department of Budget and Management (DBM) Secretary Amenah Pangandaman the funding proposal is aligned with President Ferdinand Marcos Jr.’s digitalization transformation. The Department of Information and Technology (DICT) will receive the largest allocation from the budget, amounting to P4.24 billion (US$74 million). The DOF, Bureau of Internal Revenue (BIR), and Bureau of Customs (BOC) will also be entitled to funding from the budget.
Aside from a higher budget, ICT partnerships are underway to accelerate the country’s digitalization! Recently, the Philippines and Singapore signed a Memorandum of Understanding (MOU) for digital cooperation. The agreement, signed by the DICT and the Ministry of Communications and Information, stated that the two countries would collaborate in various areas of digital connectivity. During the signing, DICT Secretary Ivan John Uy expressed the readiness of the Philippines to welcome foreign investors as the country gears up to become one of the premier destinations in Asia for investors. The Philippines and Israel also reinforced their bilateral relations in ICT and innovation. DICT Undersecretary David Almirol concurs that the Philippines can learn and take on Israeli partners for developing e-government in the country. The deal will set up further investments in the country, such as the development of the ICT structural backbone of the country and its local telecommunication companies.
POGOs may be a “no-go” in the future as President Marcos is looking to make them illegal in the Philippines. According to Senator Imee Marcos, the illegal cases that involve the POGO sector — or Philippine Offshore Gaming Operators (POGOs) — are “embarrassing before the international community.” Earlier this week, a POGO facility in Pampanga City was shut down as the police rescued 43 Chinese nationals for being forced to work there. Data from the Philippine National Police (PNP) also showed that 15 out of 29 kidnapping cases this year were related to POGOs. The fact that there are only P3 billion (US$52 million) tax revenues collected from POGOs this year — far from the projected P32 billion (US$557 million) — also highlights the questionable presence of gaming operators in the country.
The Provincial Government of Bataan is requesting the conversion of the Bataan Nuclear Power Plant (BNPP) into the Philippines’ biggest data center instead of restoring it to its original use. Bataan Governor Jose Enrique Garcia III said the 40-year-old nuclear power plant has the right foundations — such as a secure structure and water cooling provision — to serve as a cloud computing facility. Garcia added that their proposal would result in an up-to-date and safer infrastructure over the possibly toxic and unsafe power plant.
Not a bad idea!
Thursday, September 22, 2022
NEWS THIS WEEK
21 September 2022
- UK, PH firms sign fintech partnership deal – read article…
- Young, migrant workers are PH’s ‘greatest asset’ – read article…
- BOP deficit hit $572Mn in August – read article…
- Sustainability will attract more investors to PH – read article…
20 September 2022
- Accenture PH opens ‘Japan Zone’ – read article…
- BPO’s transfer to BOI could create more jobs, revenues by 2028 — IBPAP – read article…
- PH gov’t looking to ban POGOs – read article…
- PH, Singapore agrees to collaborate for digitalization – read article…
19 September 2022
- PH BPOs now allowed to implement WFH – read article…
- Revised telecommuting IRR to protect WFH workers – read article…
- Allowing BPOs WFH helps curb Covid-19 – read article…
- BOI introduces artificial intelligence-assisted VAs to attract more investors – read article…
16 September 2022
- WFH for PEZA-registered IT-BPM firms extended till December 2022 – read article…
- DOF chief urges BPOs to move to BOI – read article…
- Commuter group urges gov’t to maximize telecommuting law – read article…
- Bataan LGU pushes to convert nuclear power plant to data center – read article…
15 September 2022
- Hybrid work improved Filipinos Productivity, personal relationships – read article…
- Service sector spared from LGU taxes and fees outside their HQs – read article…
- PH, Israel to reinforce opportunities on ICT and innovations – read article…
- PH gov’t allots P12Bn for digitization in 2023 – read article…
