September 19, 2022

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FIRB decision on WFH to create employment, boost IT-BPM sector

By Revin Mikhael D. Ochave, Reporter

THE RECENT DECISION of the interagency Fiscal Incentives Review Board (FIRB) to allow work-from-home (WFH) arrangements for information technology and business process management (IT-BPM) firms will help the industry grow and create more jobs, the IT and Business Process Association of the Philippines (IBPAP) said on Monday.

IBPAP President and Chief Executive Officer Jack Madrid said in a statement on Monday that the FIRB’s decision to allow hybrid work arrangements if IT-BPMs transfer their registration will help the industry expand further.

“WFH/hybrid work is a game changer for the Philippines and the sustainability of the IT-BPM industry, and it will be a contributing factor to our ability to create 1.1 million new direct jobs for Filipinos, generate billions more in revenue, and significantly increase our countryside footprint by 2028,” Mr. Madrid said.

“After two years of making a case for what the benefits of WFH/hybrid work are, it is great news that the FIRB will be facilitating a smooth paper transfer of the registration of IT-BPM enterprises from the Philippine Economic Zone Authority (PEZA) to the Board of Investments (BoI),” he added.

Last week, the FIRB announced that registered IT-BPM firms in economic zones can implement 100% WFH arrangements and still avail of fiscal incentives by transferring their registration from the PEZA to the BoI, ending a months-long impasse.

The FIRB said the 70% on-site work and 30% WFH arrangement ratio currently being implemented by IT-BPM firms has been extended until Dec. 31 this year to allow time for the transfer.

Republic Act No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises requires registered business enterprises, including IT-BPM firms, to conduct operations within an ecozone in order to enjoy fiscal incentives.   

Mr. Madrid said during an interview in BusinessWorld Live on One News channel that several IT-BPMs have already signified their intent to transfer their registration to the BoI.

“There are 478 IT-BPM firms that are PEZA-registered that applied for letters of authority. I expect that a good number of those who want to give their employees full flexibility will be applying and expressing their interest to paper transfer to the BoI,” he said.

There are about 2,000 IT-BPM firms registered with PEZA that may transfer to the BoI.

“(The decision to transfer) will depend on the enterprise on what their priorities are. But it does seem that the solution by the DoF (Department of Finance) and FIRB resolves the majority of the issues that we’ve been tackling,” Mr. Madrid added.

He said the decision of the FIRB on work arrangements will also help improve the attrition rate in the IT-BPM industry and attract more Filipinos to work in the sector.

“Given the talent supply and demand mismatch, I think this seamless transfer and allowance of full flexibility will soften the impact of attrition, which is one of our biggest issues as an industry,” Mr. Madrid said.

“I think that it will certainly address the problem of the availability of talent to fill all the jobs for Filipinos in the IT-BPM sector. Will some reduce their workspaces? I expect so, but I believe a good number will also need more space as they receive more work and contracts from our overseas customers,” he said.

Meanwhile, one factor that may affect the decision of IT-BPMs to transfer their registration to the BoI is the one-stop shop service offered by PEZA, Mr. Madrid said.

“Aside from fiscal incentives, which are uniform across all investment promotion agencies, the main attraction of PEZA is and has always been the one-stop shop suite of services that they are able to provide to their locators,” he said.

“It is a big deal because it reduced a lot of the administrative tasks and allows investors to do what they set out to do. This will remain a very prominent feature of remaining with PEZA,” he added.

In 2021, the local IT-BPM industry posted $29.49 billion in revenues, higher by 10.6% from 2020 levels, while total headcount improved 9.1% to 1.44 million, based on IBPAP data.