Outsourcing firms in Philippine economic zones will need a long-term remote work considerations to remain competitive against other major outsourcing economies, an official from the industry group said.  

Louie Benedict C. Hernandez, chair of the Information Technology and Business Process Association of the Philippines (IBPAP), said that outsourcing firms located in economic zones that receive government incentives were given emergency authorization to allow employees to work from home until September. 

This authorization can be extended under the guidelines of a recently signed law that cuts corporate income tax and reforms the tax incentives system. 

“We can extend it. We feel that is a short-term solution. The particular topic that we need to be discussing in the industry is the rest of the world is actually moving into a hybrid model,” he said at a virtual event organized by the Management Association of the Philippines. 

“India has been driving a lot of flexibility not just in general rules and regulations in the way their businesses will be supported particularly in IT-BPM but also in work from home.”  

The local industry, he said, needs a permanent solution to be as competitive.   

Outsourcing firms were allowed to have on-site operations even during the stricter lockdown last year. The companies rolled out remote work operations in response to health safety concerns and limited mobility amid the coronavirus disease 2019 (COVID-19) pandemic.  

During the initial lockdown in March 2020, the outsourcing industry was at 50% productivity as 40% of staff worked from home and only 10% worked on site. As restrictions loosened by November, the industry returned to 95% productivity as 70% of its employees worked remotely. 

Business process outsourcing firms are now looking to retain a hybrid remote and on-site work model. 

“We feel (a hybrid model) is going to help with even tapping employees that we can’t reach with our physical location,” Mr. Hernandez said. 

Trade Undersecretary Ceferino S. Rodolfo in a separate event on Friday said that the department will propose to the Fiscal Incentives Review Board approval of work from home arrangements past September. 

 “I’m just not sure if we can get the ceiling level of 90% work from home or it will be reduced. We cannot promise that at the moment, but we’ll see,” he said. 

He added that there are discussions on removing location restrictions for outsourcing firms planning to register for incentives in the National Capital Region. 

Although there cannot be new proclamations for information technology ecozones in the capital region, the government is considering allowing firms to register in areas vacated by Philippine offshore gaming operators, Mr. Rodolfo said. 

Outsourcing revenue rose just 1.4% to $26.7 billion last year from the 2019 figure, IBPAP said. To compare, the sector’s revenues jumped 7.1% in 2019, beating industry targets.