What is the current situation of the BPO industry in the Philippines?
The article discusses current updates on the BPO Industry in the Philippines.
The Philippines is among the leading countries in offshore business services worldwide.
The Philippines remains a top business process outsourcing destination to investors with its advantages in its economic landscape.
The country is an ideal staffing destination with a highly specialized labor pool, high literacy and communication, culture, cost-effectiveness, and more.
Despite the acceleration of the Covid-19 pandemic and the consequent adoption of a digital-first and remote work model, the Philippine Business Process Outsourcing Industry has demonstrated continued operations and growth throughout the country.
Read more for current updates on the Philippine BPO Industry.
The Philippines now allows BPOs up to 100% work-from-home setup without losing tax incentives
Last September 14, 2022, the Philippine Fiscal Incentives Review Board (FIRB) resolved to allow Information Technology and Business Processing Management or Business Processing Outsourcing (IT-BPM/BPO) firms operating in economic zones to adopt up to 100% work-from-home (WFH) arrangement, without the loss of tax incentives.
Eligibility for increased WFH setup comes with the condition of IT-BPM/BPO firms to transfer their registration from the Philippine Economic Zone Authority (PEZA) to the Board of Investments (BOI). This process will be carried out expeditiously.
The resolution is beneficial to several companies that since 2020 have shifted to either a hybrid setup or work-from-home (WFH) setup as a response to ease of business operations during the Covid-19 pandemic.
Tax Incentives for IT-BPO firms
Investors outsourcing to the Philippines are also eligible to fiscal and non-fiscal incentives. Tax Laws such as the 1995 Special Economic Zone Act were legislated to promote investments in the growing Philippine BPO industry.
The Philippine Business Process Outsourcing industry highly contributes to foreign direct investment net inflows in the country. In fact, it is only second to remittances from Overseas Filipino workers (OFWs).
Republic Act 11534, or the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, simply called the CREATE Law, was enacted to grant tax incentives of micro, small and medium enterprises (MSMEs).
According to Acting Socioeconomic Planning Secretary Karl Kendrick Chua, the passage of RA 11354 “provides immediate relief to our MSMEs with a 5 or 10 percentage point reduction in the regular corporate income tax (CIT) rate [and] it brings our corporate tax rate closer to our [ASEAN] peers…”
Secretary Chua adds the passage of RA 11354 “put[s] the country in a better position to compete for investments.”
IT-BPO Industry: Largest Employer in the Philippines
The global IT-BPO market is expected to grow by $281.25 billion by 2026, at a compound annual growth rate (CAGR) of 8.12%.
In 2021, the Philippine IT-BPM industry grew by 9.1 percent, or by 120,000 FTEs year-on-year, bringing the total number of IT-BPM workers in the country to 1.44 million amid the implementation of remote working setup and the continued economic recovery from the Covid-19 pandemic.
The Philippine IT-BPM industry projects up to 1.1 million direct jobs in the next six years.
The Philippine Information Technology and Business Process Management (IT-BPM) industry, also helps promote growth in the BPO industry through hiring outside Manila, the country’s capital.
In fact, 54 percent of the 1.1 million job target will be in the countryside. This will bring the sector’s total headcount to 2.5 million by 2028. The industry also has a forecasted growth rate of 8.5 percent.
The industry also has the potential to nearly double in size as its annual revenue is likely to reach $59 billion in 2028, reflecting a compound annual growth rate of 10.4 percent.
AI Automation in the Philippine BPO Industry
The Philippines remains attractive to investors with its budget-friendly hiring costs and associated minimum wage.
Aside from cutting down costs, the integration of agile operations, process improvement and process upgrades for digital transformation are among the priorities of business today.
Philippine business process outsourcing providers are a great way for companies to keep up with your company’s staffing and transformational strategies.
According to a 2020 analysis by global consulting firm Kearney, AI is expected to provide a 10 to 18 percent uplift in GDP across Southeast Asia by 2030. The economic impact of AI in the Philippines ins 2030 (% of 2030 GDP) is 12% of a potential $92 billion GDP.
In addition, in the Philippines, 26% of businesses are keen to invest/develop AI strategy, 54% are plotting initiatives within discrete activities, 4% are scaling initiatives across discrete industries, and 9% have scaled end-to-end implementation of AI.
Conclusion
- The Philippines now allows BPOs up to 100% work-from-home setup without losing tax incentives.
- The CREATE Law was enacted to grant tax incentives of micro, small and medium enterprises (MSMEs). The law provides immediate relief to our MSMEs by reducing the regular corporate income tax (CIT) rate.
- The IT-BPO Industry is the largest employer in the Philippines. In 2021, the Philippine IT-BPM industry grew by 9.1 percent, or by 120,000 FTEs year-on-year, bringing the total number of IT-BPM workers in the country to 1.44 million. The Philippine IT-BPM industry projects up to 1.1 million direct jobs in the next six years.
- The economic impact of AI in the Philippines ins 2030 (% of 2030 GDP) is 12% of a potential $92 billion GDP.
Connext Global Solutions provides Quality Business Process Outsourcing (BPO) Solutions
Connext Global Solutions is a renowned Philippine business process outsourcing (BPO) provider that builds, trains, and manages highly functioning custom outsourced teams thus enabling client growth.
Connext Global Solutions offers industry-leading staffing solutions that helps manage a client’s team as if it was theirs and makes sure the performance matches or exceeds that of your local teams.
Industries Connext Caters to:
1. Healthcare Providers
2. Distribution
3. Telecommunications
4. Title and Escrow
5. Property Management
6. Accounting
7. Banking
8. Technology
9. E-Commerce
10. Retail
11. Construction
12. Professional Employer Organization
13. Insurance
Since 2014, the company has provided remote staffing and outsourcing services and enabled the growth to over 50 clients through highly talented remote staff, white-glove account management, work tools, operating facilities, systems, automation and targeted process improvement. is helping mid-sized businesses tackle the workplace shortage head-on with innovative remote staffing solutions.
The company experienced 71% growth in 2021, positioning itself as Leader in Customer Experience Co-Sourcing. Currently, the company has 400 employees and signed a lease for a 10,000 square ft. second building in the Philippines.
Partner with Connext and receive:
- Geographically diverse talent
- 100% virtual recruitment and employment process
- Productivity, utilization, and quality monitoring
- Dedicated account management
- Standing IT support
- Talent management and employee engagement
Build your Philippine outsourcing workforce with Connext Global Solutions today.
