IT-BPO firms buck move to scrap perks

By Richmond Mercurio (The Philippine Star), Jun 29, 2017

MANILA, Philippines – The information technology and business process outsourcing (IT-BPO) industry has expressed strong opposition to the government’s planned removal of its incentives, saying such move will not only put its competitiveness in peril, but will also derail its rosy growth trajectory.

The IT-Business Process Association of the Philippines (IBPAP) urged yesterday government and lawmakers to thoroughly take into account the economic impact of the Tax Reform for Acceleration and Inclusion (TRAIN) bill in relation to how it would affect the industry negatively and lead to possible job losses.

“We are supporting the tax reform bill’s ability to increase the take home pay of the individual. However, we believe that in crafting the tax reform bill, it is important to study its impact on both businesses and individual taxpayers,” IBPAP said.

“Therefore, we are petitioning the government to consider the negative impact on job creation that may happen if the incentives of the IT-BPM industry are removed,” the group added.

With the current model, IBPAP said there is flexible demand for its services which allows the industry to be competitive in the global market.

“This is because the margin of difference is counterbalanced by the high quality service and talent the industry offers,” it said.

“However, should the tax reform bill remove the current incentives of the industry, this will increase the price differential further. This will impact on our industry’s competitiveness in the global market, as well as the growth trajectories outlined in Roadmap 2022. More importantly, this will also impact job creation targets, including sectors who benefit from the 3.2 multiplier effect of the IT-BPM industry,” the group added.

IBPAP came out in October last year with Roadmap 2022, an aggressive six-year program that will chart the growth path of the industry over the next six years.

Under the roadmap, the local IT-BPM industry aims to generate revenues of $38.9 billion by end-2022 from an expected revenue of $25 billion by end 2016.

As a result of the revenue hike, the industry’s share of the global market will increase to 15.5 percent from last year’s 12.6 percent.

Also by the end of 2022, the IT-BPM industry is seen producing 1.8 million jobs, of which more than 500,000 will come from outside the National Capital Region and 73 percent are mid to high value.

The IBPAP is also looking to hire more post-graduates which will account for 16 percent of the total jobs generated by 2022, as compared to only seven percent of the total employment produced in 2016.

“Through the IT-BPM industry’s hub and spoke model to developing the sector and countryside, we have been contributing significantly to the growth of the middle class over the past decade. With the IT-BPM industry subsectors growing between nine to 13 percent over the next six years all over the country, we can continue helping the government with the inclusive growth and poverty eradication goals of the TRAIN Bill,” the group said.

“However, the magnitude of this growth will be highly dependent on maintaining the competitiveness of the Philippines as a major outsourcing destination and this can be done only by keeping the current incentives that the IT-BPM industry receives,” IBPAP added.