Narayan AmmachchiOnline recruitment in the Philippines’ IT and BPO industries is on the decline, with analysts citing the government’s push to cut outsourcing tax incentives in free economic zones as the reason why.
Web-based hiring in the sectors decreased 3% in July compared to the same month last year, according to Monster Employment Index.
Interestingly, hiring has increased in most other sectors. “Only the BPO/ITES industry did not seem to make a mark, but can definitely be expected to improve in the coming months,” stated Abhijeet Mukherjee, CEO of Monster.com, APAC and Middle East.
The Philippines government has drawn up a legislative bill that promises to reduce corporate tax and the tax benefits that it offers BPO providers.
“The bill aims to rationalize the current fiscal incentives regime by making perks time-bound, performance-based and targeted to select industries only,” says a local news portal Philstar Global.
As the government tries to push the bill through congress, BPO operators are warning that the reduction in tax perks could lead to job losses.
The BPO industry is one of the largest employers in the Southeast Asian country, with the United States accounting for 70% of the sector’s turnover.
The initial dip in BPO activity came early last year, when President Rodrigo Duterte said he would dump the US for a warmer relationship with China.
Later, street battles between the military and armed militants linked to the Islamic State (IS) in the central Visayas region caused a sense of insecurity in the Bohol and Cebu provinces, where several BPO operators are based.
Investment pledges in the sector experienced a 22% annual drop last year, according to Dutch financial services firm ING Bank.
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