Nearshore Americas
philippines BPO crisis

Philippines BPO in Crisis as SEZ Firms Told to End Remote-Working

The Philippines’ BPO industry has been plunged into a fresh crisis, following the government’s refusal to extend the March 31 deadline for call center firms in special economic zones (SEZ) to end remote work arrangements.

The country’s Finance Secretary Carlos Dominguez III has made it clear that BPOs would lose tax benefits if their workers do not return to their offices in free trade zones.

Around 60% of the Philippines BPO workforce is reportedly working from home. Many of them are said to be unwilling to resume working on-site. Some of them are even threatening to resign if forced to return to the office, according to the Alliance of Call Center Workers.

The growing animosity between the workers’ unions and the government may lead to job loss, leaving the entire industry in a crisis, say analysts.

As the COVID-19 pandemic wreaked havoc in mid-2020, the Philippines government allowed firms operating in SEZs to have work-from-home arrangements with their employees.

Over the past year, they have realized that their hometowns are less expensive and that remote working helps save a lot of money. Now, they are refusing to return to their offices, most of which are located in metropolises such as Manila.

However, the BPO employers are not willing to lose the tax benefits that SEZs offer. Companies in these duty-free zones are entitled to income tax holidays and a 5% tax break on their gross income.

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The government is saying that it doesn’t oppose remote working but it cannot provide tax benefits so long as remote-working arrangements are in place.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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