BPO hires down in second quarter as gov't pushes tax perk limits

MANILA, Philippines – Online hiring in the booming information-technology business process outsourcing industry (IT-BPO) has slowed in the second quarter amid government efforts to reduce tax perks offered in economic zones where these firms are located.

According to the Monster Employment Index, online hiring for the IT-BPO industry in the Philippines went down 4 percent in the second quarter from the previous three months.

The decline pulled down over-all online hires by 3 percent in the second quarter in the Philippines. Aside from IT-BPO industry, the index, crafted by online job portal Monster.com, measures e-recruitment in banks and finance, advertising, media and human resource.

While no reason was given for the decline, the negative growth was recorded amid uncertainty surrounding the government's second tax reform bill, which aims to lower corporate income taxes, but reduce also the tax perks.

Companies, including BPOs, which operate in ecozones where these incentives are offered have opposed the bill, fearing that limiting or removing tax perks would result into job losses. The BPO industry employs around 1.16 million Filipinos as of 2016, industry data show.

The bill aims to rationalize the current fiscal incentives regime by making perks time-bound, performance-based and targeted to select industries only.

On Tuesday, Finance Secretary Carlos Dominguez defended the bill, which already hurdled the House ways and means committee. Its counterpart bill at the Senate has not been acted upon by legislators.

"I expect some resistance; I also expect a lot of people supporting this. Because actually, the smaller firms are going to absolutely benefit from the reduction in taxes. There are those that obviously don’t like it but I think the vast majority will actually be benefitting [from it]," Dominguez said at a forum organized by the Economic Journalists Association of the Philippines.

Despite the quarter-on-quarter decline, the Monster index showed the online hiring for the IT-BPO industry rose 9 percent year-on-year, suggesting expansion will continue this year.

"The technology sector in the Philippines has been traditionally a strong pillar of the economy and is likely to remain in a stable position," the report said.

Among other industries, online hiring among banks and financial institutions surged by double-digit in the second quarter, but fast inflation "raises concerns" on whether this will be sustained in the remaining months of 2018.

E-hiring in advertising and media rose an average of 14.7 percent in the second quarter, while that for human resources posted the fastest growth rate of 25.7 percent.