BPO resignations feared as back-to-office looms

CEBU, Philippines —  The IT/BPM (Information Technology/Business Process Management) sector is facing another challenge of probable high attrition following the government’s back-to-office mandate effective April 1, 2022.

“The news that IT-BPM employees will now be required to report on-site has prompted a number of them to consider leaving their BPO jobs and transfer to other industries that allow for the permanent WFH setup. This is further compounded now by the rise in fuel cost that will greatly reduce disposable income of employees,” analysts at Colliers Philippines noted.

According to Colliers, now that the IT-BPM industry is being directed to have their employees report to the office full time by April 1, 2022, many are now scrambling to transition their employees back onsite, while others are willing to bear the brunt of penalties rather than increase attrition by asking their employees to return to office so abruptly. If, however, employees start going back to work, other businesses will thrive. Although whether or not the timing is right is still a matter of debate.

These companies, according to its latest industry assessment, are now scrambling to transition employees and equipment back onsite. While some have started their back-to-office plans earlier anticipating a non-approval of the extension, others are willing to bear the brunt of penalties rather than increase attrition within their organizations.

“With these developments, the outsourcing industry has arrived at a crossroads: continue under PEZA or de-bond from the agency. The latter, beginning to be more appealing now with the passing of the Create Law, wherein companies, as long as they are exporting services and meet investments requirements, can take advantage of income tax holidays, zero-VAT rating status, zero importation tax on materials and equipment, and lower corporate income tax once the income tax holidays expires even outside ecozones,” Colliers said.

According to Colliers, the hesitancy to resume onsite work is coming from employees’ preference. “WFH has proven to be effective and easier to employees, which greatly reduced the difficulties of commuting to and from the office.”

But in order to ease companies’ return to the office – and address the reservations of their employees – office landlords will play an important role, mainly by keeping in mind that employee experience is now the number one goal of their occupiers and tenants.

Colliers recommended that office landlords should highlight their buildings’ new safety and health measures that will give employees the confidence that their overall wellness, specifically physical and mental health, is of utmost priority; Assist tenants with renovations to maintain social distancing requirements; Provide additional fitted office spaces that can handle the inflow of employees by partnering with service office providers or leasing out vacated spaces even for short periods; and give incentives to tenants who are returning to physical offices by providing rental concessions such as reduced rental rates or suspended rental escalations.

“These are just some creative ways landlords can help jumpstart recovery,” Colliers added.

Economically, if, however, employees start going back to work, other businesses will thrive. Public transport will again flourish. Restaurants and other auxiliary businesses will once again see an influx of customers.

“The government hopes that these activities would be enough to reawaken our economy. Although whether or not the timing is right is still a matter of debate,” it said.

Meanwhile, Colliers’ expert believes that WFH is here to stay.

“Whether mandated or not, the pandemic has shown that technology and the private sector’s sheer resourcefulness can meet the requirements of remote work. Workers can be productive and happy in this environment, and it is undeniable that the WFH setup has helped mitigate the spread of Covid-19.

The question now is whether companies, employees, and business owners are again willing to embrace this impending change: To go beyond their comfort level and burst their 2-year-old quarantine bubble,” Colliers added.

Outsourcing companies, having settled quite well into the WFH setup, have their employees clamoring for this to remain as an option. The IT and Business Process Association of the Philippines (IBPAP), along with the Philippine Economic Zone Authority (PEZA), have lobbied for the extension of the WFH until September 2022. Unfortunately, the Fiscal Incentives Review Board (FIRB) under the Department of Finance (DOF) has denied the request to extend the arrangement any further. BPOs under PEZA are now required to go back to their offices by April 1, 2022.