Back-to-office order drives high attrition rate in BPOs

CEBU, Philippines —  The outsourcing industry in Cebu is experiencing one of the highest attrition rate in recent years, attributing to the change of working dynamics particularly in the back-to-office mandate of some companies.

According to Darwin John “DJ” Moises, founder and chief executive officer (CEO) of eXPerience Plus Inc., while  the government’s back-to-office mandate has been extended until September allowing companies to continue hybrid (office and WFH) set-up, most employees are letting go of working back to offices, as most of them have found freelancing jobs that allow them to work from anywhere.

Moises, who is also the chairman of the upcoming “2022 Transformation Summit & Expo” slated on July 13-15, 2022, organized by Cebu IT/BPM Organization (CIB.O), the problem of high attrition can be rescued if companies will continuously allow some employees to work from home or work-from-anywhere.

In March 2022, the Fiscal Incentives Review Board (FIRB) ordered employees to return to their offices effective March 31, 2022. But the March 31, 2022 deadline was extended until September of this year.

“The WFH arrangement is only a time-bound temporary measure adopted during the surge of the Covid-19 pandemic. Given the increasing vaccination rate of Filipinos nationwide, we can now undertake safe measures for physical reporting of employees, including those working in the IT-BPM firms operating within ecozones and freeports,” said Finance Secretary and FIRB chairman Carlos Dominguez III.

“The employees’ return to the office would provide more opportunities and pave the way for the recovery of local micro, small, and medium enterprises that depend on IT-BPM employees for their livelihood,” he added.

Last September, the FIRB released Resolution 19-21, which allows IT-BPM firms in economic zones to implement 90 percent WFH arrangements until March 31, 2022. Under this setup, the IT-BPMs in economic zones can keep enjoying their tax incentives if at least 10 percent of their workers report in the office.

The IT and Business Process Association of the Philippines (IBPAP) along with the Philippine Economic Zone Authority lobbied for the extension of the WFH arrangement until September this year.

Moises, together with officials at CIB.O hopes that the new administration will look closely on this issue, considering that hybrid work dynamics is “here to stay” whether we like it, or not.

IBPAP President and CEO Jack Madrid earlier stated that the should government to create legislations to support the new working dynamics under the new normal era, particularly on the work-from-anywhere arrangements.

Madrid said remote working or the work-from-anywhere concept is here to stay and that the Philippines should craft legislations and policies on this new work-style, otherwise the country’s edge in outsourcing may be snatched by other country-competitors.

Madrid cited the quick action of other country counterparts such as Malaysia, Poland and India to adjust their laws and regulations on labor/ which include already the work flexibility arrangements.

In 2020, when most industries shrank, the IT-BPM sector even grew and hired an additional 23 thousand full-time employees (FTEs) and generated $26.7 billion in revenues that were invaluable in bringing some financial inflow to the country. This is testament to the industry’s role as a growth driver and pillar of the Philippine economy, invalidating any perception that the sector is on its sunset.

Further proof to this is the resurgence the industry experienced in 2021 despite continuing uncertainties, with growth estimated to have reached an impressive 7-8 percent in headcount and 8- 12 percent in revenues.

With a workforce of around 1.4 million Filipinos, the IT-BPM sector continued to show strong multiplier effect and likely generated an additional 4.6 million indirect jobs in support industries like food, retail, transportation, logistics and others.

Export revenues of the information technology and business process management grew 10.6 percent in 2021 to $29.49 billion from $26.6 billion in 2020.

According to Madrid, the industry will remain a crucial driver of inclusive growth through well-established and emerging IT-BPM hubs located beyond Metro Manila, with 27 percent of the sector’s employees spread throughout the countryside.

Cebu, in particular has over 200 thousand employees working for the IT/BPM companies.