‘Trabaho’ bill to stem job generation in BPOs after all, study showed

The latest tax reform bill championed by the country’s economic managers could result in tepid hiring of new workers in the business process outsourcing (BPO) industry by the year 2022—or just 300,000 vacancies from the previous estimate of 550,000, a study showed.

The study, done by consulting firm Everest Group, showed how the rationalization of tax incentives under the Tax Reform for Attracting Better and High-quality Opportunities (Trabaho) bill could hold back the growth of the BPO industry, which currently employs over a million Filipinos.

The bill, the second in a series of tax packages introduced by the administration, aims to gradually lower corporate income tax (CIT) while rationalizing perks previously offered to entice firms to set up shop here.

The Inquirer saw excerpts of the study, which was commissioned by the Information Technology and Business Process Association of the Philippines (IBPAP).

Without these tax perks, doing a BPO business in the Philippines would become 20 percent more expensive compared to its nearest competitor, India, the study revealed. At present, the cost differential is already at 10 to 15 percent.

“The transition from 15 to 20 is enough to make the conversation of where to move [your operations] even more difficult,” IBPAP president Rey Untal told the Inquirer.

As firms move to cut costs, job creation would be affected, the study showed. The industry would only be able to generate 300,000 new jobs by 2022, it added.

Revenues, likewise, would be smaller than previously expected. The study showed the industry would have to shave off $3.5 billion to $5.5 billion of its estimated $13 billion to $15 billion revenues by 2022.

Source: https://business.inquirer.net/258612/trabaho-bill-stem-job-generation-bpos-study-showed