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BPO Tax Benefits Remain, According to DOF

by: Mary Christine Galang

Wednesday, August 02, 2017 | Outsourcing News | Comments (0)

BPO sector to remain competitive in the export market

The Department of Finance (DOF) said that the first package of the Philippine government's Comprehensive Tax Reform Program (CTRP) will not impact the BPO sector and that the sector will maintain its competitiveness in the export market.

Finance Undersecretary Karl Kendrick Chua said in a statement that the Tax Reform for Acceleration and Inclusion Act (TRAIN) or House Bill 5636, which is included in the first package of CTRP, seeks to remove the tax benefits enjoyed by "indirect exporters" – or suppliers of export-oriented firms and that there is no change in tax policy for exporters.

Chua clarified that under TRAIN, BPO firms, which are referred to as "eco zones" (special economic zones), will continue to retain their VAT exemptions and zero-rated status, while the ones outside, including Board of Investments (BOI)-registered firms, will retain their zero-rated status.

"Receipts from foreign services within the SEZs of the Philippine Economic Zone Authority will remain VAT-exempt, as is the case now, because they are outside customs territory by legal fiction, or zero-rated if the exporters are outside the special economic zone, including those that are BOI-registered," Chua said.

"As for exporters outside SEZs, they are zero-rated on VAT payments and are entitled to get back their VAT payments once they apply for such refunds under the proposed 90-day refund system, while all other taxpayers, including suppliers to exporters, will have to pay the VAT," he added.

Chua assured indirect exporters that their zero-rated VAT privilege will only be removed if and when an improved VAT refund system is in place, which will allow them to claim cash funds for VAT payments within 90 days of filing their VAT refund applications to the Bureau of Internal Revenue (BIR).

He maintains that the BPO sector will remain highly competitive and that the tax policy will remain the same after TRAIN.

"Demand services are driven by the high quality of service and talent they offer," Chua said.

BPO firms continue to stay, says US envoy

by: Mary Christine Galang

Monday, July 31, 2017 | Outsourcing News | Comments (0)

US Ambassador to the Philippines Sung Kim assures that the US information technology-business process outsourcing (IT-BPO) companies based in the Philippines continue to maintain good business in the country.

This follows concerns on US President Donald Trump's plans on job policies, which can cause US outsourcing companies to defer their investments in the Philippines, as quoted from Philippine Economic Zone Authority (PEZA) Director General Charito Plaza in earlier news reports.

"We (in the Philippines) have a very young population, smart, very competent, and very hardworking. There's also a very strong cultural affinity so I think BPO will continue to do very well," said Kim, who made the statement during his first visit in Cebu recently for the general membership meeting of American Chamber of Commerce of the Philippines-Cebu Chapter held at the Cebu City Marriott Hotel.

The ambassador believes that much of the threats in the IT-BPO sector come in the form of automation, which replaces human workers, leading to job loss.

This is further affirmed by the International Labor Organization (ILO) report, which notes that majority of 89% of BPO employees are at "high risk" from robotic process automation.

Filipinos are the preferred workers for US IT-BPO firms

Kim validated that Filipinos continue to be the preferred workers for US IT-BPO firms, which currently hires 1.3 million Filipino workers.

The economic partnership between the US and the Philippines is maintained, despite setbacks in 2016.

"We want to assure you that the United States will continue to partner with the Philippines and look for ways to increase foreign investment, reduce trade barriers, and streamline business regulations," he said.

BPO Industry Remains Strongest Job Generator

by: Mary Christine Galang

Friday, July 28, 2017 | Outsourcing News | Comments (0)

More companies are turning online for their recruitment, as evidenced by a 12% increase between May 2016 and 2017 in the latest results of Monster Employment Index (MEI), a monthly gauge of online job-posting activity, based on a real-time review of millions of employer-job opportunity data from career websites and online job listings nationwide.

Monster.com managing director for Asia Pacific and Middle East Sanjay Modi said that the Philippines is set to gain sustainable-employment growth in the year ahead. This is due to a highly stable macro economic environment supported by strong economic structures.

"This is evident from the latest BMI research results which said the Philippines’s business friendliness has made it favorable for investments, production activities and job creation," he said.

"In line with our MEI findings, the Philippine Statistic Authority’s latest data showed the unemployment rate has fallen when compared to the corresponding period from last year," he added.

The MEI results showed the fifth positive annual growth for the country since January of this year, with 106 total job listings last compared, which is higher than the recorded 95 in May last year.

Strongest online hiring growth in the IT-BPO industry

Web-based recruitment continues to enjoy an upward trend, with the internet technology (IT) and business process outsourcing (BPO) services industry gaining the strongest growth in online hiring.

There was a 30% increase in May 2017, with 138 employments were placed online compared to the 106 posted during the same period in 2016. This is considered as the highest growth industry year-on-year (YoY) increase in web recruitment in May.

According to the MEI's monitored occupation groups, customer-service talents are the most in-demand and most hired, at a 40% YoY growth in May this year from 107 to 150. It was a 10-percent increase from the 30% YoY growth in April of the same year.

It is followed by software, hardware, and telecom, from 106 to 117. Hospitality and travel, healthcare, engineering, real estate, and human resources and administration are recorded to have less occupational demands.

The BPO sector currently employs 1.2 million people and is anticipated to grow to 1.8 million within the next five years, as stated in the Information Technology-Business Process Association of the Philippines Roadmap 2022 report.

The second strongest sectors are logistics, freight, transportation, courier, shipping, import, and export, with an increase of 17% from 108 to 126.

Education has the lowest growth, with negative 3%, from 113 to 110.

On the other hand, the engineering and real-estate sector has a 6-percent decline from 88 to 83 YoY in online hiring in May.

"Being a shining spot in Asia’s economy, it is likely the country has come under the scrutiny of international players who can potentially and rapidly introduce new jobs in a short span of time. Even then, therein lies a need for business owners and employers alike to remain cautious and to always have sufficient plans to cushion potential headwinds," Modi said.

Rags2Riches WeaversJuly 15 is when United Nations celebrates World Youth Skills Day. Employee Engagement - CSR and MicroMissions partnered with Rags2Riches, Inc. – a social enterprise that was established in 2007 and contributed immensely to alleviate poverty in Payatas, Quezon City. R2R works with men and women from these poor communities to increase their levels of income and bring them out of poverty. They are in the business of sharing positive influence and partnering with groups (private and public) and individuals who share their values. Hence, they provide weaving workshops to share their passion and creativity, aside from generating additional income for the artisans.

Rags2Riches holds weaving workshop at MicroSourcing Ortigas

MicroSourcing Employees at Weaving WorkshopIn line with this day, 18 volunteers spent a productive and fulfilling Saturday with the artisan mentors of Rags2Riches. MicroSourcing employees got to know all about R2R and how the company, from its humble beginnings in Payatas, now employs 900 artisans whose craft is recognized by some of the Philippines' top designers including Rajo Laurel, Amina Aranaz-Alunan, and Kenneth Cobonpue, to name a few.

Matt Pardinas, R2R's Sales and Marketing Manager, together with six of the best–skilled artisans taught and guided everyone how to weave (step-by-step) and how to do it well. The fabric strips even require a certain tension to make a good product. This is a unique experience as one got to learn the proper way of weaving using simple tools and materials, as well as some tricks of the trade.

After weaving, the volunteers got to practice their crocheting and sewing skills to finish each of their beautiful products.

Looking at it, the whole process is very simple but if one would put years of experience, skill, patience, and creativity together - the results are high quality and world-class products that we can see on R2R's lineup: https://rags2riches.ph/.

If you were inspired by our experience, please join us on our next MicroMissions' activity.

Data Privacy Act to Increase PHL Global BPO Position

by: Mary Christine Galang

Monday, July 24, 2017 | Outsourcing News | Comments (0)

The Data Privacy Act of 2012, or Republic Act 10173, will significantly increase the Philippines' position as one of the most preferred destinations for business process outsourcing (BPO) in the world, according to the Contact Center Association of the Philippines (CCAP).

Espie Bulseco, Learning Series Task Force lead of the CCAP Security Council, said that the Data Privacy Act will mandate all BPO firms in the country "to ensure protection to personal data resulting to an increase in foreign investors' confidence in growing their outsourcing requirements."

All BPO companies are required to comply with RA 10173 and are given a timeline to register with the NPC on or before Sept. 9, 2017, or one year from the effectivity of the implementing rules and regulations of the law.

Data Privacy Act to strengthen BPO capabilities

This will strengthen and increase the capability to handle outsourcing requirements of countries that have their own data privacy laws that restrict transfer of data of their residents outside their region unless the offshore provider is based in a country with existing privacy laws, which the Philippines have in place.

In addition, CCAP said that the Philippine government is fully enacting the law to ensure BPO firms will comply with the cyber security and data privacy regulations to safeguard user information.

To further strengthen the implementation of the Act, CCAP has come up with several measures that include data privacy, cyber security, and governance-related issues and practices to update the BPO industry.

According to Tonichi Achurra-Parekh, CCAP board director and trustee for CCAP Security Council, "The industry has been playing an active role in educating our members through forums as well as answering data privacy-related issues in some of our conferences."

This includes organizing one of Asia's biggest data privacy summits, the recently concluded Data Privacy Asia 2017, which was held on July 20, 2017, at Makati Shangri-La Manila.

"The summit is in response to that growing need to educate and also accelerate our expertise in our industry," Achurra-Parekh said.

CCAP president Jojo Uligan said that the summit’s objective is to position the Philippines as the "best-in-class" when it comes to guideline implementation and upholding data protection and privacy, given the amount of data that goes through BPO firms in the country.

"Part of the objective is to communicate the trends and the threat landscape on cybersecurity when processing millions of data, and to establish the Philippines as a country with advanced data protection and privacy regulations to address these threats, ultimately to make the world entrust their business data with us," Uligan said.

The summit also focused on global perspectives as international experts discussed the best practices and creative solutions concerning data privacy and cyber security issues to apply in the country.

Additional initiatives include supporting, aligning, and rolling out programs related to the BPO industry, with the help of the National Privacy Commission (NPC) through its head and chairman Raymond Liboro.

CCAP has also been briefed on the NPC’s short- and long-term projects and is expected to continue to see the support through in implementation and guidelines.

Moody's Affirms Philippines' Baa2 Rating, Stable Growth Outlook

by: Mary Christine Galang

Thursday, July 20, 2017 | Comments (0)

Moody's Investors Service affirms the Philippines' Baa2 long-term issuer and senior unsecured debt rating and maintains a strong and stable growth outlook.

It cites the country's economic performance and continuous debt consolidation as positive factors that will further converge key fiscal metrics versus corresponding peer medians.

On the other hand, developments in domestic politics pose challenges to the institutional strength and the economy's positive trend in performance. There are also constraints seen in material capacity despite a stable macroeconomics.

Strong growth outlook

Between 2014 and 2016, the Philippines had an average of 6.4% real GDP growth, which is more than twice the corresponding median for Baa2-rated countries. Over the next two years, Moody’s expect an above 6% growth per year, which will largely come from the private sector.

A young population will be key in private consumption growth stability. Overseas Filipino workers (OFWs) will maintain stable remittances to support household consumption. The business process outsourcing (BPO) sector, which comprises the bulk of services exports, will continue to improve the external environment.

Improved government spending, particularly in infrastructure development, is seen to achieve the target range of 7%-8%.

The Baa2 rating reflects the country's high economic strength, which balances its large scale and rapid growth against low per capita income compared to its peers.

Moody's assessment reveals that the Philippines' institutional strength is drawn from a long track record of sustaining macroeconomic and financial stability, despite weaker Worldwide Governance indicators as compared to other investment grade countries.

In addition, the government's fiscal strength also reflects low government debt relative to most Baa2-rated peers, as well as low debt affordability and elevated vulnerability to exchange rate depreciation. These indicators have shown significant improvement in the last 10 years. Furthermore, the country's susceptibility to even risks is reduced by a healthy banking system and its external payments position.


BPO Leaders Tap Bacolod for 'Knowledge Process Outsourcing'

by: Mary Christine Galang

Wednesday, July 19, 2017 | Outsourcing News | Comments (0)

Bacolod City is eyed by leaders of the local information technology (IT) sector to follow Cebu City as one of the country's hubs of knowledge process outsourcing (KPO).

According to Joey Bondoc, research manager of Colliers International, a global real estate services company, "KPO companies offer higher value outsourcing services such as medical transcription or health information management (HIM), software engineering, and finance and accounting."

Colliers reported that outside Metro Manila, Cebu remains to be the largest and most practical choice for KPO firms due to its diverse and skilled labor pool.

Jocelle Batapa-Sigue, executive director of Bacolod-Negros Occidental Federation for ICT (BNeFIT), expressed that Bacolod City is primed for these high-value KPO services, especially HIM and software development.

"After having been declared as Center of Excellence for business process outsourcing (BPO) especially in contact center services in 2013, BNeFIT, in collaboration with the city and provincial governments has developed strategies to target three high-value areas: HIM, software development and creative processes like game development and animation," Batapa-Sigue said.

Road to Knowledge Process Outsourcing

She cited five important points in order for the city to become a fully-realized KPO key city.

  1. A solid marketing program. As per Batapa-Sigue, most investment leaders concentrate all marketing efforts on Manila. She believes that it’s about time these leaders consult with local stakeholders and carefully plan marketing strategies that accurately understands and capitalizes the strengths and talents of each city in the countryside.
  2. Reinforced incentives. "We also need to beef up our roster of fiscal and non-fiscal incentives for information and communications technology (ICT) companies." Incentives to ICT companies within the Philippine Export Zone Authority (PEZA) that are at or above par with other countries will help jobs and investments to grow steadily. 
  3. Industry-specific certifications and training. Batapa-Sigue suggests that the national and local government should offer incentives that would encourage companies to improve and strengthen their industry-calibrated certification and training programs.
  4. Early development of creative and critical thinking skills. Batapa-Sigue also suggests that BNeFIT and the industry should collaborate with K-12 educators to hone the students’ creative and critical thinking skills at an early age.
  5. e-Readiness. One of the top priorities in promoting the progress of KPO in the countryside is to scale up e-Readiness. Bacolod City should make efforts in improving its efficiency in service delivery through the integration of ICT and data analytics, among many other new technologies.

MicroSourcing Cebu runs for a cause

An activity for a cause was initiated by Employee Engagement - CSR in partnership with World Vision Philippines in building sustainable communities and helping the children of Sogod, Cebu.

Last July 16, 2017, a total of 28 employees from MicroSourcing – EagleView Cebu participated in the World Vision Run. As early as 4:00 AM, everyone assembled at Cebu Business Park waiting for the run time for the following categories: 21K (Audiever Diaz), 10K (Gene Obeso, James Parame, Kenneth Cuyno, Karren Ugsang, Rodney Polec-eo, Wenido Balsicas, Roger Onipig, Simon Balingit, Dorothy Gonzales, Asterly Ygot, Vincient Degala, William Genelza, Christian Finones, Arbel Mangubat, Catherine Teo, Adlwin Balugo, Michael Binarao, Ellara Mae Balgos), 5K (Benjie Dela Torre, Joseph Bryle Cabaluna, Ryan Fabroa, Philip Carl Yonson, Anthony Talledo), and 3K (Gel Noval, Everly Apurado, Roland Navarro, Alper Espaltero).

Everyone enjoyed and had fun. They also expressed their gratitude to MicroSourcing Philippines for extending an activity such as this to the Cebu site, with the opportunity to help the community as well as promote health and wellness.

BPO Sector to Continue Driving PHL Economic Growth

by: Mary Christine Galang

Monday, July 17, 2017 | Comments (0)

Business process outsourcing (BPO), along with agriculture and manufacturing sectors, will continue to drive the country's economic growth, according to global research and consultancy firm Oxford Business Group (OBG).

In its latest publication, "The Report: The Philippines 2017", the three sectors are greatly supported by the government's planned reforms.

Positive growth outlook for the Philippine BPO sector

According to the report, the growth outlook for the BPO sector "remains positive after years of extremely rapid expansion, with the country moving to replace India as the world’s top BPO destination in just a few short years."

In addition, the Bangko Sentral ng Pilipinas has projected that the "industry revenues will overtake remittances from OFWs by 2017" should the BPO industry’s current growth rates continue.

A 2016 report cited a forecast that the sector is said to generate as much as $39 billion in revenue over the next six years.

This is in line with President Rodrigo R. Duterte's 10-point socioeconomic agenda that seeks to continue and maintain the macroeconomic policies of the previous administration, in addition to putting a new comprehensive tax reform program in place.

The agriculture and manufacturing sectors will also largely benefit from the 10-point plan that includes the prioritization of land reforms that will enable unused farm land to be developed into new industrial developments.

Filipino Workers Are 'Key' to the Growing BPO Industry

by: Mary Christine Galang

Friday, July 14, 2017 | Outsourcing News | Comments (0)

The "key" to expanding the ever-growing business process outsourcing (BPO) sector in the Philippines is its young, English-speaking population, according to real estate consultancy firm Santos Knight Frank.

This is despite the House of Representatives approving the measure on May 31, which includes the first measure of the Duterte Administration-proposed tax reform. The substitute bill, House Bill 5636 or the Tax Reform for Acceleration and Inclusion, proposes lower income tax rates and lifting exemptions in various benefits like the 13th month pay.

However, it also seeks to lift VAT exemptions in different sectors and adjust excise taxes on fuel and automobile, as well as to remove tax incentives of BPO firms. If enacted into law, a 12% VAT would be imposed on the BPO companies' gross receipts.

Demographics make the Philippines an attractive outsourcing destination

Santos Knight Frank Chairman and CEO Rick Santos remains confident of the Philippines as an investment destination and said there are plenty of factors that make the country attractive to investors.

"I think the demographics are key. The Philippines has the people which are the secret sauce to the growth of BPOs," he said.

"It really comes down to skills, the English, the age of the workforce ... Those are the imperatives for the BPO firms," Santos added.

"The BPO industry is the biggest private sector employer today, with 1.5 million direct and 3.7 million indirect employees. The sector also contributed 8 percent to GDP (gross domestic product), with export revenues close to $25 billion," he added.

However, Santos maintains that the removal of tax incentives of BPO firms and its impact on the sector should be carefully studied and an open, continuous dialogue with the government is important in securing a beneficial future for both parties.

"We see fiscal incentives are important to encouraging the growth of BPO investments in the country," he said.

"Incentives are great drivers for growth in that sector. I think that is important to their expansion agenda," he added.

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