When the world looks at the Philippines, it is drawn by one of these two: pristine white-sand beaches and the gargantuan business process outsourcing (BPO) industry, which contributes contributes Nexford University The future of BPOs in the Philippines and growth opportunities Read more nearly $30 billion to the economy each year. While they may look completely unrelated, rightly so, they have two common factors: overseas audience and heavy government support. Nevertheless, over the past two years, both beach tourism and BPOs have found a third common denominator: they’re both vulnerable to the pandemic.
Unlike beach tourism—which has the potential to bounce back after the pandemic—BPOs are facing a larger problem. Thanks to prolonged lockdowns, the Philippines saw an explosion of unregulated “underground” BPOs, not only snatching up talent, but also offering them nothing more than a risky paycheque.
Underground BPOs aren’t technically illegal, but they’re unregistered with the Philippine government. Under the country’s laws, BPOs have to be registered with the country’s Department of Trade. Many of these underground BPOs, however, find grey areas to operate, registering themselves overseas or employing staff as freelancers.
English-speaking specialists and IT experts are being increasingly coaxed into underground companies to assist anonymous clients and moderate social media networks, potentially handling disinformation groups, employees and former executives told The Ken. The jobs are mostly similar to the tasks performed by formal BPOs: customer service, encoding and IT work, back-end office maintenance, and content moderation.
Now, formal BPOs and the Philippine Economic Zone Authority (PEZA), which sets guidelines and incentives for BPOs, are waging a war to win back their tech talent. But they’re losing the high ground. BPOs can only enjoy their tax perks if their employees work on-site. Which means the pandemic put the sector at its first crucial disadvantage.
Now as per court rulings and old PEZA directives, all registered BPOs need to force their employees to return to offices. Any non-compliant companies will lose all their incentives and tax breaks. But mandatory office-based work remains a dealbreaker for many employees.
But the biggest lure of these underground BPOs remains the fact that employees can earn money without the need to declare it to the government. And they keep reeling in talent—employees don’t mind that these companies don’t offer them mandated benefits such as leaves, health insurance, and social security support. In a country burdened with Southeast Asia’s highest income tax rate highest income tax rate Trading Economics Philippines Personal Income Tax Rate Read more and the region’s second-highest number of Covid cases cases Center for Strategic & International Studies Southeast Asia Covid-19 Tracker Read more , staying home and keeping your whole paycheque make these unregistered employers seem more messiah than the mafia.