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Giant outsourcer keeps work from home, loses tax breaks. Government says 'good riddance'

Philippines says subsidies inflate profits, not local economy

The government of the Philippines has welcomed the decision by giant business process outsourcer Concentrix Corporation to forgo tax incentives and instead allow its staff to continue working from home for the foreseeable future. The nation feels that subsidising outsourcers' bottom lines does nothing to boost the local economy.

The Philippines imposed lengthy and strict COVID-19 lockdowns that saw its substantial business process outsourcing sector quickly adapt to working from home. The nation's government supported that move by continuing to offer the pre-COVID subsidies it offered to outsourcers that run offices located in certain special economic zones.

Those subsidies have subsequently been removed, and the requirement to operate from special economic zones restored.

Tax incentives are being used to augment shareholder returns.

According to a statement issued by the Philippines Department of Finance, Concentrix last week advised it would continue allowing its staff to work from home in full knowledge that doing so would end its eligibility for subsidies.

"This goes to show that tax perks are not that important to investors doing business in the Philippines," stated Juvy Danofrata, an assistant secretary at the department and the head of its Fiscal Incentives Review Board (FIRB).

"By giving up their incentives, the opportunity cost to the government of these incentives will be minimized, which will make us more efficient in utilizing the government's resources critical in our ongoing economic recovery efforts," Danofrata said.

The Department's post on the matter also offers analysis to the effect that "total dividends declared by BPOs exceeded their income tax incentives, signalling that tax incentives are being used to augment shareholder returns."

"This suggests that the tax benefits received by BPO firms are not that necessary as these only increase their profitability."

Big business milks subsidies to improve its bottom line? Really?

Concentrix isn't just letting its staff work from home. The company has established "community hubs" in several Philippines locations. The hubs offer workspaces that local media suggest are used as temporary workspaces when staff's homes lose access to electricity or internet services. A Concentrix video explains the hubs also offer a local IT support facility and a venue for occasional collaborations such as training or team meetings.

Concentrix is not alone in using a hub model. Call centers don't pay well, and staff attrition can be very high. Some operators have used hubs to reduce their leasing costs while also saving employees some cash by shortening their commutes and choosing locations where food, coffee, and parking is cheaper than can be found in business parks or CBDs. If that sort of move reduces attrition by even a few percent, the cost of establishing a hub can quickly pay for itself.

Concentrix is advertising remote jobs around the world, suggesting many of its 250,000-plus workers – 90,000 or more in the Philippines – will have the option to work from home for the foreseeable future. ®

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