AN industry expert is backing the appeal of the Contact Center Association of the Philippines (CCAP) for the retention of the fiscal incentives under the second tax reform package now pending before the country’s lawmakers.
H. Karthik of the Everest Group said incentives are important to sustain the growth of industries like business process management (BPM), which has multiplier effects to the economy in forms of jobs and other indirect business activities.
Incentives, according to Karthik, make the industry competitive in the midst of amplified competition in the global market.
“BPM is one of those unique industries whose growth has been consistent since the past years and because of its steady upside, it has created plenty of opportunities,” said the Everest Group official.
Karthik pointed out that because of these tremendous opportunities, other countries have been generous in giving them incentives.
“No country I know has stopped giving out incentives or reduced them, especially that these incentives would be beneficial in the long-run,” he said.
Since package 2 of the Tax Reform for Acceleration and Inclusion (Train) was crafted, CCAP has sought for the retention of the incentives to maintain the country’s stature as an attractive outsourcing business destination.
CCAP president Jojo Uligan said the country is already far behind its competitors in terms of incentive-offerings and that removing such perks under the Train 2 could dampen the growth of the industry.
Train 2 seeks to rationalize fiscal incentives and reduce corporate income tax rates gradually to less than 25 percent from 30 percent.
The economic team of the Duterte administration is proposing to modify tax incentives for companies to make these “performance-based, targeted, time-bound, and transparent.”
President Duterte, during his State of the Nationn Address last Monday applauded, Congress for the passage of the Train law. He said Train has made funds available to build better roads and bridges, and improve health and education, and strengthen the country’s safety and security.
“Some have incorrectly blamed our efforts toward a fairer tax system for all the price increases in the past months, and some irresponsibly suggesting to stop Train’s implementation. We cannot and should not. We need this for sustainable growth that leaves no Filipino left behind,” Duterte said.
The President urged Congress for the speedy passage of Train 2.
“I am committed to a comprehensive tax reform, and I ask Congress to continue the job...The enactment of the package 2 is what stands between today and millions of jobs in the near future,” said Duterte.
Currently, the Philippines remains the biggest source of voice services worldwide. Based on data from the Everest Group, the country is seen to account for 16 percent to 18 percent of the aggregate outsourced services globally in 2017.
Financially, revenue generated by the local call center sector reached $13 billion in 2017. This is projected to grow by seven percent to nine percent this year.
“We are forecasting to add another $1 billion in revenues this 2018. That translates to an additional 70,000 more jobs,” Uligan said.
Contact center players are, likewise, bullish on the industry’s financial performance as shown in positive results of surveys that the CCAP conducted.
These figures are aligned with the industry’s existing roadmap, which shows that the call center sector’s revenue is projected to rise by 8.2 percent compounded annual growth to $20.4 billion between 2016 and 2022.
“Now on our third year of industry roadmap, the contact center community remains consistent with its forecast of growth given that focus on high complex type of work,” Uligan said.
“We are on track with our roadmap forecast. We keep adding growth and increasing our market share,” added CCAP chairman Benedict Hernandez.
He noted that to sustain growth, the companies are investing in up-skilling their workforce to prepare them for more complex problem solving tasks.
“We are never left behind in terms of investing in the capability of our employees to compete and grow in this digital era,” said Hernandez.