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POGOs are not BPOs, business group tells Palace

MANILA, Philippines — The business process outsourcing (BPO) industry distanced itself from online gaming firms, as it rejected any association with the controversial sector.

This came after Malacañang labeled Philippine offshore gaming operators (POGOs) as BPOs to allow the resumption of their services in areas under quarantine due to the COVID-19 pandemic.

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Rey Untal, president and CEO of the IT and Business Process Association of the Philippines (IBPAP), drew the line by differentiating BPOs from POGOs in terms of why they are here in the country and to whom they answer to.

The group came out with a statement Saturday, saying that “IT and [IBPAP] would like to have it clarified that as far as the IT-BPM industry is concerned, Philippine Offshore Gaming Operators or POGOs, as they are commonly called, cannot be considered as Business Process Outsourcing (BPO).”

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For one, IBPAP stressed that BPO companies are registered with the Philippine Economic Zone Authority (PEZA) or the Board of Investments (BOI), which then gives them tax incentives, while POGOs is registered with the Philippine Gaming Corp. (Pagcor).

“While BPOs and POGOs share one extraneous similarity, which is their offshoring nature, POGOs primarily do so because they are allegedly unable to practice their betting or gambling functions in their respective shores,” Untal said.

IBPAP also said the work of BPO firms “require[s] a range of technical, domain, and soft skills” while POGOs has a different style of work and are mistaken to have similarities with BPOs due to its gaming notion.

According to Untal, BPOs come to the country for Filipino talent and therefore give direct and indirect jobs to millions of Filipinos. POGOs, on the other hand, largely hire foreigners.

“BPOs come to the Philippines to leverage off our human capital, i.e. our strong English and technical skills, customer service orientation, malasakit, and ability to adapt to foreign cultures,” Untal said.

“This, in turn, has directly benefitted millions of Filipinos by providing them with better employment opportunities throughout the years,” he added.

PEZA and the BOI are investment promotion agencies under the Department of Trade and Industry. DTI Secretary Ramon Lopez, who chairs both agencies, said POGOs is online gaming firms but refused to answer if he considers them BPOs, too.

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“They are online gaming,” Lopez said Saturday when asked for comment. He deferred from answering when asked to categorically say if POGOs is also considered as BPOs.

“There are similarities with BPOs in terms of the use of IT and online platform in their business models, not brick and mortar, no physical interaction with clients and customers.  So they could impose the required minimum health protocol standard,” he added.

As of 2019, the IT-BPM industry has employed 1.3 million direct workers. The figure would swell when the indirect jobs, or the jobs that were created in related industries to support BPO operations, were also considered.

On the other hand, Pagcor said back in March that POGOs has a total of 120,976 workers, with nearly 70,000 of them being Chinese nationals, while only over 30,500 are Filipinos.

IBPAP’s remarks came after presidential spokesman Harry Roque said that POGOs are counted as BPOs. In separate statements, Pagcor and Roque also said that since POGOs are considered BPOs, it is, therefore, part of the exemption and could resume operations via a work-from-home scheme and skeleton workforce even if an area is under lockdown.

Domingo likewise announced that POGOs is set to partially operate at 30 percent capacity during the enhanced community quarantine.

It is also not clear why POGOs were allowed to operate when gambling is still among the businesses that are banned under both enhanced and general community quarantine.

The game development sector is also part of the IT-BPM industry, but Untal emphasized that even this is different from POGOs, although they are “sometimes mistaken as having similarities due to the gaming notion.”

Public opinion towards POGOs has been mixed, as racial and political tensions mix with the business side of online gaming, a sector that only became popular after the Duterte administration began courting the good graces of China.

Tensions are likely to aggravate as POGO workers get back their jobs at a time when many Filipinos under enhanced community quarantine find themselves jobless and without a daily income to make ends meet.

But racial and political tensions aside, even the business itself has been controversial.

Not only did China ask the Philippines to ban Chinese-run POGOs last year, majority of the POGOs even failed to pay a total of P50 billion in withholding and franchise taxes in 2019, according to the Bureau of Internal Revenue.

The tax they failed to pay overshadows the revenues POGOs made, which Pagcor said started as P73.72 million in 2016, then P3.12 billion in 2017; P6.11 billion in 2018; and P5.73 billion in 2019.

On the other hand, the IT-BPM industry is considered the largest employer in the private sector, giving good-paying job opportunities to Filipinos so that many would not have to work abroad anymore.

Although their revenue prospects have lowered mainly because the Duterte administration wanted to rationalize tax incentives, the industry still made $26.3 billion in revenues last year.

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TAGS: business process outsourcing, Chinese, coronavirus Philippines, enhanced community quarantine, lockdown, Nation, national news, nCoV update, philippine offshore gaming operators, pogo
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