BPO firms reject POGOs as part of industry

MANILA, Philippines — The umbrella organization of business process outsourcing (BPO) firms in the country on Saturday took exception to Malacanang’s characterization of offshore gaming companies as BPOs.

“As far as the IT-BPM industry is concerned…, POGOs, as they are commonly called, cannot be considered as business process outsourcing,” said Rey Untal, president of the IT-Business Process Association of the Philippines (IBPAP), in a statement. 

Untal made the statement a day after the Palace announced that Philippine offshore gaming operators (POGOs) will be allowed to re-operate under lockdown starting Friday, a decision met with staunch criticism online and from legislators who saw POGOs as areas where illegal Chinese workers have proliferated, and tax evasion is rampant.

There is basis to such claims. Untal himself said that unlike BPOs, which directly employed 1.3 million full-time Filipino workers last year, “majority” of POGOs’ “staffing comes from foreign labor”, which had been the subject of many Senate investigations.

In terms of revenues, Untal also clarified that earnings from POGOs were also “not part” the $26.3 billion generated by BPO firms under IBPAP last year.

As it is, even the government itself treats POGOs and BPOs differently, at least before Palace officials’ statement on Friday. Under current laws, POGOs are regulated by the Philippine Amusement and Gaming Corp. (PAGCOR), while BPOs are largely overseen by the Philippine Economic Zone Authority (PEZA).

Unlike BPOs, POGOs not qualified for tax perks

On Friday after POGOs were allowed to resume operations, PEZA Director-General Charito Plaza told Philstar.com by phone that as policy, “we don’t accept offshore gambling” applications to PEZA ecozones, which grant tax perks to priority industries, including BPOs.

“Some BPOs may have involvement in POGOs but there are mostly administrative, like accounting or process of payments because that’s the nature of their job as non-voice firms,” Plaza said. 

“But firms with direct involvement in betting, no we do not accept,” she added.

Prior to 2016, POGOs were only allowed to operate in two economic zones namely the Cagayan Economic Zone Authority and the Aurora Pacific Economic Zone and Freeport Authority.

That was the case before President Duterte liberalized their operations beyond those ecozones to allow them nationwide.

Since then, PAGCOR data showed 61 POGO firms, acting as service providers for bettors abroad such as by providing IT system platforms, have been in operation. PAGCOR said a total of 31,556 Filipinos are employed in these firms, which senators said largely employed Chinese workers. 

“It is also worth noting that the IT-enabled jobs BPO companies create are of much higher value…This is also very different from the work done by the game development sector which is sometimes mistaken as having similarities due to the gaming notion,” Untal said.

Sought for further comment, Eleanor Roque, tax advisory head at P&A Grant Thornton auditing firm, said “I can’t think of similarities” between BPOs and POGOs. Benedict Tugonon, former president of industry group Tax Management Association of the Philippines, agreed.

“In POGO, it is unclear if the services rendered here are actually export services” that will qualify for incentives,” Tugonon said in a text message.