IBPAP says LGU rules threaten Philippine IT-BPM lead
MANILA, PHILIPPINES — The Information Technology and Business Process Association of the Philippines (IBPAP) has warned that local government unit (LGU) tax impositions, inconsistent business permits, and additional employee documentation requirements are raising operating costs for Philippine information technology-business process management (IT-BPM) firms 15-20% above rival markets, with the concerns being escalated to multinational headquarters and influencing active location decisions.
According to a report from Philstar, the barriers persist despite the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act, which grants fiscal exemptions to registered business enterprises but is being inconsistently enforced by local governments across the country.
CREATE MORE exemptions ignored; costs rise 15-20% vs rivals
The Philippines holds 20% of the global IT-BPM market with $40 billion in revenue and 1.9 million employees as of 2025, projecting $42 billion in revenue and 1.97 million jobs in 2026.
A 15-20% operating cost premium against competitor markets is the threshold IBPAP warns LGU friction is pushing the sector toward — a gap that enterprise clients can use to justify sourcing diversification away from the Philippines.
IBPAP notes that client concerns are being formally relayed to multinational headquarters, where they directly influence decisions on where to expand or redirect new headcount.
The association has framed the issue as an active competitive risk: IT-BPM AI awareness training has reached only about 68,000 employees, or 3% of the sector’s projected workforce, making regulatory stability even more critical as clients accelerate AI-enabled delivery requirements.
A 15-20% operating cost gap against rival markets is not a theoretical risk — it is an active factor in the location decisions IBPAP reports being escalated to multinational headquarters, making LGU enforcement consistency the most direct variable in the Philippines’ near-term IT-BPM competitiveness.
“These concerns are escalated to global headquarters and influence location decisions,” said Celeste Ilagan, Chief Operating Officer, IBPAP.
IBPAP seeks AI workforce scale, LGU clarity, and cybercrime fix
A Joint Memorandum Circular (JMC) issued March 23 by the Department of the Interior and Local Government, the Department of Finance, and the Department of Trade and Industry provides clearer guidance on how LGUs may tax registered business enterprises — but IBPAP says implementation remains inconsistent across local governments.
IBPAP’s second priority request is AI workforce development: with only 3% of the sector’s workforce AI-trained, the gap between the Philippines and competitor markets that are scaling AI delivery faster represents a compounding competitiveness risk.
The association is also seeking amendments to the Cybercrime Prevention Act of 2012 to grant IT-BPM firms direct prosecutorial standing to file cyber cases, reducing dependence on law enforcement timelines for incidents affecting client data security.
For global BPO operators with Philippine delivery centers, IBPAP’s regulatory agenda confirms the country’s competitiveness gap is driven by correctable internal policy inconsistency — and the 15-20% cost differential gives both government and industry a concrete benchmark to hold enforcement accountable.
“This industry helped build a new Filipino middle class. With clear policies and decisive action, the Philippines can remain a global leader in IT-BPM,” said Ilagan.
For offshore operators and IT-BPM buyers, IBPAP’s LGU warning frames a near-term competitiveness risk that policy enforcement could resolve — and the 15-20% cost differential provides a threshold against which to measure whether managed delivery capacity from the Philippines remains competitive.
