PHL employee turnover seen hitting 20% as workers seek more than pay — AscentHR

Employee turnover in the Philippines could reach 20% this year as workers increasingly prioritize career growth, flexibility and workplace well-being alongside compensation, according to AscentHR chief executive officer and director Subramanyam Sreenivasaiah. AscentHR is a managed HR services and human capital management technology company.

The projected rate is higher than estimates for Singapore at 19.3% and Malaysia at 18.2%, while attrition in some segments of the business process outsourcing (BPO) industry could exceed 30%, highlighting the growing challenge for companies competing for skilled workers.

The projected 20% turnover rate reflects “a fundamental shift in workforce expectations,” Mr. Sreenivasaiah said.

He said the problem is being driven by a growing gap between employee expectations and their day-to-day workplace experience. While companies continue to invest heavily in recruitment, employees are increasingly evaluating employers based on factors beyond compensation, including career growth, flexibility, workplace processes and overall well-being.

The Philippines is particularly exposed to these pressures because of the competitiveness of its talent pool. Filipino workers are highly skilled, English-proficient and digitally fluent, making them attractive to cross-border remote employers and the global IT-BPM industry.

“However, this global employability coincides with local friction,” Mr. Sreenivasaiah said.

According to Mr. Sreenivasaiah, Filipino employees remain among the most stressed workers in Southeast Asia despite also being highly psychologically attached to their work.

He said prolonged workplace friction can eventually outweigh employee loyalty, making retention a matter of balancing the competitiveness of the regional labor market with the realities of the local workforce.

For younger workers, meanwhile, salary increases alone are becoming a less effective retention tool.

Mr. Sreenivasaiah said compensation remains a basic consideration, but relying solely on pay increases is a reactive approach that can provide only temporary relief, particularly among Gen Z and millennial employees.

According to Mr. Sreenivasaiah, more than half of Filipino Gen Z professionals cite career growth as their primary reason for staying with an employer. This points to a broader shift in how younger workers assess their jobs, with continuous skills development, clear career pathways and workplace flexibility becoming increasingly important.

“When employees encounter slow legacy processes and unclear career roadmaps, financial incentives only delay resignations rather than prevent them,” Mr. Sreenivasaiah said.

He urged companies to move from “transactional retention” toward “relational retention,” including through HR technologies that reduce administrative friction and provide employees with clearer opportunities for advancement within the organization.

The BPO and shared services sectors face an additional challenge because of the cumulative operational pressures associated with the industry.

Mr. Sreenivasaiah said demanding schedules, rigid performance metrics, gaps in frontline leadership and fragmented HR systems can contribute to employee fatigue and frustration.

He recommended that BPO companies strengthen frontline management by giving supervisors better coaching tools and integrating workforce systems such as payroll, leave management and performance tracking.

“When employees feel supported by efficient infrastructure and see clear pathways for skill progression, they are far more resilient to the inherent demands of the sector,” he said.

Work arrangements are also becoming a more significant factor in retention decisions.

In major urban centers such as Metro Manila, Mr. Sreenivasaiah said flexibility is increasingly viewed not simply as an employee benefit but as an economic and well-being consideration. Mandatory return-to-office arrangements can translate into hours spent commuting, affecting employees’ take-home pay and quality of life amid rising living costs.

He said employers should avoid treating remote work and full-time office work as an either-or choice and instead develop well-governed hybrid arrangements.

Companies can use work-from-home options to reduce commute-related stress while maintaining structured in-person interactions for collaboration and workplace culture, he said.

“When flexibility is embedded into a well-governed, compliant HR framework, it directly strengthens talent retention without compromising operational oversight,” Mr. Sreenivasaiah said.

Beyond workplace policies, companies can also use workforce data to identify employees who may be at risk of leaving before they submit their resignations.

Mr. Sreenivasaiah said organizations should look beyond traditional indicators such as exit interviews and monthly turnover figures. Changes in participation in learning and upskilling programs, attendance and overtime patterns, as well as employee sentiment and survey feedback can provide earlier signals of potential attrition.

“Resignation is not an isolated event, but the culmination of subtle, observable workforce signals over time,” he said.

By combining employee feedback with workforce data, companies can identify potential attrition risks earlier and allow managers to intervene before employees decide to leave.

Employee well-being is another area where employers have made progress, although gaps remain.

Mr. Sreenivasaiah pointed to the growth of corporate wellness programs and stronger attention to workplace mental health frameworks. However, he said wellness initiatives alone cannot address the underlying causes of workplace stress.

Companies can still fall short when they treat well-being as a periodic check-in instead of an organizational priority. Unclear processes, excessive workloads and inefficient technology can continue to create stress even when wellness programs are available.

“True well-being requires addressing the root causes of workplace stress,” Mr. Sreenivasaiah said.

This includes streamlining workflows, setting realistic operational expectations and training managers to create psychologically safe workplaces.

For companies that are successfully retaining workers despite a competitive labor market, Mr. Sreenivasaiah said a common factor is treating talent management as an ongoing strategy rather than a periodic human resources exercise.

He identified data-driven compensation and benefits management, clear internal career pathways and digital-first HR services as practices that can strengthen retention.

Organizations can use market data to keep compensation and benefits competitive, while skill-based career pathways can help employees see opportunities for advancement without having to leave their current employer.

Digital HR platforms can also provide employees with faster access to payroll, benefits and personal information, reducing the everyday administrative friction that can contribute to workplace dissatisfaction.

Looking ahead, Mr. Sreenivasaiah said Philippine employers should focus on building more agile HR systems over the next 12 months.

This includes modernizing fragmented HR infrastructure, investing in employee training on emerging digital and artificial intelligence tools, and strengthening frontline leadership.

According to him, managers should move beyond administrative supervision and take on a greater role as career coaches who can understand and respond to employees’ needs.

Ultimately, the retention challenge requires companies to rethink the role of human resources.

“HR can no longer be viewed merely as an administrative support function. In a competitive regional landscape, an agile, data-ready HR ecosystem is a direct driver of strategic business performance and long-term enterprise value,” Mr. Sreenivasaiah said. — Kaizzer Angela Marie V. Manuba