Are you planning to outsource to the Philippines? Before you start looking for a third-party service provider, it pays to understand the cost of outsourcing in the Philippines and how you’ll be charged for the service you pay.
In this blog article, we provided a rundown of the costs associated with hiring Filipino employees and what the best outsourcing pricing model can help you save on operating costs.
The Cost of Outsourcing to the Philippines
The cost of outsourcing is typically based on the skill level of the workers, the number of people hired, and the length of the contract.
In the Philippines, most outsourcing companies use a standard pricing model. This outsourcing pricing method allows them to determine the cost of a service based on a number of factors, such as workforce costs, service fees, and government-mandated benefits.
1. Workforce costs
All workforce costs are passed on to the client because they are based on market rates for the positions that need to be filled. These costs can vary depending on the skill level of the workers, with entry-level workers typically costing less than experienced or expert workers.
For example, an entry-level graphic designer in the Philippines might cost 19,000 PHP (341.52 USD) per month, while an expert in the field could cost more than 25,000 PHP (449.37 USD) per month.
Please take note that conversions can change depending on the current exchange rate (1 USD equals 55.63 PHP as of December 2022).
2. Service fees
Each outsourcing company will have its own service fees, which typically include a fixed fee per employee per month to cover the company's operating expenses, such as equipment costs, utility bills, taxes, and other expenses. Some outsourcing companies may offer additional perks depending on the size of your outsourced team, which may or may not be negotiable during the contract negotiation stage.
3. Government-mandated employee benefits
Each employee is entitled to a number of perks, including the ones listed below, as specified by Philippine labor regulations. Your outsourcing partner will take care of these things since it is a payroll-related issue. Once you get in touch with them, feel free to ask them to go into further depth about this.
13th month pay
The 13th month pay is an additional salary given to workers in the Philippines in addition to their regular monthly salary. It is mandated by the Philippine Labor Code and is equivalent to one twelfth of an employee's total basic salary for the year. The purpose of the 13th month pay is to provide workers with additional income to help them meet their expenses during the holiday season.
Night differential
Night differential is an additional pay that is given to workers in the BPO (business process outsourcing) industry in the Philippines for working during the night shift. The night shift is typically defined as the period between 10:00 PM and 6:00 AM. Under the Philippine Labor Code, workers are entitled to receive an additional 10% of their basic hourly rate for each hour of work during the night shift.
SSS
SSS contribution is the amount of money that employees in the Philippines are required to pay into the Social Security System (SSS) in order to be eligible for its benefits. The amount of SSS contribution that an employee is required to pay is based on their salary, with higher earners paying a larger share. In general, employees are required to pay 11% of their monthly salary into the SSS, while their employer is required to pay an additional 12% on their behalf.
PAG-IBIG
The government essentially ensures that the Filipino workforce will have savings going while they work through PAGIBIG. Usually, this is done when a worker wants to borrow money for housing or other necessities. The rate of contribution for an employer is 2% of the employee's base pay.
PhilHealth
The PhilHealth premium rate is 4.00% of the base pay as of 2022. This functions as a health insurance benefit, even if some outsourcing businesses continue to provide a separate health insurance benefit from a private provider due to the high cost of healthcare in the Philippines.
Do US companies outsource to the Philippines?
Yes! In fact, the Philippines is the most preferred outsourcing destination of US companies especially for voice-related services like customer service and technical support.
There are many reasons why US companies choose to outsource in the Philippines. Some of the most common reasons include the availability of a large pool of highly skilled and educated workers, the relatively low cost of labor, and the country's strong English-language proficiency.
Some of the multinational companies that have successfully outsourced to the Philippines include Google, Microsoft, and Amazon.
Hire the Best Ecommerce Professionals in the Philippines
Are you a retail business owner looking for cost-effective ways to scale your operations? Partner with the best customer service outsourcing provider in the Philippines and experience the 70% cost reduction on your operational expenses.
ManilaPros, a Philippine-based full-service outsourcing company, offers five-star customer care for retailers. In our ten years of industry experience, we’ve helped hundreds of retailers become successful sellers on major marketplaces like Amazon and eBay. We'll provide you with a team of vetted, trained, and certified customer support agents, along with a dedicated account manager for better quality assurance.
Contact us today to learn more.
