According to The Scotsman, saving money is the main reason the Philippines continues to be the top outsourcing destination. Outsourcing can significantly reduce the cost of material expenditures such as office space, infrastructure, technology, and other equipment, as these become the BPO provider’s responsibility. In addition to that, companies also save on employee costs like their salary, health care, and other benefits. All in all, companies outsourcing to the Philippines can save up to 60% on labour and employment and 40-50% on operating costs, savings that can go towards resources that will contribute to healthy and substantial growth.
In the Philippines, outsourcing is one of the legs of the economy. The Philippines is one of the fastest-growing nations in the outsourcing industry, with a staggering 30% growth within the last decade alone. In fact, business process outsourcing (BPO) accounts for one of the biggest boosts to the Philippines’ economy and currently employs more than 2 million people in several sectors, boasting a net worth of $24 billion. The Philippines is among the top outsourcing countries Western countries outsource to, and with benefits such as low cost of labor, an English-proficient and highly skilled workforce, as well as cutting-edge technology and infrastructure, there really is no doubt that the country has emerged as the world’s largest—and leading—top outsourcing destination. Outsourcing to the Philippines has also been proven, time and time again, to be the most cost effective option for businesses of all sizes and industries.
Average salary in the Philippines
As of August 2020, according to an average wage analysis by Picodi.com, the average salary in the Philippines is PHP 15,200 or USD 308 for the non-agricultural sector. It ranks 91st in global average wages, making it cheaper compared to India. According to Timedoctor, the Filipino minimum wage ranges from PHP 290 (US$5.70) to PHP 537 (US$10.61) per day, varying across the country’s regions. In comparison, the average salary of a BPO employee is around PHP 375,000/year ($7,395), which amounts to above PHP 1027 ($20.31) per day. On average, contact centers in the Philippines charge US$8–$16 per hour for their services. When compared to hourly rates charged by centers in the US (US$24–$32/hour), Latin America (US$14–$20/hour), Western Europe (US$25–$35/hour), Eastern Europe (US$18–$26/hour), or Australia (US$28–$40/hour), according to Manila Bulletin.
How the average salary in the Philippines changes
Educational background
The Philippines has an exceptionally high standard of education. Microsourcing cites that more than 680,000 Filipinos complete university each year and with more than 41 million highly trained people in the workforce, the diverse talent pool in the Philippines is so deep and rich that you are guaranteed your business needs will be met. When it comes to offshore staffing in the Philippines, you can offshore almost any position from customer support agents to mobile app designers, and you can also fill roles vertically, from entry- and mid-level right up to senior and executive levels.
A degree holder’s average salary with the most relevant experience is PHP 16,379 or USD 318.58, according to Indeed. BPOs and their clients usually offer a minimum of USD 500 or about PHP 25,500 of monthly salary for customer and technical support roles and higher for more complex services.
Regional rates
According to InCorp Philippines, minimum wage rates in the Philippines vary in every region. The Regional Tripartite Wages and Productivity Board (RTWPB) monitors economic activities and adjusts minimum wages based on the region’s growth rate, unemployment rate, and other factors. As of September 2022, the current real minimum wage of agricultural non-plantation workers in the National Capital Region in the Philippines was 467.95 hundred Philippine pesos – the highest nationwide, as reported by Statista.
Cost of living
According to Numbeo, the overall cost of living in the Philippines is approximately PHP 26,159 or USD 509 without rent. It is around 47% lower compared to the United States and is higher than the cost of living in Southeast Asian countries. A monthly salary of USD 300 can provide a person with a good standard of living. According to the Philippine Statistics Authority, a family of 5 needs a minimum of USD 177 per month to cover their food and non-food needs. In another 2015 survey, the agency revealed that a Filipino family spends an average of 4,150 per year or USD 345 every month, as revealed by Outsource Accelerator. According to iPrice, the monthly cost of living in Metro Manila is estimated at PHP 50,798 (USD 1,002) for a single person. Rent for a one-bedroom apartment in the capital is 56% higher than in Kuala Lumpur and 9% higher than in Bangkok.
Standard pricing model
Workforce cost
Outsource Accelerator explains how in the Philippines (and in other countries as well), basic wages usually range differently for different types of jobs. For Non-Agricultural members or workers who live or work in the National Capital Region (ie Makati), the basic wage as of October 2017 is $10 per day. For NCR workers who are working in Agriculture, Retail/Service Establishments who have 15 or fewer workers, and manufacturing establishments employing less than 10 workers, the basic minimum wage is $9 per day. According to PayScale, Customer Support Representatives or CSRs get about $3,000-7,000 per annum. Operations Managers that are working in the business process outsourcing industry ranges from $7,000-27,000 per annum. For Data Analysts, the range is about $2,000-8,500 per annum.
Service fees
According to Global Strategic, different companies would charge different service fees. Traditionally, these may include a fixed fee for the labor cost and operating expenses. Additional fees for labour and employment would most likely cover equipment costs, utilities, and taxes. Remote.com emphasizes that statutory benefits or mandatory benefits are entitlements that employers are obligated by law to provide to their employees. Common examples include fees and government benefits like paid annual leave, parental leave, worker’s compensation insurance, and paid sick leave.
What are the costs and fees of outsourcing to the Philippines?
Outsourcing to the Philippines should cost you between $500-$1500/month depending on the type of staff you hire, saving you about 70-80% savings in salary costs – which can greatly improve your experience in outsourcing in general. In addition to being more affordable than full-time employees, the Philippines boasts a highly-skilled workforce with a huge pool of professionals who are university-educated – hundreds of thousands of university graduates enter the workforce each year with western-influenced training and excellent communication skills, offering a variety of services from content creation to admin tasks and technical support, with the unique resourcefulness only Filipinos can deliver. Colliers also adds that the Philippines is considered a top-tier destination for the business process outsourcing industry; it is a market leader in terms of voice-related services, and it is rapidly expanding its capacity to provide non-voice Business Process Management (BPM) and IT services for the expanding list of global clientele.
How a company saves costs through Filipino hires
connectOS emphasizes how much does employee costs equate to a role in Australia or the US – in the Philippines, the standard pricing model is that they are generally 30% of an equivalent role. For every role you have in Australia, you can typically hire three people in the Philippines for the same cost. This is achievable due to the Philippines having one of the lowest costs of living among its regional neighbors. Offshore staffing is highly sought after – an employee working in an outsourcing/offshoring role earns, on average, more than double the minimum wage – AUD$770 – AUD$930 per month. It is also worth noting that there are a few other fees, government related factors, and benefits that may affect the overall standard pricing model and costs of outsourcing in the Philippines such as 13th-month pay, night differential, social security, and insurance.
Read: How Much Does It Cost to Outsource to the Philippines
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