May 2010

06

Outsource to Philippines

Posted by Noel
Categories: Outsourcing

Here’s some very cool information I’ve written before for my boss about “Outsource to Philippines”.
I’ve been monitoring the internet marketing industry and I’m seeing an increase in discussions about outsourcing to the Philippines.

As an internet marketer, a work at home dad, and somebody who is actually living here in the Philippines, I bet you’ll learn a lot about Virtual Assistants and how outsourcing to the Philippines from this article below. Read on and hope you like the information.

Where can you find people to outsource your tasks and functions?
Based on experience and also from some of the sites I’ve seen from the net, the best place to outsource is the Philippines. Why?

1. Because English is the primary mode of instruction in Philippine schools. 95% of people who have gone to school knows how to read and write in English. Of course not everyone has really good English but if they are on the internet, I’m pretty sure they can converse with you in English.
2. Easily trained – Since English is not a problem, you can easily train them. Send a pdf document or a video capture of what you want them to do, and they’ll be able to learn it quickly.
3. Labor is inexpensive, a fresh college graduate with no work experience is probably willing to take an equivalent of $300/month (I’ll tell you later on why they can go this low). A person with about 2-3 years experience might cost around $500/month while a person with 7 years+ experience will cost about $1000-$2500+.
4. Internet connection is widespread. In each neighborhood, there are probably 3 or more internet cafes and the telecoms company are rolling out wireless broadband access. Speed though is not as fast as the ones in the US. However, you don’t actually need a super fast internet access when you need to outsource something. Not unless your tasks depend on it.
What I’ll be discussing here are things you need to know when you will hire somebody part-time/fulltime from the Philippines, meaning ongoing work and they report to you similar to hiring somebody locally.

Things you need to know when outsourcing to the Philippines

1. Understand their labor practices
(Note: These are not applicable if it’s a one-time job like ask somebody to design a website for you).
Labor in the Philippines is governed by local labor laws which is quite different for each country. Here are some of the differences you might need to understand.

a. The 13th month pay

The 13th month pay is a mandatory pay given to all employees who have worked at least a month within a calendar year. The amount is equivalent to 1 month salary. This pay is given on or before Dec 24 and is prorated depending on how many months an employee worked. So if you hired somebody on Dec 1, the 13th month pay is 1/12 of the monthly salary. If you hire somebody on Feb 1, then the 13th month pay is 11/12 times the monthly salary.

b. Holidays

There are a number of official Philippine Holidays. These include but not limited to
January 1 – New Year’s Day
April 1 – Maundy Thursday
April 2 – Good Friday
April 9 – Araw ng Kagitingan or Day of Valor
May 1 – Labor Day
June 14 – Independence Day (Monday nearest June 12)
August 30 – National Heroes’ Day (Last Monday of August)
November 29 – Bonifacio Day (Monday nearest November 30)
December 25 – Christmas Day
December 27 – Rizal Day (Monday nearest December 30)
The special non-working holidays are:
August 23 – Ninoy Aquino Day (Monday nearest August 21)
November 1 – All Saints Day
December 24 – Additional special non-working day
December 31 – Last day of the Year

These are paid holidays. So you need to include these on your payroll computation even if your employees/virtual staff are on holiday. If you really really need them to report on such holidays, there’s a different pay rates as per the Philippine labor code. Like for the 1st 8 hours of work the rate becomes 200% so you pay twice the daily pay rate.

c. Payment of Salaries/Wages

Wages shall be paid at least once every two (2) weeks or twice a month at intervals not exceeding sixteen (16) days.

Ways to pay your outsource employees (paypal.com, xoom.com)

Now let me discuss more about how in the world can one be able to live on $300 a month. Some people might think this is slavery or something in-humane but actually this isn’t.

2. Understand their culture

The capital of the Philippines is Manila which is part of National Capital Region (NCR). In this part, the cost of living is about 2 to 3 times higher than the people outside of NCR. So if you happen to find people living in provinces far from the main capital, the cost of living is really low. Which is why foreigners retire in islands like Cebu or Boracay and live comfortably with a $1500 monthly pension.

In addition, it is not uncommon to see 20 to 25 year old people still living in their parents house. It is part of the extended family culture. This means they don’t pay rent.

Public transportation (aka Jeepneys) are also common so one can survive without having a car to move around. Car payments is about $200/month so newly graduates don’t really buy cars immediately and just be contented with public transportation even if its a bit uncomfortable.

Usually people get out of their parents house when they got married. That’s the time when they can’t live on $300 a month because they need a car and rent a place.

So should you concentrate on finding people outside of the main capital to keep costs to a minimum?

There’s a drawback. The people with the best education, and have the best experience most probably live in the main city since the top schools are located in NCR and the top corporations are in the business districts located also in NCR. This is the reason why parents living in the provinces save up to send their kids to a good college in Manila.

The difference is probably similar to a small town employee vs somebody who lives in New York working for a top 500 firm. But I’m not saying you can’t find any good people outside of the main capital. There are lots of them but you have to really go through several people, interview them and see if the skills you require fits their existing skills and experience. It all depends I guess on your outsourcing requirements.

Popularity: 6% [?]






One Response to “Outsource to Philippines”

  1. Electronic Staff Says:

    Very good article! we also have a few Philippines on our payroll and they are a hard working and take task that we assign to them very seriously.

Leave a Reply