April 13


Costs Of Outsourcing To The Philippines: Pricing Structure & Fees

By Global Strategic

April 13, 2022

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What Are The Costs And Fees Of Outsourcing To The Phillippines?

Without a doubt, the Philippines is still the number one place you’d want to go to if you want to save on operational costs. But what makes the country attractive to international clients goes far and beyond savings.

Since 2010, the Philippines has become the leading name in offshore outsourcing – and for good reason. Currently, the Philippines has the highest literacy rate in all of Asia with 98.18%. Additionally, the outsourcing industry receives tremendous support from the government.

Costs Of Outsourcing To The Philippines: Pricing Structure & Fees

As such, international clients also get tax exemption benefits as well thanks to the Special Economic Zone Act. But for now, we’ll be focusing on the costs that you might expect when outsourcing to the Philippines.

Pricing Model For Outsourcing in the Philippines

Naturally, every outsourcing company in the Philippines has its own unique pricing structure. However, all companies in the country adhere to specified laws which may affect how they charge clients.

With that said, among the things you need to consider are labor costs, service fees, and government-issued charges.

Labor costs in the Philippines

Generally, workforce costs will always be charged to clients. Furthermore, the cost would also differ depending on the skill level. But, when it comes to the Philippines, you could always expect highly-skilled workers who are more than eager to learn new things.

Outsourcing in the Philippines

Another thing you need to consider is the exchange rates between your currency and the Philippine Peso. However, some companies would have a standardized rate for their labor.

For example, an entry-level Data Entry Specialist may cost around $2-3 on the low end and $6-10 on average according to Payscale.

In the Philippines, employees are entitled to the following:

13th Month Pay

In the Philippines, the 13th month pay is something that all workers look forward to at the end of the year. Generally, this is equal to 1/12 of an employee’s base salary and is pro-rated depending on when the employee started working at a company.

Night Shift Differential

Most employees working under a Business Process Outsourcing (BPO) company works the night shift to cater to their international clients. As such, these employees get a night-shift differential of 10% on their hourly rate if they work between 10:00 PM to 6:00 AM.

Social Welfare Benefits

Social Security System – All employees in the Philippines are entitled to have a Social Security Systems account. This is the government’s way of providing Filipinos with social welfare services.

The Social Security contribution is 11% of an employee’s monthly earnings. The employer is responsible for 7.37 percent of the overall 11 percent payment, while the employee is responsible for the remaining 3.63 percent.

Home Development Mutual Fund (Pag-IBIG Fund) – A set monthly donation of P200.00 is made to the Pag-IBIG fund. For employed individuals, the company will cover P100.00, while the remaining P100.00 will be deducted from the employee’s monthly salary.

Philippine Health Insurance Corporation (PhilHealth) – According to PruLife, The employee’s compensation has a salary base that will be used to calculate the PhilHealth contribution. The employer is responsible for half of the contribution, with the remaining 50% withdrawn from the employee’s wage on a monthly basis. The minimum wage base is P10,000 and the maximum is P50,000, resulting in a minimum contribution of P275.00 and a maximum contribution of P1,375.00 each month.

Service Fees of Outsourcing Companies in the Philippines

Different companies would charge different service fees. Traditionally, these may include a fixed fee for the labor cost and operating expenses. Additionally, the fees would most likely cover equipment costs, utilities, and taxes.

How much can you save by Outsourcing to the Philippines?

Based on a study from Outsourcing Accelerator, companies can expect to save 70-90% in wage payouts. But how is this even possible?

For starters, the Philippines has a lower minimum wage compared to other countries. Meanwhile, this is compensated for the low cost of living. As such, companies who want to outsource to the Philippines can get massive savings on operational costs while still providing a decent and competitive wage to their workforce.

If you’re ready to start your outsourcing journey, Global Strategic can help with your business needs and give you the Strategic Advantage needed to edge out the competition. Learn more about how offshore outsourcing to the Philippines can help your business and future business growth.