Have you ever wondered why so many companies choose the Philippines for their outsourcing needs? The answer lies in the country’s cost-effective labor market, especially when it comes to salary expenditures. Lower average salaries make the Philippines an attractive destination for businesses looking to optimize their operational costs while still maintaining a high level of service and expertise.
Overview
The Philippines has emerged as a major outsourcing hub, primarily because of its affordable labor costs when compared to Western nations. Companies are lured in not just by the promise of lower salary expenses but also by the wide range of skilled professionals available. These lower salaries are influenced by various factors, including experience, job position, industry, and even geographical location within the country.
Average Salary Statistics (2018)
To get a deeper understanding, let’s delve into some numbers. In 2018, the general average salary in the Philippines was PHP 161,847.60 per year, which is roughly $3,218. This figure contrasts sharply with Western countries, where average salaries can easily be five to ten times higher.
Here’s a quick look at some key statistics from 2018:
| Metrics | Philippine Peso (PHP) | US Dollars ($) |
|---|---|---|
| General Average Salary | PHP 161,847.60/year | $3,218 |
| Median Salary | PHP 655,200/year | $12,955 |
| BPO Employee Average Salary | PHP 375,000/year | $7,395 |
| Family Income | PHP 313,000/year | $6,231 |
| National Capital Region Family Income | PHP 460,000/year | $9,157.78 |
It’s noteworthy that BPO (Business Process Outsourcing) employees generally earn higher than average salaries. For instance, the typical BPO salary was PHP 375,000 annually ($7,395), which significantly exceeds the national average.
I also find it interesting to note how family incomes vary by region. Families in the National Capital Region (NCR), where Manila is located, tend to have higher incomes than those in other parts of the country.
Sample Job Salaries
To give you a better grasp, here are sample job salaries in the Philippines:
| Job Role | Average Annual Salary (PHP) | Average Annual Salary ($) |
|---|---|---|
| Accountant | PHP 250,000/year | $4,942 |
| Call Center Agent | PHP 300,000/year | $5,930 |
| IT Manager | PHP 900,000/year | $17,790 |
The salary ranges can be quite broad depending on the role and experience level, but generally, even higher-tier jobs remain quite affordable for companies from high-income countries.
Impact of Lower Salaries on Filipino Employees
The impact of lower salaries isn’t as harsh as one might initially think, thanks to the lower cost of living in the Philippines.
Lower Cost of Living
Despite the lower salaries, the cost of living in the Philippines can be considerably more manageable. The average expenditure is about PHP 258,000 per year, which translates to around $4,506. When you compare this to the average salary or even the BPO sector salaries, it becomes clear that making ends meet is quite feasible.
Comparison With Minimum Wage
To give you another angle, the minimum wage in the Philippines ranges from PHP 573 to PHP 610 per day, which is approximately $5.70 to $10.98. The disparity between minimum wage and BPO sector salaries is substantial. While minimum wages might require a more frugal lifestyle, BPO salaries afford a more comfortable and even relatively prosperous lifestyle.
4 Reasons Why the Philippines is Ideal for Outsourcing
Lower salaries are just one reason why the Philippines is ideal for outsourcing. There are other critical factors at play, and understanding them can help explain why this nation is a global outsourcing leader.
Access to Skilled Talent at Low Costs
The Philippines boasts a high literacy rate of 98.18%, strongly supported by a well-established education system. In addition, there’s the TESDA program, which offers specific training for the BPO sector. This ensures that the workforce is not just affordable, but also highly skilled and ready to meet the diverse needs of outsourcing companies.
English Fluency
English is widely spoken in the Philippines, mainly because it is one of the country’s official languages, alongside Filipino. This linguistic advantage means that communication barriers are minimal, making it easier for businesses to integrate and operate smoothly. The large English-speaking population is an enormous asset for any company looking to outsource its operations.
Tax Benefits
Financial incentives offer another compelling reason. The Special Economic Zones Act provides substantial tax benefits for companies operating in designated areas, including tax exemptions, duty-free imports, local tax exemptions, and even residency benefits for expatriate employees. These tax breaks can significantly reduce operational costs.
Data Security and Privacy Regulations
In today’s digital age, data security and privacy are non-negotiable. The Philippines addresses these concerns rigorously through the Data Privacy Act, which ensures strict adherence to data protection standards. Companies can thus be confident that their sensitive information will be well-protected.
Productivity Management Tools
Managing outsourced teams effectively can be challenging, but there are tools designed to help with this. One of the most reputable ones is Time Doctor.
Time Doctor
Time Doctor is a comprehensive tool designed to track both time and productivity for remote teams. It features performance analysis, distraction prevention, and monitoring of policy violations. This means that not only can companies track how their outsourced employees are spending their time, but they can also implement measures to enhance productivity.
Conclusion
The Philippines offers a compelling package for businesses looking to outsource. Its combination of cost-effective labor, skilled workforce, widespread English proficiency, tax benefits, and robust data security protocols make it an ideal outsourcing hub.
Utilizing productivity management tools like Time Doctor can further enhance the efficiency and output of outsourced teams, ensuring that businesses get the most value out of their partnerships in the Philippines. So, if you’re considering outsourcing, the Philippines stands out as a highly advantageous option.
