The cost difference is real and can reach up to 70 percent fully loaded against the US, UK or Australia, depending on role and seniority.
What has changed is the market. The candidates worth hiring are recruited by international companies, know what the role pays elsewhere, and have options. Salary is set against the market you are competing in rather than a national average, and the Philippine Statistics Authority figures that circulate describe the domestic employment base, not internationally facing roles.
Companies that approach this as a cost exercise tend to set an offer below market, stall at the offer stage, and conclude the talent is not available. It was available. The budget was wrong.
Market Guides
What hiring in the Philippines is not
In short
Building a team in the Philippines is not a low cost labour arrangement, not a service contract, not a way to avoid employment obligations, and not a solution to a role you have not defined. It is employing capable professionals under a legal system that protects them, in a market that competes internationally for the same people you want.
The assumptions people bring to this decision are usually 15 years out of date, and they lead to the wrong structure, the wrong budget and the wrong expectations. Clearing them up is more useful than another list of advantages.
It is not a low cost labour arrangement
It is not a service contract
The people are your team. You choose them, direct them, set their priorities and standards, and they sit in your organisation.
That is a different arrangement from contracting a function to a provider who staffs and manages it, and Philippine law treats the difference as significant rather than semantic. Where a supplier is really just providing people who work under your direction, the arrangement may be assessed as labour only contracting under Department Order 174, and the workers considered your employees.
The practical consequence: you carry the management. There is no provider absorbing performance issues, cover or scheduling on your behalf.
That is a different arrangement from contracting a function to a provider who staffs and manages it, and Philippine law treats the difference as significant rather than semantic. Where a supplier is really just providing people who work under your direction, the arrangement may be assessed as labour only contracting under Department Order 174, and the workers considered your employees.
The practical consequence: you carry the management. There is no provider absorbing performance issues, cover or scheduling on your behalf.
It is not a way to avoid employment obligations
Statutory entitlements are a floor and cannot be waived, bundled away or agreed out of. SSS, PhilHealth, Pag-IBIG and 13th month pay apply regardless of what the contract says.
Employment status is assessed on substance. A four fold test looks at selection, wages, dismissal and control, with control decisive. A full time team member working your hours under your direction is an employee whatever the paperwork calls them, and the exposure is retroactive.
There is also no at-will employment. Security of tenure applies, and dismissal requires a just or authorised cause with the correct process.
Employment status is assessed on substance. A four fold test looks at selection, wages, dismissal and control, with control decisive. A full time team member working your hours under your direction is an employee whatever the paperwork calls them, and the exposure is retroactive.
There is also no at-will employment. Security of tenure applies, and dismissal requires a just or authorised cause with the correct process.
It is not a fix for an undefined role
If you cannot say what this person will have done in 90 days, specifically enough that you would both agree afterwards whether it happened, hiring internationally will not clarify it.
The time gap makes the feedback loop longer. A misunderstanding that would be corrected in a corridor conversation locally takes a cycle of days here, and if the person is not raising problems, which is the common pattern early on, longer still.
This is the most frequent cause of a capable hire being judged a failure.
The time gap makes the feedback loop longer. A misunderstanding that would be corrected in a corridor conversation locally takes a cycle of days here, and if the person is not raising problems, which is the common pattern early on, longer still.
This is the most frequent cause of a capable hire being judged a failure.
It is not automatic
The market supplies capable people. It does not supply management.
A remote hire with an absent manager fails reliably, not occasionally. The context a local hire absorbs by proximity has to be supplied deliberately, and that is front loaded management time in the first 90 days.
If the reason for hiring is that everyone is too busy, and nobody will have several hours a week for this person in the early months, the hire will consume more attention than it returns.
A remote hire with an absent manager fails reliably, not occasionally. The context a local hire absorbs by proximity has to be supplied deliberately, and that is front loaded management time in the first 90 days.
If the reason for hiring is that everyone is too busy, and nobody will have several hours a week for this person in the early months, the hire will consume more attention than it returns.
What it actually is
Employing professionals in a market with genuine depth in English speaking technical, financial, customer facing and operational roles, under a legal system that protects them, at a cost that is materially lower than hiring the same person in your own market.
The advantages are real. They are also conditional on structuring the arrangement properly, defining the role, paying to the right benchmark and having capacity to manage.
Companies that treat it as a hiring decision rather than a cost decision generally get what they expected. Companies that do the reverse generally do not.
The advantages are real. They are also conditional on structuring the arrangement properly, defining the role, paying to the right benchmark and having capacity to manage.
Companies that treat it as a hiring decision rather than a cost decision generally get what they expected. Companies that do the reverse generally do not.
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