Outsourcing offshore is so cheap that it must mean staff are underpaid and their working conditions are compromised. Right?
Actually, one of the most common misconceptions about outsourcing offshore is that it’s taking advantage of people in countries such as the Philippines. That the practice is unethical; with visions of sweatshops springing to mind. However, labour costs are much less for offshore staff because the cost of living is about 70% less than Australia.
Before you start offshoring, it’s important to understand the industry’s economic impact, staff motivation and culture, how to avoid unethical practices and the country’s labour laws. So you can feel comfortable knowing that your offshore staff are well looked after.
What is the local impact of outsourcing?
The outsourcing industry has had a significant impact on the Philippines' local economy, which has catapulted the country into the global outsourcing spotlight. The offshoring industry has created approximately 1.5 million jobs for people in the Philippines, making it the country’s biggest source of private employment. In addition to this, the Philippines has steadily increased their share in the global outsourcing market, currently claiming an estimated 13% stake (and growing!). More skilled workers in employment, thanks to the industry growth, has helped to stabilise the local economy. Thanks to the outsourcing sector, The Philippines has been given the title of the Next Rising Tiger of Asia; reflecting the economic prosperity the industry is bringing to the country.
The growing popularity of regionally based BPOs has secured better employment opportunities for those living outside of metro areas in provinces and cities such as the Clark Freeport Zone. The outsourcing industry is a key driver in establishing, maintaining and increasing regional development. So you can rest assured offshoring to the Philippines is helping regional communities flourish.
Are wages fair in the BPO sector?
Working in the BPO sector is a dream for thousands of Filipinos. The wages paid to Filipinos in the outsourcing sector are competitive internationally and provide a stable income for families. Staff in the industry are typically paid more than double the national average and are often provided the added benefit of membership with a Health Maintenance Organisation (HMO). While the government-run PhilHealth exists to cover some medical costs for Philippine citizens, its coverage often falls short. HMO is similar to private health insurance in Australia, except premiums are paid by the employer, which is crucial in easing the financial burden of medical expenses for staff.
Understanding the differences in the cost of living and lifestyle between the Philippines and Australia is crucial when evaluating the seemingly low wages paid to Philippine staff. Compared to Australia, the cost of living in the Philippines is up to 70% less. It’s also important to recognise that when you pay a Filipino, you are supporting more than one person. It’s not unusual to see a whole extended family relying on one income, including parents, grandparents and siblings. Wages are used mainly for health care and to fund higher education opportunities, even for extended family members; Filipinos also hire nannies and other household help with their income.
What laws are there in place to protect Filipino staff?
To protect the interests of private employees, companies seeking to hire Philippine staff offshore must comply with the strictly-enforced Labour Code of the Philippines. The Labour Code addresses areas such as hiring, termination, minimum wages, benefits and working conditions. There are hefty consequences for employers who fail to meet the legislated requirements.
How can you avoid unethical outsourcing practices?
The most effective way to guarantee you are compliant with the Labour Code is to carefully select a reputable outsourcing provider who respects and looks after their employees. Your outsourcing provider should take care of all the HR requirements and help you manage the risk of employing people in a foreign country with unfamiliar Industrial Relations legislation.
Some outsourcing providers go above and beyond by providing extra benefits and employee perks; the results of which are beneficial to both the outsourcing provider and the client (you). Employee benefits can include free shuttles to and from work, subsidised on-site cafeterias, internal team building events and more. Creating an environment that values the needs and desires of employees is a major part of attracting and retaining quality staff, high attendance, high performance, fewer workplace complaints and ultimately, a higher level of client satisfaction.
Filipinos are very similar to Australians and other work forces around the globe. They are increasingly seeking out diverse workplaces that can offer them ethical employment opportunities, safe and inspiring workspaces, employee and family engagement, competitive wages and attractive benefits and perks.
At Beepo, we are determined to exceed our customers' and employees' expectations. Our commitment to ethical practices helps us to attract and retain top talent for our clients. Read our guide on 33 Critical Questions to Ask Your Outsourcing Provider to make sure you stay aligned with your values.