Building an in-house team in the USA involves various costs, including salaries, benefits, office space, and equipment. Salaries can range widely, with tech roles often commanding a median salary of $61,550 USD to $140,910 USD annually, and operational roles like marketing, sales, and administration varying from $37,460 USD to $159,660 USD.
Benefits, including health insurance and retirement plans, can incur an additional 20-30% on top of salaries. Office space and equipment costs depend on location and needs, but can significantly increase total expenses.
For a small team, annual costs can quickly sum up to several hundred thousand dollars, with exact figures depending on the team's composition, the company's location, and the benefits package offered. This amount of money can be used to fund future business investments.
Meanwhile, outsourcing to Southeast Asia can significantly bring down overhead and labor costs. If you’re choosing the Philippines as your outsourcing destination, you made the right choice. We created this guide to help you understand the cost of outsourcing in the Philippines.
How Much Is the Cost of Outsourcing In the Philippines?
The cost of outsourcing in the Philippines varies based on each job function. Here is a breakdown of the average monthly cost of hiring a Filipino worker for the following roles:
- Customer Service Agent: $349.79 USD - $437.23 USD
- Graphic Designer: $402.26 USD - $577.15 USD
- Content Writer: $402.26 USD - $577.15 USD
- Software Developer: $507.19 - $682.09 USD
- Certified Public Accountant (CPA): $559.66 USD - $734.55 USD
- Human Resources Specialist: $367.28 - $489.70 USD
If you want a more comprehensive price and breakdown of costs, it will vary from one outsourcing company to another. However, more often than not, the standard pricing on outsourcing solutions is based on a certain computation.
What Goes Into the Cost of Outsourcing In the Philippines?
The total cost to outsource to a Philippine outsourcing company is usually calculated based on the skill of the resource, the number of people you want to hire, and the tenure of the contract. In the Philippines, offshore outsourcing companies calculate fees based on workforce cost, service fees, and government-mandated benefits. This allows an outsourcing provider to come up with unique service models to fit their respective target markets.
1. Workforce Cost
All workforce cost is always charged to you since outsourcing rates are driven by the market rates for the positions you want to fill. Moreover, these costs will vary depending on skill level — whether entry-level, experienced, or expert prospects.
For example, the cost to hire a Filipino graphic designer at the entry level is $440.16 a month, whereas a senior graphic designer will cost $868.94 USD per month.
Note: Conversions will vary from time to time, depending on exchange rates ($1 USD = ₱57.13 PHP, as of this writing).
2. Service Fees
Every BPO (business process outsourcing) company will have its respective service fees as part of its outsourcing cost, which generally include a fixed fee per employee per month to cover all their operational costs. These operating expenses will typically cover equipment, utility bills, taxes, and more.
Some outsourcing providers will give you perks depending on the total size of your outsourced team, which may or may not be part of your negotiation stage.
3. Government-Mandated Employee Benefits
As prescribed by Philippine labor laws, each employee is entitled to several benefits. Don’t worry, your outsourcing partner will handle all of these for you, as this is part of the business's cost to outsource and falls under its payroll department. Feel free to have them explain all these benefits in detail once you come into contact.
- 13th-month Pay
According to the Philippines’ Department of Labor and Employment, the 13th-month pay is equal to 1/12 of the basic salary of an employee. This is usually given at the end of the year, with pro-rated values depending on the start date of the employee.
- Night Differential
The Philippines is hours ahead of the US, and this depends on which state you are in (Washington, DC = 12 hours, California = 15 hours). If you want your outsourced team to work at your hours, they are entitled to a night differential pay of not less than 10% of their basic salary.
- SSS (Social Security System)
Social security contributions are shared by the employer and the employee and are a part of the cost to outsource business services in the Philippines. As of January 2025, the contribution rate is 15%, with 10% shouldered by the employer and 5% by the employee.
- Pag-IBIG
Pag-IBIG is the government’s way of ensuring that the Filipino workforce will have savings while they work. This is usually for housing purposes, or when an employee needs to borrow money. An employer's contribution rate is 2% of their employee’s basic salary.
- PhilHealth
The PhilHealth premium rate is 5% per month. This serves as a health insurance benefit, albeit some outsourcing companies still give a separate health insurance benefit from a private provider, as healthcare in the Philippines is expensive.
FAQs On the Cost of Outsourcing In the Philippines
Below, we answer questions related to pricing models, hidden outsourcing costs, and whether you should choose a cheap outsourcing company.
1. Which Pricing Model Should I Choose?
There’s no right or wrong answer here. Your choice of pricing structure depends on your budget and business needs. Here are common examples of outsourcing pricing models:
- Fixed Price Model: The outsourcing service provider charges a flat rate for the outsourced services. This model helps promote alignment, as you and the outsourcing company agree on project timelines, deliverables, and requirements. While great for projects with clear scope and deliverables, this model lacks flexibility and can cause conflicts of interest along the way.
- Dedicated Team Model: The outsourcing partner hires dedicated outsourced Filipino professionals for your project and charges you a monthly rate. Salaries and other pertinent costs are already included in said monthly fee. With this model, you can build a solid professional bond with your team members and scale your headcount as needed. For effective team management, regular communication is a must.
- Time and Materials (T&M) Model: This pricing model enables alignment on hourly labor costs, labor hours, project scope, and maximum cost. It allows room for flexibility to accommodate changes in requirements. Unfortunately, delays, extensions, and additional resources may incur extra costs.
2. What Are the Hidden Costs of Outsourcing to A Philippine BPO Provider?
Hidden costs in outsourcing include:
- Technology upgrades
- Implementation costs
- Transition costs
- Compliance expenses
- Fluctuations in exchange rates
- Unforeseen circumstances
Being aware of these hidden costs helps you anticipate potential challenges and avoid financial risks down the line. These costs also manifest in poor performance and lackluster work, so it’s important to thoroughly vet and evaluate your potential outsourcing partner before signing the contract.
3. What Is the Cheapest BPO Company In the Philippines?
Here’s a word of warning: Don’t work with a cheap outsourcing provider — even if you’re an owner of a small and medium-sized enterprise (SME). While outsourcing costs are dependent on headcount, project complexity, and other factors, choosing a dirt-cheap BPO company can backfire and leave you with more expenses than savings.
Thankfully, many outsourcing companies offer flexible and affordable pricing models for SMEs that enable them to achieve cost savings while enjoying high-quality outsourced services.
Achieve 70% Cost Savings by Outsourcing to KDCI Outsourcing
After having an overall idea about the cost of outsourcing in the Philippines, the challenge now is to balance cost-effectiveness, the quality of the service you’ll get, and how well your needs will be met.
One company can achieve this delicate balance: KDCI Outsourcing. We help you build a dedicated offshore team based on your custom requirements. This way, you’ll only invest in the resources you need, when you need them, all without sacrificing quality and operational efficiency. You also won’t be tied to fixed pricing commitments.
Choose KDCI Outsourcing As Your Partner
As a BPO company with deep industry knowledge in finance, healthcare, human resources, software development, and other fields, KDCI Outsourcing stands as your business partner who will drive your business to success.
Contact us today to learn more about our services.
