Cost to Outsource to the Philippines: A Comprehensive Guide

How Much Does It Cost To Outsource?

Outsourcing is one of the most affordable business solutions in the market.

Your business can hire skilled workers without having to rent an office space. Or pay for other costs related to being on-site. All at a much lower price.

At first, hiring people from other countries might seem scary. But you’d be surprised at how much value you can get for such a move. Outsourcing staff can be much cheaper when housing and additional recruitment costs are considered.

Cost to Outsource: Some Things To Consider

So you’ve chosen to outsource, pointed out all areas for improvement in your business, and are looking at outsourcing companies online. 

But do you have an idea of what the cost of outsourcing is? Where do you start?

What Task to Outsource

Outsourcing is a reliable business solution, but just like any other business process, it only works when done right. 

Before you start sifting through providers and promo rates, ensure you are outsourcing for the right reasons. Take a good look at your business and determine which areas need improvement and which can be amplified by a good, reliable outsourced service. 

Customer service is one of the most outsourced services, but it has grown a lot from that in the past few years. Now that business process outsourcing (BPO) continues to innovate, functions such as back office operations, reception desks, accounts payable, and data entry can be outsourced just as much as customer support. 

Which Type of Outsourcing

Outsourcing comes in many types, and knowing what setup works well for your business and industry is essential. 

Hybrid call centers handle both inbound and outbound communications. This is usually a more cost-effective option.

Inbound call centers handle all incoming calls. This is usually a good option for businesses operating a high volume of inbound calls daily.

Outbound call centers are usually for selling, with agents contacting leads and potential customers through cold calls. This is often the go-to option for growing businesses looking to expand their customer base or introduce a new product or service. 

An Average Cost to Outsource

Outsourcing services are priced differently, some by the number of calls, while others by the hour. 

Due to the thriving outsourcing industry, many countries have become sites for many types of BPO companies, and their cities are now famous for being the prime location for shopping for outsourcing providers. 

Many things factor into the costs of outsourcing, such as recruitment costs, employee benefits, taxes, and the like, all based on the home country’s laws on labor and trade, so it’s no surprise that prices vary per city. 

The Philippines is known to be one of the country’s top quality yet most affordable outsourcing providers, with rates ranging from $6-$8 per hour. The cost of outsourcing in the country is beyond cheap; it is also worth it.

Although, the costs may also depend on the volume of transactions handled. Many outsourcing providers charge this way in inbound, outbound, or hybrid call centers. Industry-specific outsourcing can also charge differently depending on the project and the resources needed. 

While many cities in the West outsource, locations in Asia provide much lower rates due to lower costs of living and operations. This is one of the biggest reasons countries prefer to outsource from Asian countries like The Philippines, India, and Vietnam. 

Outsourcing Rates Per Location, By The Hour

Not only do Asian countries get money from outsourcing, but countries worldwide do. Eastern Europe and Latin America are also growing steadily in the outsourcing business. They offer software development, technical support, accounting, and graphic design services.

Here is a comparison of the cost to outsource per location and hour:

• North America (USA/Canada)  – $22-$35
• Western Europe – $40
• Eastern Europe – $12-$25
• Australia – $35-55
• Africa/Middle East – $12-$20
• Latin America – $8-$18
• India – $5-$9
• Pakistan – $6-$10
• The Philippines – $6-$8

Factors Influencing Outsourcing Costs in the Philippines

When considering outsourcing to the Philippines, it’s essential to understand the factors that can impact your costs to make informed budgeting decisions. Let’s examine the key elements:

Skill & Experience

As in any market, experienced professionals command higher rates. A senior software developer with in-depth knowledge of a particular framework will cost more per hour than an entry-level customer service representative. Consider your project’s requirements and budget carefully when determining the level of experience you need.

Project Complexity

Straightforward tasks with transparent workflows tend to be the least expensive to outsource. Highly complex projects with many moving parts or requiring specialized knowledge will often come with a higher price tag due to increased resource investment on the provider’s end.”

Industry & Specialization

Some industries have additional regulations regarding data privacy, security, and compliance. The healthcare, finance, and legal sectors are common examples where outsourcing providers must also meet standards and common consumer privacy laws. These extra measures typically mean more costs.

Urgency & Volume

If you’ve got a rush project with a tight deadline, outsourcing providers may need to add staff or reshuffle their workload to prioritize your work — which could cost you. Similarly, larger-volume projects might require additional staff or extended engagement periods, affecting overall costs.

Key Takeaway: So, when seeking out staffing quotes in the Philippines, you must be clear about the specifics of your project, the skill level you require, any industry-specific regulations that apply to your project, and your timing. This will help providers give you the most accurate quote possible.

Hidden Costs of Outsourcing (and How to Mitigate Them)

While outsourcing offers significant cost advantages, knowing a few less obvious expenses is important. Here’s a breakdown of these hidden costs and how to manage them:

Onboarding & Training

While outsourcing can save on in-house training costs, there’s still an investment involved in getting your outsourced team up to speed. This includes:

• Familiarization with systems: Time spent introducing them to your company’s software, communication tools, and project management platforms.
• Understanding processes: Explaining your workflows, quality standards, and any specific procedures they need to follow.
• Company-specific knowledge: Some roles might involve training on your products/services or sharing customer service guidelines.

Mitigation:

• Create detailed documentation: Invest time upfront in creating clear guides and process manuals.
• Assign onboarding mentors: Have existing team members guide new outsourced hires or pair them with experienced outsourced workers for knowledge transfer.
• Budget for training hours: Include this within your project estimation, even if the outsourcing provider provides training.

Management Overhead

Successful outsourcing still requires some management involvement. Be prepared for the following hidden costs of outsourcing:

• Communication & Coordination: Your team will need to invest time in holding regular meetings, getting updates on progress, and addressing issues that arise.
• Quality Control: Scheduling time to check the quality of work, at least initially, is time well-spent to ensure it aligns with your output standards.
• Team Dynamics: If it’s a hybrid in-house/outsourced setup, you’ll still need to spend some energy fostering positive relationships and addressing any possible friction.

Mitigation:

• Dedicated Project Manager: If you can, assign one person as your outsourced team’s primary point of contact.
• Clear KPIs & Metrics: Make sure there are well-defined ways to measure performance and catch any issues early.
• Proactive Communication: Schedule regular updates and let your delivery partner know you want to hear about workflow challenges early to avoid delays.

Potential Inefficiencies:

Even the most well-prepared businesses (us included) will face an initial adjustment period. Anticipate:

• Slower Turnaround Times: It’s not unusual for projects to take a bit longer initially, significantly if you’re still streamlining communications.
• Misunderstandings: A few initial cultural and first language barrier-related misunderstandings can be expected.
• Learning Curve: Even seasoned professionals new to your company will need time to acclimate to your specific way of doing things.

Mitigation:

• Start Small: A pilot project will allow you to work through any unforeseen snags before outsourcing in earnest.
• Over-Communicate: Err on the side of more detail than less in the beginning, give clear concise instructions covering everything you can think of. Check in frequently to see that the job is progressing as you envisioned.
• Be Patient and adjust: If things take a bit longer than expected, try not to be frustrated—outsourcing is a building process, not an overnight solution. Be prepared to tweak processes here and there as you work together.

Important Note: These hidden costs should not deter you from outsourcing. By considering them, you can intelligently plan and budget for them, reducing their impact and maximizing your long-term ROI.

Points To Help You Decide

Outsourcing is an attractive option, especially for small and growing businesses. But just like every business decision, this investment must be informed and worthy. 

While rates are an excellent way to start, there are other deciding factors that you need to ponder while shopping for a provider. No matter how good the offer is, a poorly fitting outsourcing service can be a loss. And the cost of outsourcing would not be worth it.

Look past the promo rates and packages and dive deeper into the efficiency, limits, and other factors. 

Language Efficiency

Outsourcing is rooted in communication. To maximize its value, you must choose a provider with agents who understand the language well. 

Fluency in English is a must in countries like the USA and Australia, with some agents requiring them to speak in the country’s native accent for better communication. Many outsourcing providers require agents to have above-average fluency in English upon recruitment. The Philippines, for example, is famously an English-speaking country, which puts Philippine BPO companies in demand in many countries in the West. 

Outsourcing can involve many different languages, and it requires an above-average level of fluency to communicate effectively with customers and leads who are native speakers. Communication is the backbone of outsourcing, so choose a provider with excellent language skills.

Performance

When looking for a provider, it helps to research which company does what best. With hundreds of companies in the market, it can be a little stressful to sift through offers and deals, so it’s essential to know exactly what service you’re looking to outsource and which company does it best.

Each company has its flagship service, and it helps to know what company specializes in which service and what their clients and partners have to say about them. Make sure to read reviews and ratings, which help you gauge how well the providers perform. 

The Best Value for Your Business

As a business owner, it’s perfectly understandable that every decision you make for your business needs to be wise. Time and money are always essential in every industry, and every investment needs to make returns. 

Outsourcing was developed to help businesses grow by providing the best possible value at the lowest price. Once you’ve evaluated your business and determined what you need, you can find a reliable, legitimate partner.

Magellan Solutions Provides High-Quality Outsourcing for a Low  Price

The cost to outsource should not break your bank account!

Here at Magellan Solutions, we understand your drive to grow your business and provide the best services to your customers. We have been in the industry for over 18 years, so you can trust us to give you excellent services that meet international standards.

Magellan Solutions was one of the first companies in the country to offer outsourcing services to small and medium-sized businesses. We are ISO-certified and HIPAA-compliant. We offer a wide range of high-quality outsourcing services guaranteed to give you the best value for the best price.

Let Magellan Solutions take your business to the next level. 

Choose a provider that’s also a partner. Talk to us today.