Why Outsource Developers To The Philippines?

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The Philippines is thought to be one of the fastest-growing economies in Asia and one of the key drivers of this growth is the Business Processing Outsourcing (BPO) industry. It is no surprise that it has been one of the top outsourcing destinations over the past decade, given its young and tech-savvy workforce.

The Philippines is a small country situated in Southeast Asia. It is an archipelago of about 8000 islands with white sand beaches, magnificent landscapes, and delectable cuisine. However, these aren’t the only things for which the country is well-known. One of the things the Philippines is well-known for is its people. 

Filipinos are well-known for being hardworking, hospitable, well-educated, and highly skilled people. The Philippines is thought to be one of the fastest-growing economies in Asia and one of the key drivers of this growth is the Business Processing Outsourcing (BPO) industry. It is no surprise that it has been one of the top outsourcing destinations over the past decade, given its young and tech-savvy workforce.

The IT outsourcing industry is prepared for another wave of growth, as it continues to expand from the capital to emerging cities in different regions. The flourishing IT outsourcing industry in the Philippines can be due to the numerous benefits the nation and its workforce have to offer. 

In this article, you’ll be given a quick overview of the outsourcing industry in the Philippines. This will help you decide if it’s the best solution for your needs.

 

Country Profile

  • Capital: Manila
  • Official Languages: English &Filipino
  • Currency: Philippine Pesos
  • Population: 112,982,595
  • Time zone: GMT +8
  • Number of Developers: 210,000+
  • Average Monthly Rate: $1300
  • Political Stability(scale -2.5 to 2.5): -0.93
  • Ease of doing business: 62.8/100
  • Biggest Tech Hubs: Manila, Cebu, Davao City, Angeles, and Bacolod City
  • Popular Technologies: Java, C++, C, PHP, Python, and Visual Basics

 

  1. Advantages of outsourcing developers to the Philippines

 

  • English Literacy

The Philippines is the world’s fifth-largest English-speaking nation. Over 90% of the population speaks and understands English. The country was placed 13th out of 72 countries on the EF English Proficiency Index (6th Edition). Language has also been integrated into the educational system. Filipinos have a good understanding of the language and a neutral accent. The usage of English facilitates communication and collaboration amongst these Filipino developers and the business outsourcing them.

 

  • Growing talent pool

The Philippines boasts a diverse talent pool of young and experienced professionals, with over 200,000 software specialists. Because the local IT industry is one of the fastest-growing industries, you can find specialists with just about any tech stack in the nation. There were also concerns about software developers oversaturating the local market a while back. 

One of the most significant challenges that Western companies encounter when hiring talent is the lack of diversity. Its diverse talent pool also includes individuals of all ages, making it simple to fill talent gaps and specific roles. Working with such dynamic talent allows you to expand quickly and effectively. You can easily arrange agreements with these developers for customized commitments and flexible terms.

 

  • Cultural compatibility

The Philippines has a strong affinity to western culture. This is largely due to its historical ties with Spain and the United States. Before the Americans arrived and integrated their culture with the Filipinos, the Philippines had been under Spanish rule for 300 years. It is also primarily a Catholic country, with Catholics constituting more than 80% of the population.

Due to western influence, these Filipinos are open-minded and are open to multiple values and perceptions. Filipinos have demonstrated a level of cultural adaptation that is uncommon in other nations. This makes it easier for them to adapt to foreign cultures, which makes Filipinos one of the easiest people to work with in the outsourcing industry.

 

  • Political and economic stability

The Philippines is relatively stable in comparison to most other countries. It has a robust and fast-growing economy and outsourcing has been a big contributor to its growth. It contributes a substantial chunk of the GDP of the country. As a result, the Philippines is a great place to outsource developers. It has also been incredibly welcoming to American business investment. This makes doing business with the Philippines simple.

 

  • Proactive government support

The national government works hard to facilitate outsourcing to the Philippines. The government saw the potential of the local BPO business and it is today a significant economic pillar in the Philippines. They help the outsourcing industry by guaranteeing efficient infrastructure and policy development. The Philippine government offers significant tax incentives to the outsourcing industry and legislators establish legislation that allows companies that outsource to improve and grow.

Other ways the government provides assistance is by introducing SOPs to encourage international investment, a unique voucher system, and a specialized National ICT Council. Recently they introduced the Philippine IT-BPM Roadmap 2022, a program aimed at creating 1.8 million additional employment for Filipinos.

 

  • Growing IT infrastructure

Due to its significant investments and ongoing improvements, the Philippines now has a world-class IT infrastructure similar to that of other Asian giants like South Korea, Hong Kong, and Japan. The country’s main ISPs provide high-speed and dedicated fiber optic internet connections. It also introduced 5G technology in 2019, becoming the first country in Southeast Asia to do so.

 

  • Cost-efficiency

Despite fluctuations in the global economy, the Philippines remains as one of the least expensive countries for outsourcing. Businesses can save up to 60-80% on operational costs by outsourcing to the Philippines and getting the same service. The daily salary of Filipino software developers and other IT professionals may be equivalent to the hourly wage of an employee from the United States or Europe. 

 

2. The cost of hiring developers from the Philippines

The cost of hiring developers is often determined by the skills required, the number of developers required, and the length of the contract. However, there are a number of costs to consider when outsourcing to the Philippines. These include workforce costs, service fees, government-mandated costs, and other administrative costs. The following is a short breakdown of the costs:

  • Workforce cost – These are the market rates for the roles you are looking to fill. It typically relies on the skill level, whether beginner, intermediate, or expert. For example: according to talented, a junior Fullstack developer will make between $400 and $1200, while a senior developer may earn between $1800 and $3300 or more.
  • Service costs – These prices vary from company to company. It is the monthly fixed cost for all operating expenditures.
  • Government-mandated benefits – Under the Philippine labor law, every employee is entitled to a variety of benefits. For example, employees should be given the Home Development Mutual Fund (Pag-IBIG Fund). This is to guarantee that these Filipino employees save money.
  • Administrative costs – Primarily concerned with the expense of paying the employee’s salary. They must be paid in Philippine Pesos, which will result in bank charges and foreign exchange fees when you attempt to convert your country’s currency.

 

These software developers’ salaries may vary depending on the city. If you consider employing developers from a place like Manila, where living expenditures are greater than in most other cities. Salary levels will need to be raised. For example, a developer’s typical weekly income in Manila will be roughly $883 but a developer’s salary in Dasmarinas might be as low as $679.

The average salary may also be affected by the developer’s specialty and tech stack. A C# developer, for example, will make roughly $772 per week but a CMS developer will earn around $592. Check out this article on the cost of outsourcing developers to the Philippines for more information.

 

3. Things to watch out for when outsourcing developers to the Philippines

Even though hiring developers from the Philippines is a safe and reliable choice. Before you commit to outsourcing these Filipino developers, there are a few things you should consider.

  • The most serious issue is that you have no notion of who the developer is. You need to have a lot of trust in them because you will be giving them access to your code and databases.
  • Just like hiring any other employee, it can take a lot of work as you’ll need to recruit, screen, interview, and do background checks. When the individual is on the other side of the world, this might be challenging.
  • Developers from outside large cities are likely to encounter power and internet outages occasionally.
  • If you hire 2-3 freelancers who all work from home, you may miss out on having them work side by side in an office. It is possible to stay connected through tools like Slack and Skype. However, working side by side with your other coworkers enables you to share information and foster team building.
  • These Filipino developers may require several benefits like HMO insurance and other perks. And if you’re unable to provide them, it’ll be hard for you to attract top talent.

 

4. Disadvantages of outsourcing developers to the Philippines

 

  • Disruptive weather 

The Philippines is a tropical archipelago located on the west side of the Pacific Ocean. It is estimated that they experience an average of 20 storms. This can cause power outages and cancellation of work in flood-prone areas. Furthermore, because they are located within the Pacific Ring of Fire, they are subject to earthquakes and volcanic eruptions. They experience around 100 earthquakes every year on average. However, you may still have a smooth outsourcing experience by recruiting developers in comparatively safer areas.

 

  • Holidays

There are 18 official non-working government and religious holidays in the Philippines. Because the Philippines is predominantly Christian, many culturally significant festivals are officially deemed as holidays by the government. Despite the fact that Filipinos enjoy celebrating holidays, labor regulations mandate that employees be paid extra when they work on legal holidays.

 

  • Loss of business control

One of the most common concerns about outsourcing to another country is the loss of visibility and control over certain business functions. However, there are methods available to help you keep control. One such way is by using a talent marketplace like Unicorn.dev. They employ a 5-step vetting process to ensure you are hiring quality developers.

 

  • Pro-employee labor code

In the Philippines, you cannot fire an employee at will. To fire any Filipino employee, a justifiable reason and sufficient documentation must be presented. You will also be required to pay the severance money. However, a talent marketplace like Unicorn.dev will provide you a 7-day trial period to test out your talent and if you feel it isn’t the best fit, you can have them changed with a new developer, who will also be given a 7-day trial or you may opt not to use its services anymore.

 

  • The difference in time zones

Companies in the United States or Europe may find it difficult to contact these Filipino developers due to the time difference. Since it is more difficult to interact with these Filipino developers, it might pose issues with project management and control. Unicorn.dev, for example, provides its clients with a four-hour time overlap. Despite the time difference, this makes it simpler to collaborate.

 

5. How can you hire developers from the Philippines?

If you’re looking to outsource developers to the Philippines, you must select one of the following options:

 

  • Remote contracting websites

You can use local job boards to find developers according to your requirements. A few popular job boards are listed below:

 

  • Traditional outsourcing

There are several software development companies in the Philippines that you can hire. However, this can be a risky affair, as it’ll be hard to ensure if the talent is the most suitable. You can review the company on sites like Clutch.co and check the reviews and ratings. But this can be quite tedious.

 

  • Talent marketplace

This is probably the most sensible option. It is a great way of hiring individuals or teams based on your requirements. There are several talent marketplaces available such as Unicorn.dev. It has its very own exclusive pool of highly vetted developers. 

They are in charge of all the talent management, payments, and compliance. This makes outsourcing considerably easier and less risky. Unicorn.dev also guarantees that talent is assigned within 24 hours via a private Slack workspace. These developers are also continually monitored to ensure that quality standards are met.

 

6. Key Takeaways

Now, let’s go through some key takeaways from the Philippines’ IT outsourcing landscape. This will help you decide if it’s the ideal solution for your company.

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