There Is Temptation, But There Are Also Consequences
You have seen these postings on job ads. “Virtual assistant $3/hr” or “Social media manager $5/hr.” As a businessman who wants to cut costs, these numbers are extremely tempting. The rationale is quite straightforward: lower costs equal higher profit margin. But how about if this calculation is fundamentally flawed?
The fact is that hiring cheap is one of the costliest mistakes a company can do. Of course, it does not happen suddenly but gradually: in delays, revisions, customers’ complaints, and the eternal cycle of hiring, training, and firing employees over and over again. Paradoxically, such a hiring strategy is particularly prevalent with those companies that search for cheap talent outside of their home country, even to such countries like the Philippines, which offers some of the best and most professional people in the world.
In this blog, we are not going to discuss whether it is a good idea to hire Filipinos. We are rather going to discuss how you should go about it.
The True Cost of Cheap Labor
While companies focus on minimum costs, they seldom take into account the “total cost of employment” that economists talk about. This is just the tip of the iceberg.
There is the matter of turnover. It takes between 50% and 200% of an employee’s annual income to replace them due to all the expenses incurred through hiring, integration, training, and reduced productivity. A worker earning $4/hour who quits in two months hasn’t really saved you money; rather, he has cost you lost production time.
There is the aspect of quality as well. Substandard hiring practices often result in work that needs a lot of revision – or even worse, work that ends up in the hands of someone and creates a negative impression of your company. Badly written emails to clients, flawed code shipped to production, or improperly handled customer complaints will undermine a relationship that took many years to develop. This cost will never show on an Excel sheet, but it will definitely exist.
There is also the aspect of morale. Putting together competent employees with underperforming ones will create frustration among the former, who end up taking on too much work and ultimately leave.
Reasons for Getting Trapped in the “Cheap Hiring” Scheme
The trap of cheap hiring is not caused by neglect but by necessity. In startups and small businesses where finances tend to be stretched very thin, there is an attitude that one simply cannot afford high-quality hires. Thus, people try to hire cheaply and improve their team later.
However, in practice, there is no point where they stop hiring new candidates and start improving. Moreover, they continue getting trapped in an endless cycle of fire-fighting and hiring.
In addition, the market suffers from another misconception, which claims that the talent from overseas, especially from developing countries, is worse and should be paid less than the domestic talent. This myth is wrong and extremely costly for companies. One of the countries which have a highly qualified labor force that exceeds such low expectations is the Philippines.
Why Filipino Professionals?
The Philippines is more than just a supplier of cheap labor. It is a true country of skilled and highly trained workers who have perfect command of English, and the statistics prove that.
Each year the country is turning out more than 500,000 university graduates in such disciplines as information technology, business management, accounting, nursing, engineering, and creative art. English is one of the official languages of the country and the medium of education in schools.
A cultural compatibility with Western businesses is yet another major benefit. The Filipino population is accustomed to the business culture in the United States, Australia, and Great Britain due to numerous outsourced partnerships, media impact, and education. It translates into smooth communication and onboarding and cultural compatibility.
In addition to technical knowledge, Filipinos have earned the reputation of dedicated and loyal people who excel in remote working. They not only do what they were hired to but usually perform more than expected. Employee retention rates of well-paid Filipino workers are very high, which is the exact opposite of what businesses get with hiring based on low prices alone.
The list of professions and specializations of Filipino experts is endless: software developers, UI/UX designers, financial analysts, content strategists, project managers, and customer success specialists — there is almost any profession within any industry sector in the Philippines.
ROI for Investing in Quality Talent
Here’s another take on talking about ROI.
An experienced Filipino worker making $10-$15 an hour — seen as a reasonable pay range for quality work — can cost twice or even three times as much as the most inexpensive choice available on a freelance platform. But let’s look at what you’re really getting: someone who needs little supervision, delivers high-quality results, works independently, and sticks around long enough to fully get what your company is all about.
And after 12 months, you’ll see how radically this approach differs from hiring cheap talent. Your projects are going to be completed faster. Your clients will be more satisfied. Your core team won’t feel overwhelmed. And your business will have a solid foundation to grow.
Companies investing in quality remote workers from the Philippines outperform their peers who compete by maintaining very low costs for labor in terms of increased client satisfaction rates, quicker project completion time, and year-to-year growth. The relationship between the two factors is anything but coincidental. It is one of causation.
Identifying and Recruiting Talented Filipinos
To find good Filipino workers, you will need to be deliberate. Try out the following tips:
Use the right platforms. LinkedIn, OnlineJobs.ph, and Jobstreet Philippines are among the best sources for recruiting professional-level workers. Upwork (used selectively) or recruitment firms with a presence in the Philippines are equally effective platforms.
Offer fair wages, and make sure you do it. It goes without saying that talented Filipinos understand the value of their work. Those who advertise low rates are not going to get any response from talented workers. Be honest about your wage and ensure that it is attractive enough.
Consider communication and initiative in addition to skills. In your recruitment process, consider the ability of applicants to write emails, pose questions, and deal with vague instructions. Such soft skills are what will distinguish an employee that can work well from one that would need to be supervised all the time.
Provide a quality onboarding experience and foster a sense of belonging to the company. Even the perfect hire needs some context. Offer your Filipino employees clear systems and processes and make them a part of your company culture by making them a valued part of the team.
Foster lasting relationships. The companies that have the most success in collaborating with Filipino workers treat them as partners, not merely vendors. Performance-based raises and regular evaluations play a significant role here.
Avoid Optimizing for the Wrong Number
The choice of hire that appears to be most sensible because of its safety – the $3/hour assistant, the minimum-skilled freelancer – can be one of the worst decisions you make for your company. It focuses on one figure at the expense of many others.
Skilled Filipino professionals are one of the most attractive prospects in today’s international job market. These are excellent capabilities along with true cultural fit and relatively cheap pricing – if properly rewarded.
What needs to be considered nowadays is not whether you can afford to hire skilled Filipino professionals but rather whether you can afford not to do so considering all the additional expenses associated with the opposite choice.
Think about your approach to hiring. Forget about chasing low prices and start working with those who have the potential to drive your company forward.
