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Outsourcing to the Philippines

With its highly-educated and English-proficient labor force, the Philippines is one of the best outsourcing destinations in East Asia. The country does not only offer a skilled talent pool that is constantly growing but also has very low labor costs, allowing companies wishing to outsource their activity over there to maintain the high quality of their products and work standards, while significantly reducing their expenses.

The outsourcing services provided by FMC Group greatly simplify the process of hiring local employees in the Philippines and managing them on a day-to-day basis. FMC Group covers the entire recruitment process and everything related to the administrative management of employees and to compliance with local regulations, allowing clients to focus entirely on their activity and only manage the functions of their employees. Moreover, the outsourcing services of FMC Group provide clients with unmatched flexibility that allows them to quickly adapt the size of their local team in the Philippines according to the evolution of their needs.

Content:

  • Advantages of Outsourcing to the Philippines
  • FMC Group’s Outsourcing Approach
  • Advantages of Outsourcing with FMC Group
  • Labor Laws in the Philippines
    • Working Hours
    • Paid Vacation and Public Holidays
    • Other Paid Leaves
    • Minimum Wage
    • Social Contributions and Taxes
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Stephan Dorn FMC Group

Advantages of Outsourcing to the Philippines

  • Education is an important social value in the Philippines. The country’s literacy rate stands at over 98%, making it one of the most literate countries in East Asia. This high access to education translates into a highly-talented workforce that is always open to learning new skills.
  • English is the most used language in the fields of business and commerce in the Philippines. It is taught in all public and private schools from the primary level and it is one of the two main languages of instruction at the secondary level and in universities. In the 2021 EF English Proficiency Index, the Philippines ranked second in Asia and 18th worldwide, among the “High Proficiency” countries.
  • While the majority of young Filipinos join the labor market right after high school, enrollment in universities is becoming more popular every year. The Philippines currently has 112 state universities, in addition to over 120 local universities and more than 1,700 private higher education institutions. The country counts around 350,000 new graduates every year that join the Filipino talent pool. Some of the most popular fields of study in the Philippines are business, education, engineering, architecture, and IT.
  • Labor costs are very low in the Philippines. For example, the salaries of confirmed software developers or IT engineers in the country average around PHP 35,000 (EUR 627) gross per month.

FMC Group’s Outsourcing Approach

Selection and interviews

  • Preselection of candidates that match the client’s criteria;
  • Establishment of reports on the best candidates;
  • Conduction of interviews;
  • Conduction of personality tests (optional).

Recruitment

  • Showcase of video interviews for clients to make the final recruitment decision;
  • Employment of successful candidates at the local FMC Group company.

Operations

  • Functional management of employees by the client;
  • Administrative management of employees (payment, leaves, contracts, etc.) by FMC Group;
  • Provision of the necessary tools and infrastructure for employees’ work by FMC Group.
Approach for Nearshoring

Advantages of Outsourcing with FMC Group

  • Adapted search for candidates according to the client’s needs;
  • Job advertisement on different online platforms and search for fitting candidates on FMC Group’s growing talent database;
  • Full recruitment process conducted by FMC Group: Preselection, interviews, reference checks, contract negotiations, etc.;
  • Complete functional management of employees by the client;
  • Flexibility and no long-term commitment;
  • No need for setting up a local company.

Labor Laws in the Philippines

Working Hours

  • Employees in the Philippines can legally work up to eight hours per day and must have at least one full rest day every week.
  • Overtime work is paid at a rate of at least 125% of the hourly base salary.

Paid Vacation and Public Holidays

  • Labor law in the Philippines gives employees the right to five days of annual paid leave, but only after they complete their first year of service.
  • The Philippines celebrates 14 public holidays:
    • January 1st: New Year’s Day;
    • Between January and February: Chinese New Year (moveable);
    • February 25th: EDSA People Power Revolution Anniversary;
    • Between March and April: Maundy Thursday and Good Friday (moveable);
    • April 9th: Day of Valor;
    • May 1st: Labor Day;
    • June 12th: Independence Day;
    • August 21st: Ninoy Aquino Day;
    • August 29th: National Heroes’ Day;
    • November 1st: All Saint’s Day;
    • November 30th: Bonifacio Day;
    • December 8th: Immaculate Conception Day;
    • December 25th: Christmas Day;
    • December 30th: Rizal Day.

Other Paid Leaves

  • Maternity Leave: New mothers can receive up to 105 days of maternity leave, including 45 days before delivery and 60 days afterward. Single mothers can take up to 120 days of maternity leave instead. Employers have to pay their employees full salaries during this period and they get reimbursed by social security later.
  • Paternity Leave: New fathers are entitled to seven days of paid leave after the birth of their baby, covered by the employer.
  • Paternal Leave: Single parents are entitled to seven days of paid parental leave every year, covered by the employer.
  • Sick Leave: Sick leave days in the Philippines are counted towards the annual leave.

Minimum Wage

  • The daily minimum wage in the Philippines stands at PHP 537 (EUR 9.62).
  • Salaries in the Philippines are paid twice per month, every two weeks.
  • The 13th-month salary bonus is mandatory in the Philippines and it has to be paid before December 24th.

Social Contributions and Taxes

  • Employers have to pay a social contribution of 11.75% of the employee’s gross salary, in addition to a fixed contribution of PHP 425 (EUR 7.62) every month.
  • Employees have to pay a social contribution of 6.75% to 7.75% of their gross salary, in addition to a fixed contribution of PHP 225 (EUR 4.03) every month.
  • The employee income tax in the Philippines starts at 0.00% for employees with a yearly salary of less than PHP 250,000 (EUR 4,480) and goes up to 30.00% for employees with yearly revenue between PHP 800,000 and PHP 2,000,000 (EUR 14,335 – EUR 35,837).
  • Employees with a revenue of more than PHP 2,000,000 but less than PHP 8,000,000 (EUR 35,837 – EUR 143,350) have to pay a fixed tax of PHP 490,000 (EUR 8,780), in addition to 32.00% of the excess revenue over PHP 2,000,000.
  • Employees with an income of more than PHP 8,000,000 have to pay a fixed tax of PHP 2,410,000 (EUR 43,184), in addition to 5.00% of the excess revenue over PHP 8,000,000.