You may have noticed that there has been a recent proliferation of outsourcing courses in the internet.  We have John Jonas, Tyron Shum, and John Reese, to name a few.  All of them are considered internet marketing “gurus” and they have now grown to include outsourcing as one of their expertise.

I have nothing against outsourcing courses.  In fact, I encourage anyone new to the concept of outsourcing to take any one of the courses by the people mentioned above.  It will open up your eyes and encourage you to try your hand at delegating some of your work to people overseas.

My only gripe is that most, if not all, of the outsourcing courses slightly downplay the rates that are proper for online contractors in the Philippines.  I don’t know the living conditions, minimum wage, and cost of living in countries like India, Indonesia, etc. so I will decline to comment about wages in those countries and just stick to the Philippines.

Most of the outsourcing courses recommend paying Filipino online contractors as little as $200-$300/month for online work.  They suggest that this is the average rate and that you are doing Filipinos a favor by giving them this rate as it is above the country’s minimum wage.  But are you really?

In my previous post on reasonable rates to give a Filipino online freelancer, I gave a table of rates that will be a good starting point when hiring an online contractor.  The starting rates differ depending on the kind of work that you outsource.  If you read this post, the only work where I recommend a wage within the $200-$300/month range is for data entry.  This will involve simple copy & paste, entering data into spreadsheets, and other similar work.  For other online work categories, I recommended higher monthly rates.

Where did I get these rates and am I some kind of an expert to be recommending stuff on here?  No.  I am by no means an expert.  But, I did reasonable research when I did this article.  I also did a bit of an informal survey asking actual Filipino online freelancers their current rates and the kind of online work that they do.  It is disheartening to be going to job sites and to look at the rates being offered for online jobs nowadays.  My theory is that employers refuse to offer higher rates as they were told by outsourcing “experts” that the rates they are offering are acceptable.

While it is true that $300/month is higher that our country’s minimum wage, it should also be mentioned that the minimum wage is given to blue-collar workers.  These online workers are college-educated and if hired for a traditional job, they will be white-collar workers and will be earning above the minimum wage.  Plus, you have to take into account the fact that online freelancers have to pay for overhead expenses involved in online work, like internet connection and electricity, that they don’t have to pay for in a traditional job.

So why do Filipino online contractors agree to such low rates even if they are not enough?  Simple.  They have no choice.  Employers think you are expensive if you try to charge above $2.00/hr and they will refuse to hire you.  Another reason is that by nature, Filipinos are optimistic people.  We always find the silver lining in every dire situation.  Contractors accept the low rate in the hopes that when their employers find out what they can do, they will be offered a higher wage.  Of course, there are happy endings to this story.  But, there are also a lot of giving up and moving ons, and even more “Just suck it up and plaster a smile on your face. Don’t complain, at least you have a job!” going on.  Another reason a Filipino will take that wage is that they will compensate it by getting another online work on the side. They will work full-time for you and work full-time for someone else. The effect? They need to work longer hours than necessary. They wake up very early and sleep very late just to cater to all their clients. Inevitably, some of their output is compromised.

The moral of this story is that we should not take everything that is being said in online courses as gospel truth.  Do a little research yourself and most important, pay your contractors what you think they truly deserve.  Rest assured that the rates of Filipino online freelancers are still a lot lower than their counterparts in more developed countries.  Just make sure that you are paying them a fair wage.  In the end, you still get your cheap labor but for an amount your worker will be happy with.  It is still a win-win situation.