What is the reasonable rate to give a Filipino freelancer?

Most employers, especially those new to outsourcing, have this very important question foremost in their minds:  “What is the fair rate that I should give my Filipino provider(s)?”

An online freelancer’s rate is determined by a lot of different factors, the most important being: the cost of living in their country, the skills and abilities of the said freelancer, and whether you are hiring for a full time position or a project-based endeavor.

It is a no-brainer that the cost of living in the Philippines is much lower than that of first-world countries like the US and the UK.  Consequently, you could get the same quality of work, if not better, from a Filipino provider for a much lower rate than what you would expect to pay providers in your own country.  However, contrary to what some people believe, paying a Filipino freelancer $200/month for 40 hours of highly-specialized work per week is hardly enough.  Between spending for food, rent, utilities, and expenses necessary for online work – like PC maintenance and internet connection, $200/month is not a livable rate.

The old adage, “You get what you pay for”, is also very much applicable to outsourcing.  You may be able to hire somebody for $1/hr, but  more often than not, you will get better quality work if you hire someone for a slightly higher rate.  If you are willing to pay a reasonable rate, you will easily find an intelligent, hardworking, trustworthy, and loyal contractor that will stay with you and grow with you and your business.

So how much is reasonable?  Now, that would really depend on the kind of work you are outsourcing. But before I get to that, let me give you a basis for the rates that I will be suggesting.  The minumum wage in the Philippines in the national capital region is roughly P10,000/month.  With the exchange rate of P44 per $1 ( with paypal and xoom exchange rates a few points lower than prevailing exchange rates), the minimum wage would come up to more or less $220/month.  This wage is given to rank and file employees, factory workers, fastfood employees, etc.  Naturally, white-collar workers get more than this.

Let me take for example the average salary a call center agent gets per month.  Why call centers, you ask? Call centers are the top outsourced industry to the Philippines and since we are talking about outsourcing in general, it would be a good basis in terms of rates.  An average call center agent earns P15,000 or $340 per month.  That is roughly $2/hour for 40 hours of work per week.  Call center agents don’t have to buy their own PCs/laptops, pay for an internet subscription, and pay for electricity.  Plus, companies spend a lot in training and building facilities.

Below is a table of suggested rates that you may want to pay a Filipino online freelancer based on the kind of work you are outsourcing.  I have come up with these rates based on my research on prevailing rates, both for traditional and online jobs.  Please note that these are just suggested rates, not absolutes, and you may want to just use this as a guide. These rates assume we’re talking about a worker of average to above average skill and experience.new-rates

Note that there is a significant difference between the project-based rates and the full time rates.  Full time rates are mostly lower because these jobs, more often than not, are long term as opposed to project-based jobs that are piecemeal. I’ll be writing a post about this later.  Also, these rates are given under the assumption that you are to hire average to above average-skilled workers.  Less skilled workers will naturally be paid less as you would need to spend time in training and teaching them the skills they will need to do the kind of work you’d want.

At the end of the day, what you decide to pay your worker will ultimately depend upon you and your business – the amount of responsibility you are willing to delegate, the role this worker plays in your administration, and the amount of money you are looking to earn with their help.  Whatever you decide, one thing remains certain: outsourcing to the Philippines may just be one of the best things you can do for yourself and your business.

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