14 Feb

How Much Do You Save by Outsourcing to the Philippines?

As a medium-sized business, you have to take into consideration that there are several expenses that are not necessary. The processes are important, but there are ways in which you can mitigate costs. One of these ways is outsourcing to the Philippines.

Outsourcing to the Philippines

Since there are many kinds of businesses and processes, we will take a small business that requires a 15-seater operation for our theoretical demonstration.

Whether you need contact center agents to serve your customers, or you need virtual assistants, you can use this example to have an overview of how much you can save if you outsource these services to the Philippines.

The Cost of Not Outsourcing

If you do not outsource, the first thing you need to look for is a real estate property. You either build your own, or you rent a facility. Even if you rent, your expenses do not stop there. You need to furnish and build your facility to site your 15 employees. You also have to pay utility bills like the following:

  • Internet
  • Gas
  • Power
  • Water

Since these expenses are subjective and will depend on how heavy your usage is, we will not include this in the equation for now. What matters most is the cost of your real estate. Let us say that you will operate in Denver, Colorado.

Here is a table of a basic projected cost of operating a site with 15 people.

 

COST OF OPERATIONS

Notes Cost per Unit
Rent 15 people with a cost of $165 serviced space per person $2,475
Salary 15 employees @ 20 days per person with a rate of $5 per hour $36,000
Computers 15 units @ $1,000 each $15,000
TOTAL   $53,475

Your initial cost is more than $50,000 a month. And you have to pay at least $38,000 in monthly salaries and rent, not including your utility costs.

The Cost of Outsourcing to the Philippines

Here are the outsourcing benefits if you do business in the Philippines.

In the Philippines, the average salary of a person is in the range of $20 per day. Now, compare this to your average American labor cost, and you will see that huge variance in the cost of labor.

You will get the same quality of service, or better, if you choose the right partner. Now, since the outsourcing vendor will shoulder your operational costs, it will be reasonable enough to charge the same amount of salary with a U.S. employee. And with a model like this, below is your total cost.

 

COST OF OPERATIONS

Notes Cost per Unit
Rent None $0
Salary 15 employees @ 20 days per person with a rate of $5 per hour $36,000
Computers None $0
TOTAL   $36,000

As you can see, you already have a cost savings of $17,000 right at the start of your operations. As a client, you do not need to worry about utilities, computers, security, gas, power, internet, and all that.

You can still bring down this cost since outsourcing experts know what it takes to add value to your company. There are methods, software, and processes that a vendor can recommend to you to make your process more effective and efficient to drive your bottom line. For inquiries, write to bd@athl.com.hk

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