Offshoring in the Philippines? Here’s A Step-by-Step Guide

Offshoring in the Philippines? Here's A Step-by-Step Guide

The Philippines has become one of the top offshore business centers in the world. Many companies are looking into the country to outsource specific functions to boost efficiency, to work with culturally diverse people with particular high-calibre skill sets, and reduce salary costs. 

Global brands and businesses trust the Philippines and Filipino workers to perform and execute their responsibilities to international standards of best practise. Lawrence Barrett, Partner at Manila Recruitment, echoes the same sentiment:

“Working with an offshore recruitment partner in the Philippines provides added benefits during the hiring process, rather than tackling it alone. These include:

  • Candidate market insights;
  • Quick access to qualified, pre-vetted talent, especially talent that may not be visible through common channels such as LinkedIn and job boards;
  • Advice on cultural norms; and
  • Guidance on any necessary adjustments to job descriptions to suit the Filipino talent market;
  • General advice for establishing, managing or augmenting offshore teams;
  • Advice on retention strategies for hired employees”.

Aside from the lower cost of labor in the country, the Filipino workforce is also a step ahead in terms of skills and talent honed over decades of working with onshore teams from all over the globe. Plus, most Filipinos speak English well, so working with them can be as smooth as working with a local employee.

Many things make the Philippines more than ready for offshoring functions. This article will provide a rundown of the things you need to know and prepare for in order to hire offshore employees in the Philippines, and to hit the ground running.

1. Finalize budget and cost

Any company or foreign investor expanding in another country should take some time to learn the new things related to international expansion. This includes immersing yourself in the country’s laws, regulations, cost of doing business, and other related information. 

Do your due diligence in understanding the essential things in your budgeting process, such as rental and furnishing an office versus hiring work from home employees, the cost of sending any of your local team members to the Philippines from time to time, business registration costs versus using an offshore payroll company, and more. You can seek the help of a business consultant in the Philippines to get a firm grasp of the cost of setting up an offshore business in the country.

Barrett shares his insights on how to get the ball rolling in a foreign country such as the Philippines. “It is important to listen to the guidance from professionals such as Manila Recruitment when it comes to aligning with the talent market in terms of advice on competitive salaries and benefit structures.”

“Plus ensuring that you have well thought-out retention strategies from the outset by creating medium to long term incentives due to the competitiveness of the best talent in the market.”

2. Register your business

In the Philippines, a company may be registered as a sole proprietorship, a partnership, a foreign branch, a foreign representative office, a 100% foreign-owned domestic corporation, or a 60/40 owned domestic corporation. If you decide to partner with a business outsourcing agency, they can accomplish the business registration and documentation.

To register your business, you’ll have to visit government agencies and accomplish the necessary paperwork, namely the Securities and Exchange Commission (SEC), Department of Trade and Industry (DTI), and Bureau of Internal Revenue (BIR). 

Some foreign-owned businesses are also eligible for tax incentives and government exemptions from the Philippine Economic Zone Authority (PEZA) and Board of Investments (BOI).

Alternatively, depending on your home jurisdiction, there may be quite simple ways to hire offshore employees as contractors through a third party payroll company, online contractor portal, or directly to your onshore operation. This can save on the time and expense of incorporating a company in the Philippines whilst you test the waters and ensure that an offshore team is the right fit for your business in the long-term. 

3. Pick an office space and location

Once you secure a business registration, permits, and other paperwork, you can begin to scout office locations in the city you prefer. Determine your objective and niche when deliberating on location. 

For instance, if you plan to establish an offshore office for tech support or customer service, you may want to select areas within business districts in major cities. This will give you the advantage in terms of connectivity and accessibility.

The cities in the Philippines that made it to the 2020 Tholons Services Globalization City Index, the industry premier annual publication that rates and ranks the “Super Cities” in the world, include Manila (#4) and Cebu (#15). Other major business hubs outside Manila you can check out are Davao, Pampanga, and Laguna.

Alternatively, many companies are now moving in the direction of having their offshore employees work from home. This is a common set up for Filipino employees, especially in the areas of technology, software, IT, digital marketing, finance and more. Job candidates often jump at the chance to work remotely instead of fighting the congested traffic in major Filipino business centers. This can be a win, win situation as it reduces the costs for the employer, and at the same time helps the employee achieve a better work/life balance. 

4. Process network and connectivity

There are many options for you when it comes to an internet service provider (ISP). However, know that not all ISPs provide stable service to all areas in the Philippines despite being equipped with the latest technologies. 

Create a shortlist of your ISP choices and compare the plans offered. Since your business will highly depend on an internet connection, choose one that provides the right bandwidth and speed for your office needs.

5. Align time zone differences

Consider the time difference between your headquarters and your office in the Philippines (and other offshore offices, if any). You may need to adjust the working hours of your employees.

This is vital, especially when your employees need to work closely with your HQ or provide assistance to customers in a different time zone, which is the case for most outsourcing companies. Filipino workers can adjust to time differences quite easily, so you shouldn’t have much problem with that. If you’re on completely opposite time zones, it can be advantageous to consider a mid-shift for your Filipino employees that gives them at least half a working day’s crossover time with the HQ, but doesn’t completely turn their life upside down by having them work a full night shift. This will increase the pool of interested job candidates to choose from. 

6. Train your employees

The future of your business relies on staff training and development. Statistics show that 74% of workers felt they weren’t achieving their full potential because of a lack of development opportunities. The last thing you want is employees resigning one by one within just a few months, so invest in onboarding early on.

You can use simulations or employ highly skilled managers to train your team properly. Moreover, you can work with training providers to help improve soft skills necessary for their job (e.g., communication skills). When you continuously train your employees, they become not only good but the best at what they do.

Importantly, it is best practise to treat your offshore employees to extra training time and allowance for onboarding timeframes, since working remotely and cross-culturally can add extra time onto the usual path an employee embarks upon to familiarize themself with a new role. Sending seniors or managers from the HQ over to the Philippines when setting up can speed up and smooth out the process, but it is not necessary. Also, some companies send their Filipino employees over to the HQ for training from time to time too. This can be viewed as a huge perk for the Filipino offshore worker. 

7. Plan on how to scale and expand

Once you hire your first batch of employees, you must think about your next steps in managing the growth of your team, task delegation, and expansion. Growth is a welcome problem for businesses, but it can cause stumbling if not appropriately handled. 

Propose a plan on how your business systems, infrastructure, and teams can accommodate the growth without being hampered. This may require some funding, process modifications, and implementing new technologies and partnerships.

Barrett notes, “It is best practice to approach scaling a team with a top-down approach, so hiring lead or senior candidates first and working your way down to the junior level roles is the best strategy if you are hiring a team.

“It’s also important to ensure good integration with your onshore team and to treat your offshore Philippines team in the same way as you treat your onshore team. Make your Filipino team feel like part of the family, and do your best to build your onshore culture into your offshore team. Filipino’s are extremely social and warm people. Your offshore team will welcome team bonding sessions, competitions, outings, games and anything to do with food!”

“Regular communication and clear directives are fundamental to achieving quality output and also as part of a well-planned retention strategy. Where possible, it is important to visit your Filipino team as regularly as possible to build stronger relationships and to install greater confidence in your commitment to the Philippines.”

Summing It Up

Establishing an offshore office in the Philippines may seem like a large task at first, but it doesn’t have to be, as long as you educate yourself on the ins and outs of operating an offshore business and be sure to commit to the process of integration with the onshore HQ.

For your offshoring recruitment and staffing needs, get in touch with Manila Recruitment, the leading recruitment firm that provides top-grade service in the Philippines. Visit the services page or contact us for inquiries.

Lawrence Barrett