Outsourcing to countries like the Philippines has become a popular trend in recent years. With promises of cost savings, hardworking staff, and flexible terms, it can be tempting. But outsourcing overseas risks are real—and they could hurt your business more than help it.
From legal gaps to unpredictable weather and hidden labor costs, there are several reasons why keeping your team stateside may be the safer move.
How Can This Affect My Business?
1. Weather
The Philippines can often face natural disasters caused by typhoons. This area located on the West side of the Pacific Ocean faces no less than 20 storms every year. Leading to floods, and power outages for days or even months. This kind of tragedy can vastly affect your business if you have entrusted a large amount of your responsibilities to their care.
2. Holidays
There are 18 government officiated non-working holidays that are celebrated in the Philippines. It is okay for an employer to ask the paid employee to return to work on one of these days. However, it is at the discretion of the employee to make the decision to work that day. In addition, their government requires that individuals must be paid more per hour on these days if they choose to work.
3. Additional Pay
It is considered a legal responsibility to pay a filipino 13th & 14th months pay. What this means is that they will need to be allocated this additional pay separate from their salary pay in the month of December as a bonus. This is legally required on an annual basis.
4. Legalities
When it comes to protecting your business, there are best practices we become accustomed to implementing at the start of any work relationship. While it can be as simple as signing contracts at the start of your work relationship, there are factors you may need to consider. These contracted employees reside in a completely different country where the legalities here in the US may not be applicable. The probability of services lost are higher.
Outsourcing Overseas:
Risks
1. Weather
Although the U.S. experiences natural disasters as well, there are more opportunities for recovery at a faster rate than most foriegn countries. This means less down time for your business, less paid time off for your employees, and altogether a quicker turnaround for your business to get back to normal for your customers.
2. Holidays
In comparison to 18 government officiated holidays, the U.S has only 11. Yes, these national holidays can cause your employees to still not arrive for work, but on most occasions, your customers will be taking this day off as well. Your business may not be as hectic and most likely can be run by a much smaller team that would still like to come in for work.
3. Additional Pay
It is not legally required for you to pay “bonuses” to any employee in the U.S apart from their annual salary. Additional pay will only be necessary when a paid employee chooses to work on one of the official government holidays. This will in turn require a higher pay rate per hour.
4. Legalities
While there are certain stipulations when it comes to working with employees in different states, the red line is far less. Let’s also not forget the crisis we’ve all experienced during the Covid 19 pandemic. So many US based businesses have suffered. The best way to help our economy is to support and encourage our US based workers.
Outsourcing is a valuable tool—but not without risks. Outsourcing overseas risks can quickly outweigh the savings if you’re not prepared. Before you delegate work abroad, consider what’s really best for your team, your clients, and your long-term success.