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How to Successfully Offshore to the Philippines: A Step-by-Step Guide
Explore the advantages of offshoring to the Philippines for global standards, skilled labor, and English proficiency. Learn about budgeting, setting up operations, and retaining employees with expert advice from Lawrence Barrett.
Updated Jul 31, 2024
How to Successfully Offshore to the Philippines: A Step-by-Step GuideThe Philippines has established itself as a leading destination for offshore business operations. Many companies are turning to the country to outsource specific tasks, seeking to boost efficiency, work with a culturally diverse and highly skilled workforce, and reduce salary expenses.
International businesses and brands trust the capabilities of Filipino workers to meet global standards.
According to Lawrence Barrett, Partner at Manila Recruitment hiring Filipino offers several advantages, such as the lower labor costs, the Filipino workforce boasts high-caliber skills, developed through years of working with global teams. Plus, with most Filipinos being proficient in English, communication is generally smooth and effective.
This guide will walk you through the essentials of offshoring in the Philippines, from budgeting to scaling your operations.
1. Set Your Budget and Costs
When expanding your business offshore, it’s crucial to understand the costs involved in the new market. This includes familiarizing yourself with the country's laws, regulations, and business expenses.
Key considerations include:
- Renting and furnishing an office versus hiring remote employees
- Costs of sending your team members to the Philippines
- Business registration expenses versus using an offshore payroll company
- You might want to consult a local business advisor in the Philippines to get a clearer understanding of these costs.
Barrett emphasizes the importance of professional advice when aligning with the local talent market, particularly regarding competitive salaries and benefits. He also highlights the need for well-planned retention strategies that include medium to long-term incentives.
2. Register Your Business
In the Philippines, you can register your company in several forms, such as a sole proprietorship, partnership, or foreign-owned corporation. If you partner with a business outsourcing agency, they can handle the registration process for you.
You'll need to visit agencies like the Securities and Exchange Commission (SEC), Department of Trade and Industry (DTI), and Bureau of Internal Revenue (BIR) to complete the necessary paperwork.
Some businesses may also qualify for tax incentives through the Philippine Economic Zone Authority (PEZA) or the Board of Investments (BOI).
Alternatively, you can hire Filipino employees through a third-party payroll company or an online contractor portal, which might be a simpler route if you’re testing the waters before fully committing to setting up a business in the Philippines.
3. Choose an Office Space
After securing business registration and permits, you can begin looking for an office location. Consider your business objectives when choosing a location.
For example, if you need tech support or customer service operations, locating your office in a major business district could be beneficial. Cities like Manila and Cebu are among the top locations for offshoring due to their connectivity and accessibility.
However, with the growing trend towards remote work, many companies are opting for home-based setups for their Filipino employees. This approach can be particularly beneficial in fields such as IT, digital marketing, and finance.
Remote work not only helps in reducing overhead costs associated with maintaining a physical office but also provides employees with greater flexibility and work-life balance. Many Filipinos appreciate the opportunity to work from home to avoid the stress of commuting in congested urban areas.
Before finalizing your office space, consider factors such as the proximity to public transportation, availability of amenities, and the potential for future expansion.
Whether you choose a traditional office setup or a remote work arrangement, ensure that your chosen space meets your operational requirements and supports your team’s productivity.
4. Set Up Network and Connectivity
The first step is to choose a dependable Internet Service Provider (ISP) that offers strong coverage in your chosen area, as service quality can vary significantly across regions.
It's important to compare different ISPs, considering factors like speed, data caps, and service reliability. Investing in high-quality networking equipment, such as routers and switches, will ensure your internal network is stable and capable of supporting your business activities.
Additionally, implementing strong network security measures, including firewalls and VPNs, is crucial to protect your business data.
To mitigate the risk of connectivity issues, consider having a backup plan in place. This might involve subscribing to a secondary ISP or using mobile data hotspots as a fallback option.
Given the possibility of power outages in the Philippines, equipping your network with an Uninterruptible Power Supply (UPS) and, if necessary, a backup generator can keep your operations running smoothly during interruptions.
Regular monitoring and maintenance of your network are also important to ensure ongoing reliability and to address any issues proactively.
5. Adjust for Time Zone Differences
The Philippines operates in the Philippine Standard Time (PST) zone, which is UTC+8, the same time zone as Singapore. This alignment simplifies scheduling but may still require adjustments depending on the location of your headquarters.
For companies based in regions with significant time differences, such as Europe or North America, it's crucial to establish overlapping working hours that allow for real-time collaboration.
For example, if your headquarters is in Singapore, coordinating with your Filipino team will be straightforward since both operate in the same time zone.
However, if your company is based in a region like the United States, where time differences can range from 12 to 15 hours, you might need to implement mid-shifts or flexible working hours for your Filipino team.
This ensures there are enough overlapping hours for effective communication while still respecting your employees' work-life balance.
6. Train Your Employees
Employee training is crucial for your business’s success. Statistics show that 74% of workers feel they aren’t reaching their full potential due to a lack of development opportunities. Invest in onboarding and continuous training to ensure your team is well-prepared and motivated.
Training might take longer due to cultural differences and remote working challenges, but it’s worth the investment. Sending managers from your HQ to oversee training in the Philippines, or occasionally bringing Filipino employees to your HQ, can also enhance the training experience.
7. Plan for Growth
Once you’ve established your initial team, think about how you’ll manage growth. Planning for scaling your team, delegating tasks, and expanding your operations is essential for smooth business growth.
Barrett advises starting with senior roles and then hiring junior staff to build a strong team foundation. He also stresses the importance of integrating your Filipino team with your onshore operations to create a unified company culture.
Regular communication and visits to your offshore team are key to maintaining strong relationships and ensuring alignment.
Setting up an offshore office in the Philippines may seem daunting, but with the right knowledge and preparation, it can be a smooth process. Educate yourself on the local market, plan your budget carefully, and integrate your offshore team with your HQ.
For staffing needs, consider partnering with Epicareer for Employers, a leading recruitment firm in Malaysia to help you source Filipino talents.
Herdina Ika
Digital Marketer
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