Dramatic Savings
There are many reasons that the Philippines is the best place to outsource for English language support. In this series we will discuss the many reasons it is a superior location starting with Reason #1: Dramatic cost savings versus the U.S.
When you outsource to the Philippines, you can expect to save up to 67% of the cost in the U.S.
Hourly wages for many contact centers in the U.S. have reached $20 per hour (see Verizon raises its minimum wage to $20 an hour, Verizon website). Add taxes, benefits, holiday/Paid-Time-Off, and direct management & support costs (supervisors) and you can easily get close to $30 per hour on a purely variable cost basis. That’s before considering rent, utilities, and technology costs of running an operation in the U.S. (even a work from home operation in the U.S. has substantial technology costs in order to provide a truly secure WFH desktop), which can easily add another $8 per hour, driving the total up to $38 per hour or more.
In the Philippines you should be paying approximately $12.50-14.00 per hour for a high-quality brick and mortar BPO Provider. Larger brand-name BPO’s will charge a little more.
A high quality solution in the Philippines should at a minimum provide a college graduate with several years of BPO experience at a rate of $12.50 per staffed hour. Comparing that to a typical cost structure in the U.S., you can expect to save up to 67% on a fully allocated cost basis, dropping your hourly cost from $37.93 to $12.50.
Even if you only look at variable costs, you can still save 57% of the cost in the U.S. dropping your cost from $29.29 to $12.50.
Conclusion
U.S. costs are under intense pressure from both a domestic labor shortage and a change in employee attitudes towards entry-level, administrative work. More employees in the U.S. want to work from home on a permanent basis after they got used to working from home during the Pandemic.
This is all combining to drive up costs in the U.S. to unprecedented levels. Most companies have moved their minimum wage to at least $15/hour and many more have already increased it to $20/hour or more. There is an emerging battle amongst employers to offer richer and richer levels of expensive benefits to differentiate themselves in the marketplace and attract new employees.
When considering the costs to hiring a U.S. employee the effective hourly cost is close to $30+/hour on a variable basis and nearly $38/hour on a fully allocated basis. High quality, college educated and experienced workers in the Philippines can deliver up to 67% savings with better performance.
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