A primary reason why companies put up BPO companies offshore is the lower cost of labor. So naturally, among the first questions a prospective BPO company founder would ask is, “Exactly how much less does this offshore labor cost? How much should we pay our employees in the Philippines?”
Basic BPO Salary
Minimum wages in the country vary according to the region where your company will be located. The highest minimum wage requirement is at the National Capital Region (NCR), where employees in non-agricultural industries must be paid at least ₱429 to ₱466 per day, equivalent to approximately $235 per month. [Source: Philippine Department of Labor and Employment]
Despite its relatively high wage requirement, the NCR is the most popular site for establishing a BPO company because it is by far the most densely populated area of the country, and it includes the political capital of Manila, the business capital Makati, and the location of most government office headquarters, Quezon City. It is also where one will find most of the country’s top universities, such as the University of the Philippines, Ateneo de Manila, De La Salle University, and the University of Santo Tomas.
In any case, the average BPO applicant will not accept minimum wage salaries no matter where the company is located, because nobody applies at a BPO company to become a minimum wage earner. The lowest monthly salary offered by a reputable BPO company in the Philippines is ₱12,000 ($275), but the most common minimum starting rates are at ₱14,500 ($332).
These rates are generally accepted regardless of job function. They may be given as base pay to somebody doing directory assistance, tech support, customer retention, and even collection, whether in a customer-facing or back-of-house job function, as long as they are all Tier 1 employees.
Law Mandated Benefits
Philippine law mandates employers to have a share in their employees’ government contributions to the Social Security System (SSS; for retirement benefits), PhilHealth (government health insurance), and the PAG-IBIG Fund (government housing program), in addition to their monthly base pay.
The costs of these contributions are based on employee salary. For an employee earning a base pay of ₱14,500 per month, the employer contribution to SSS, PhilHealth, and PAG-IBIG would respectively be ₱930.80, ₱150, and ₱100, for a total of ₱1180.80 ($30) per month.
Although the minimum starting rate for BPO employees is not too far beyond the required minimum wage, the BPO industry is still attractive to many because of the non-wage benefits that are usually expected from companies such as these.
HMO coverage is one of the most basic expectations from a BPO company. Fifteen days of vacation leave and five days sick leave are likewise expected for every year of service, although these are not required under the Philippine Labor Code.
Allowances are often given to increase employee benefits without increasing their taxes. BPO employees comparing notes would normally ask each other about their company’s transportation allowance, clothing allowance, food allowance, and rice subsidy.
Nevertheless, these allowances are still seen as icing on the cake. It is really HMO benefits upon regularization that determine in people’s minds which BPO companies are worth staying with and which ones are only stepping stones to better future employment.