Is Outsourcing Exploiting Cheap Labor?
In today’s topic, I’m sharing along is that I’m going to be talking about “Is outsourcing taking advantage of cheap labour and hurting local small companies?” And the reason why I raise this question up is I just received an e-mail from a local outsourcing company here that said to me, “Hey Tyrone I believe you’re really, really not doing a very good job because you’re exploiting cheaper labour than what it is than what we’re allowed to be charging here.” Seemingly,it will cost at about $1500 here in the community to engage a virtual assistant for a small company whereas I can teach people how to outsource and look for people for around about $300-$350 US per month and they’re charging about $1500 US about to be able to engage and outsource to these people. Now don’t get me wrong. I’ve got not an issue with that. And, it’s definitely already half the price of what costs to hire just a local executive assistant here. Like any executive assistant, you’d be checking out paying them a minimum of $3000 to $4000 every month just to have them work in your office full-time and also too, do the work that you need them to do and on top of that, you’re going to add on super taxes, etc and the like so in reality it’ll be more than $4000. But to employ a virtual assistant, a full-time virtual assistant doing work for 40 hours a week locally here with an outsourcing company costs you in approximately $1500 and that’s included everything. You don’t need to bother about the taxes, you don’t have to worry about super annuation, you don’t worry about setting computer for them and so on. And he commented that It looks like he thinks that I’m really taking advantage of it really cheaply because to hire someone for $300 every month is really, really low-priced like it’s less than a dollar or $2 an hour. And, now I’m going to give you my opinion. I know that some individuals are going to get really edgy with this. So I’m going to present you with my point of view and how and where I sit on it. I believe, outsourcing is an additional way to supply a job for someone else and also to be able to give them skills and a livelihood. The real difference between hiring someone here and hiring someone overseas say in Philippines, or India or any of those other countries and particularly for me, I hire people in the Philippines, is that their economy is really different. Tthey have a different currency exchange to us. And if you’re to visit there and basically live their standard living, the price of living would be so, so much lower and as a consequence that’s why their wages are so much lower. However in the comparison, they’re getting just about the same say income as what we would be getting here but our exchange rate exchanges so therefore it looks like it’s so much cheaper. Say somebody in the Philippines they’re getting paid 20,000Php per month just as a full time programmer. 20,000Php a month equates to roughly about $400 US per month, approximately. Whereas here in Australia, you’re probably looking at hiring a full-time programmer for roughly about 10K per month like for a really, really serious type of programmer that I’m hiring in the Philippines. Now, 10K -- $10,000 AU versus 20,000Php, 10,000 you can do a lot of things in Australia. Standard living is much higher that’s why you ought to be paid that much higher. And also too, $10,000 takes you quite a bit of way but after you pay your mortgages, your food, your expenses and stuff, you might only be left with maybe about 5 or 4K every month or so. So the cost of living is really high whereas in the Philippines, 20,000Php really does push them a lot further as well, too. So in terms of propotional scale and also the standard living, it’s greatly relative. And that’s the reason why people just don’t understand that I’m actually doing a good thing to supply a job for people inside the Philippines and paying them that kind of rate. And, if I had to employ someone here, yes person here might not get a job here but I’m actually providing a job for someone overseas. And because we are a world economy now with internet, with quick access with social media marketing, we can have accessibility to resources similar to that. Basically you can contact someone and you will be able to get in contact with someone instantly. Whereas in the past, to get into the economies and scales, to get into all those kind of resources it’ll take you days, weeks, months even just as a way to access it. So time does change and if you’re not staying in touch, particularly large companies right now like large telecommunication companies, they’re outsourcing to Philippines, they’re outsourcing to India and they’re outsourcing to Russia. All those countries out there, their economies and scales are basically in proportion but their exchange rate makes it look like as though they’re not getting as much back. So that’s the reason in my opinion why It looks like it’s not a bad thing, it’s a great thing. You actually give a job for someone else. And yes the person in the community, you may lose the job but that means that they’ll have to go out and be a little bit more either a better entrepreneur to look for a job and upsell their skills and be a little more specific and professional because the more professional you are at a particular skill, the less demand there would be. So I’m just going to reiterate on what I’m saying. It’s not a bad thing, we’re not taking advantage of cheap labor, we’re actually getting a benefit here and also providing a benefit for other people overseas and moreover, small enterprises can usually benefit from this if they think they’re going to be hurt by this. If you are not starting to outsource as small business in order to be able to compete with medium to large sized companies, you’re falling behind the eightfold because I know that a lot of large companies are already doing it already. You may have heard this when you pick up the phone, it gets re-routed over to the Philippines and you’d be chatting with a Filipino. It’s common, I’ve been hearing that myself and I’ve even had times when I said, “So which part in the Philippines are you from?” They go Manila, Cebu, I’m not surprised.
