Often, the first place many companies look when contracting global talent is one of the emerging nations of Oceania and Southeast Asia. This region is home to Thailand, Vietnam, Cambodia, Malaysia, Indonesia and, most industrious of them all, the Philippines. The Philippines in particular is where many companies look for skilled contractors, since this country’s economy is among the more well-established.
Nevertheless, there are sometimes snags when it comes to working with Philippine contractors. The biggest is how to pay them appropriately. Not only is this country half a world away from the United States, there are also currency considerations to be aware of—and the obstacle that comes with a significant population of professionals that’s either unbanked or not banked traditionally.
If you’re considering prospecting talent from this area of the world, here’s what you need to know about paying contractors in the Philippines.
Why hire contractors in the Philippines?
Right off the bat, hiring Filipino workers is much cheaper than hiring from other countries. As an emerging economy, the Philippines has a much lower cost of living as compared to the United States, which means a dollar (or a Philippine peso) goes a lot further. In 2022, the cost of living in the Philippines is roughly 69% cheaper than the United States—which makes for a steep discount when contracting talent.
Many companies don’t realize it, but the Filipino workforce is also one of the youngest and most ambitious in the world. 65% of the population is considered working age (16-62) and the country has one of the highest literary rates in the developing world. Many are fluent in English, and a significant portion of working population of the country has internet access. In short: the Philippines is a booming hub for contract workers.
As if these reasons weren’t enough, contractors in the Philippines are extremely tech savvy, and very easy to transact with. While a significant portion of the country is traditionally banked, even more have embraced digital payments. As we’ll see in a moment, this makes it much easier to pay contractors in the Philippines.
Currency and transfer considerations
As mentioned, there’s a significant cost of living difference between the Philippines and the United States. This also means there’s a big gap in currency value. The exchange ratio from United States Dollars (USD) to Philippine Pesos (PHP) is roughly 1:50. Companies looking to contract Filipino workers will find themselves paying less, even factoring in exchange rates.
Now, it’s important to remember that because the USD has much more buying power than PHP, some Filipino contractors might request payment in USD, via digital payments. This allows them to maintain buying power when using those funds elsewhere. To ensure landed funds arrive in USD, companies will need to embrace digital payments.
Ways to pay contractors in the Philippines
Found the perfect contractor in the Philippines? Before you bring them on and put them to work, make sure you have a way to pay them. Whether it’s a one-time lump sum for a specific project or ongoing payments for regular work, each situation will dictate the best way to get them paid. Here are some of the most common ways to pay contractors in the Philippines:
- Wire transfer. Wire transfers are fast, secure and global, which makes them the first option for many companies paying contractors abroad. Unfortunately, they’re also expensive, which means they’re best for one-time transfers, not recurring.
- Check or money order. While some contractors in the Philippines may still want a money order as payment, these paper methods are all but antiquated. Don’t plan on sending your contractors checks or money orders in today’s digital age.
- Bank transfer. Bank transfers offer some level of convenience, but not all contractors in the Philippines are banked. Moreover, outgoing international transfers might get flagged or stopped by the bank as suspicious activity.
- Digital payments. Digital payments offer a new wave of convenience for paying contractors. Once both parties open a wallet, it’s easy to transfer money in any currency, track payments and even set up automations. It’s today’s preferred payment mode.
Ultimately, every contractor and situation are going to demand that companies look at their payment options to pick one that works under the circumstances. The best one is the payment method that gets contractors paid on-time, in-full and without obstacles for either side.
The best way to pay independent contractors in the Philippines
Businesses need to put time and energy into figuring out the ideal payment option for contractors, to ensure they’re able to attract and maintain a reliable global workforce. Your ability to pay a contractor seamlessly has a lot to do with whether they choose to continue working with you! If they know they’re going to get paid accordingly, you can expect a high caliber of work.
Looking for a simple way to explore international payments to workers? Give Veem a try and see how easy it is to pay contractors in the Philippines and around the world.
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