John Jonas (Secret Sauce of Outsourcing podcast, Ep. 349) discusses how to evaluate whether Online Filipino Specialists (OFS) are being paid appropriately. Using an anecdote about building a garage, he introduces the idea of "needs" versus wants, quotes a set of salary-related questions from a colleague (Jared) employers can ask, and gives concrete pay benchmarks and cost-of-living context for the Philippines (e.g., 10,000 PHP ≈ US$200/month is near subsistence; 20,000 PHP ≈ US$400/month is basic survival; common OFS rates of US$5–$10/hr allow a comfortable, thrifting lifestyle). He warns against both underpaying and setting unsustainable high precedents, and recommends asking employees about concrete expenses (housing, utilities, internet, appliances, vacations) when they request raises or loans.
US$5–$10 per hour (examples: $5/hr, $6/hr, $7/hr, $10/hr)
Candidate asked for $7/hr; host initially offered $5.50/hr to start with growth to $7/hr expected
Chapters
Welcome to the Secret Sauce of Outsourcing podcast that's dedicated to making you better at working with OFS online Filipino specialists. This is episode 349. Are you paying your OFS enough or too much? So let's talk about pay and need. So, at my house right now, we're building a detached garage. And as we started designing this, we met a designer, and one of his first questions was, well, what do you want with this? And I was like, well, we want this and we want that. We want this much space and we want whatever. And he said, well, what are your needs? And I responded with, well, I mean, needs is a really interesting word. I don't need any of this. I don't need the garage. I don't need this particular thing. I don't need. I don't need any. And I don't know, because life changes. So I got this email from Jared the other day about needs in the Philippines. Now, needs with a detached garage at my house is very different than needs in the Philippines. Here are questions and a conversation that Jared has with people when discussing salary and needs. Here's what he says. Questions that I ask people when discussing salary include, what's the bare minimum you need to survive and pay the bills each month? He says most people don't want to be in survival mode and want to have some extra for doing fun things and going out to eat and such. What is that number for you each month? Do you own a house or rent? Do you travel? What kind of hobbies do you have? And do you feel like you're able to spe money on those hobbies? And that's the end of Jared's questions. So in talking about, how much are you paying people? Are you paying them enough? Well, when you're first starting, people will typically ask for a salary. And I recently hired someone. They were asking for $7 an hour, and when I offered them the job, I offered them 550 an hour so that there was room for them to grow and to make sure that this is going to work out before we start paying the full amount. But my guess is this person's going to move up to $7 an hour pretty quickly, and then as time goes on, they'll be making more and more and more. So are you paying your ofs enough? Well, let me just give you some ideas. My son is in the Philippines, and he keeps talking about these people that just need to make 10,000 pesos per month. Well, 10,000 pesos is about US$200 per month. Now, for most people, needing to make 10,000 pesos a month is just enough to give their family rice. And that's, that's about it. They have rice to eat two times a day at 10,000 pesos. Now that doesn't mean they're eating three times a day, but it also means they're not starving. There are a lot of people in the Philippines who are starving. He says what most people need to make is 20,000 pesos per month, which would be US$400 per month. Now that is need. They're not doing anything fun at that point, but they are surviving where so many people aren't surviving now@onlinejobs ph what you're gonna find is people who are thriving. You're gonna find people that are making $5 an hour or $6 an hour or $7 an hour or $10 an hour, which at those rates it's more than enough. So people making those rates are able to own a house rather than just live with their parents. They are traveling potentially. They might be buying their first car maybe. They're certainly not living how you and I live, but they're doing pretty well. Now on the other end of that, I talked to someone recently who said they were paying. They just hired someone and they're paying them 2,300 pounds per month. And at today's conversion rates, that's $2,800 per month. So at $2,800 per month to someone in the Philippines, that is like a C level position, like a C level executive in the Philippines would be making that amount of money. 3,000. US$3,000 per month. Yep. That's a lot of money in the Philippines. That person is living super, super well. Now the person they hired had five years of experience with Google AdWords. They're running an agency. That person's going to handle all of their Google AdWords for all of their clients. This is a good deal for this agency owner. She was super happy about it. I still feel like it's a bit much, you know, I mean, that's a lot of money in the Philippines, especially for a new hire that you're not sure if this is going to work out or not. Now, I don't advocate underpaying people. I certainly don't think you should be paying someone $200 per month or $400 per month. I don't think that's enough in today's world. I said something to this employer and said, you just need to be careful here. Like this is a lot of money and it's not setting a great precedent for the future of what you're doing. Let me take this a different direction. We often get people that come to us, people on our team that come to us and say, hey, I need a loan. And that's fine, we'll give you a loan. And then when they come back a second time or a third time for more loan, then we start to ask questions. Well, like, what's going on? Is this a temporary thing? Is it a long term thing? They always tell us it's a temporary thing, but then it usually continues, which leads me to believe that either they're being unwise with their money or they're, they're not making enough money. And so that's when we typically start having the conversation like what Jared had and saying, well, what are your needs? Like, what are your expenses? Do you own or do you rent? Do you have a car? Do you have a washing machine? Or how much does your Internet cost? What are your utilities? What is your electric cost? We start asking these questions. Now, these are pretty invasive questions, but when you're the boss and they're asking for more money from you, well, in my experience, they're willing to have the conversation with you. And then you get a really good idea of like, oh, am I paying them enough? Am I not paying them? Am I paying them too much? Or do I need to reevaluate this? Maybe, maybe I want to take care of this person better than I thought I was. And maybe they're good enough and important enough to me that we're going to pay them more money. It might be worth asking your team members, when was the last time you went on vacation? What kind of vacation was it? Do you have a washing machine? Do you have a microwave? Do you have an air conditioning unit? How much does an air conditioning unit cost and what are the use, what are the associated electricity costs? With an air conditioning unit, you'll get a good idea of what their financial situation is like and if you need to pay more or not.
