A short podcast episode (Secret Sauce of Outsourcing, episode 400) by John Jonas arguing for reframing hiring of remote Filipino team members as 'insourcing' rather than 'outsourcing'. He explains that although Filipino hires functionally act as part of the company and are integrated into teams and project systems, Philippine law and tax practice require they be treated as independent contractors (no tax withholding, no employer SSS/PhilHealth payments) unless the hiring company has a physical presence there. Jonas plans to use the term 'insourcing' going forward while acknowledging 'outsourcing' remains common for SEO/marketing.
Chapters
Welcome to the Secret Sauce of Outsourcing podcast that's dedicated to making you better at insourcing. This is episode 400. Let's talk about insourcing. So when I started this podcast, I didn't. I never really considered about getting to episode 400. It's kind of a milestone, and I'm proud of sticking with it, even though I was committed to sticking with it when I started it. Yeah, 400 is a lot. And I try and keep them short and to the point, so they're helpful to you. So let's talk about insourcing. I've thought about this for a while now, for many years, actually. I don't love the word outsourcing because that's not what I do. So the typical definition of outsourcing would be like sending a portion of your work out to another entity for them to do the work and send it back to you. You don't oversee it. You just send it to them. They do it for you. You don't see what happens. And that's. It's definitely not what we do. Where we hire people in the Philippines who. We bring them into our company. They work with us. They work for us staff. They are team members. They communicate with me. They communicate with our team. They. They're part of our company. They're not outsourced people that we don't care about. So I kind of want to start using the word insourcing versus outsourcing, where insourcing is a way more correct way to refer to the people on our team. They are team members. They are staff. Now, a couple thoughts with this. First of all, they're employees, but they're not employees. So with the Philippines, there's no way for you to consider this person an employee. They are an independent contractor, period. We recently verified this with an accountant and a tax attorney, and they're in the Philippines. They said the Philippines government does not allow you to withhold taxes for them. They do not allow you to pay any of their taxes or their SSS or their FilHealth. You may not have an account with the Philippines government unless you have a physical presence in the Philippines. So we do not have that. We do not have a physical presence in the Philippines. We don't have a business in the Philippines. We. We don't have an office in the Philippines. So there is no way for us to have any sort of relationship with this person that would consider them an employee. They are an independent contractor, period. End of story. So I know that's something that People always. People are always concerned about, well, does that make him an employee? No, it does not. You cannot consider them an employee regardless of if you give them their computer, if you tell them what hours they have to work, if you give them instructions, and there's nothing you can do. So this tax attorney in the Philippines explained to us the Philippines way of justifying employee versus independent contractor. And one of those was like, do you make them require. And one of those was, do you require them to wear a specific uniform? Or another one was, how do you force them to get to work? Do they have to come your way or do they. Can they go their own way? Can they arrange their own transportation? Those were two of the four ways that. That was like, oh, yeah, these are not, definitely not possible for any of our customers. We're not requiring them to wear uniforms and we're definitely not forcing them to get to work a certain way. So there's no way to consider them an employee. They're an independent contractor, but they're still in our company. They're in our project management system. So I want to use the word insource, insourcing when talking about the people that we are working with. So moving forward, I'm going to kind of move away from the word outsourcing, although I won't move away from it completely because it's what the world uses for SEO purposes or for marketing purposes. If people hear sourcing, they don't always know what I'm talking about. So I'm going to explain it a bunch of times. But I'm going to shy away from outsourcing because I don't like it. It's not what we do, it's not what you do, it's not what I do. I'm not outsourcing to some random person that I don't care about or don't know about or don't see. No, I see these people and I talk with them and I care about them and I provide training to them and I care about the how their work is. I care about the hours that they work because I don't want them getting overworked and I don't want them working the night shift if I can help it. Yeah. Moving forward. Episode 400 it's a milestone. I'm going to make a milestone out of it. I'm going to start using the word insourcing moving forward.
