In today’s topic, I’m sharing along with you is that I’m going to be speaking about “Is outsourcing taking advantage of inexpensive labor and hurting local small businesses?” And the reason why I open this question up is recently I received an email from a local outsourcing company here that said to me, “Hey Tyrone It looks like you’re really, really not doing a very good job because you’re taking advantage of cheaper labor than what it is than what we’re said to be charging here.” Obviously,it will cost at about $1500 here in the area to hire a virtual assistant for a small company whereas I can teach people how to outsource and look for people for about $300-$350 US a month and they’re charging about $1500 US about to be able to employ and outsource to these people.

Now don’t get me wrong. I’ve got no hassle with this. And, it’s definitely already half the price of what costs to employ just a local executive assistant here. Like any executive assistant, you’d be checking out paying them the very least of $3000 to $4000 each month just to have them work in your office full-time and also too, do the work that you’ll require them to do and on top of that, you’re going to add on super taxes, etc and so forth so in actual fact it’ll be more than $4000. But to hire a virtual assistant, a full-time virtual assistant working for 40 hours a week locally here with an outsourcing company costs you around about $1500 and that’s included everything. You don’t have to worry about the taxes, you don’t need to bother about superannuation, you don’t have to worry about setting computer for them and so on. And he commented that I feel he thinks that I’m really exploiting it really cheaply because to engage someone for $300 a month is really, really inexpensive like it’s less than a dollar or $2 per hour. And, now I’m going to give you my opinion. I know that many people are getting really edgy with this. So I’m going to give you my point of view and how and where I sit on it.

I believe, outsourcing is an additional way to give a job for someone else and also to be able to give them skills and a livelihood. The 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 amazingly different. They have a different foreign exchange to us. And if you’re to stay there and basically live their standard living, the price of living would be so, so much lower and thus that’s why their paycheck are so much lower. But in comparison, they’re getting just about the same say wages 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 every month, approximately. Whereas here in Australia, you’re probably looking at hiring a full time programmer for roughly about 10K each 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 many 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 each month or so. So the price of living is amazingly high whereas in the Philippines, 20,000Php really does push them a lot further as well, too. So with regards to proportional scale and also the standard living, it’s completely relative. And that’s the reason why people just don’t understand that I’m actually doing a good thing to provide a job for people inside the Philippines and paying them that kind of rate. And, if I had to engage 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 an international economy now with internet, with easy access with social media, we can obtain access to resources so much like that. Basically you can contact someone and you should be able to get in touch with someone instantly.

Whereas previously, to get into the economies and scales, gain access to all those kind of resources it’ll take you days, weeks, months even just to be able to access it. So time does change and if you’re not keeping up, 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 nearly in proportion but their exchange rate makes it look like as though they’re not getting as much back. So that’s the reason i believe why It looks like it’s not a bad thing, it’s a great thing. You actually offer a job for someone else. And yes the person in the area, you may lose the job but that means that they’ll have to go out and be a little more either a better entrepreneur to look for a job and up-sell their skills and be a little bit 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 exploiting cheap labor, we’re actually getting a benefit here and also providing a benefit for some individuals overseas and moreover, small companies 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 so that you can 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.

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