Outsourcing Software Development to the Philippines: All You Should Know

Outsourcing Software Development to the Philippines: All You Should Know

Published on
September 9, 2022
Updated on
September 26, 2022
Author
Luan Campos
Reading Time
Read on to learn more about outsourcing software development to the Philippines and whether it's a good option for your company.

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Hiring U.S. software developers can be costly. According to Payscale, the average U.S.-based software engineer earns an impressive $88,896 annually. In comparison, the annual mean wage of all occupations in the U.S. was only $58,260 in 2021.

To cut costs, many tech companies have decided to outsource software development. Hot outsourcing locations include Eastern European nations like Poland and Asian nations like India, China, and the Philippines.

In recent years, an increasing number of companies have decided to outsource to the Philippines. It's easy to see why: The Phillippines boasts the second-highest level of English proficiency in the Asia-Pacific region after Singapore. It's also one of the most U.S.-friendly countries in Southeast Asia.

Read on to learn more about outsourcing software development to the Philippines and whether it's a good option for your company. Along the way, we'll cover average rates for hiring Filipino developers and how to hire Filipino software devs. We'll also cover the pros and cons of outsourcing to the Philippines and alternative offshore development locations.

The Benefits of Outsourcing Software Development to the Philippines

Hiring offshore Filipino software developers offers many benefits, such as established centers for outsourcing and budget-friendly rates.

Established Centers for Outsourcing

The Philippines has been involved in the outsourcing world for a long time.

In 1995, the Philippine Congress passed the Special Economic Zone Act, establishing the Philippine Economic Zone Authority. This established tax incentives and lower development area requirements, attracting foreign investors.

In 2001, President Gloria Macapagal Arroyo addressed an information technology (IT) forum in the U.S. During this meeting, three memoranda of understanding (MOUs) were signed by various companies in the U.S. and the Philippines, kick-starting the growth of the business process outsourcing (BPO) industry in the Philippines.

At this time, most of the outsourcing centers were for the Philippines' developing call center industry. However, throughout the 2000s and the 2010s, an increasing number of IT outsourcing centers started to spring up. Several individuals contributed to the expansive growth of the IT-BPO industry during these two decades, including:

  • Rainier "Bong" Borja, the former president of Alorica's Asian branch, who is often called the most articulate voice of the Filipino IT-BPO industry
  • Mar Roxas, who, during his tenure as the Philippines' secretary of the Department of Trade and Industry, promoted foreign investment and shaped the landscape of IT-BPO into what it is today
  • Bill Gates, who donated Microsoft App Licenses to the Philippines' Personal Computers for Public Schools (PCPS) program and enabled the IT-BPO industry to grow and thrive

As of 2022, the Philippines has a thriving BPO economy. The sector has continued to grow throughout COVID-19 and is expected to generate over $29 billion by the end of the year.

Affordable Rates

Filipino software devs also offer affordable rates. Most Filipino programmers only charge a fraction of what their U.S. equivalents would earn.

Average Rates for Hiring Offshore Developers in the Philippines

As previously mentioned, the Philippines is home to thousands of developers with cost-effective rates. Most junior and senior Filipino coders only charge a quarter of what U.S. programmers earn.

Junior Hourly Rate

A junior dev has under three years of real-life experience.

Most of them are fresh grads, but some are self-taught. Since they're new to the programming scene, they only know one or two coding languages. They also have limited experience building, testing, deploying, debugging, and maintaining software by themselves. To help them reach their potential, consider investing in mentorship and education opportunities.

According to Glassdoor, the average junior programmer in the Philippines earns 24,000 PHP per month or 139 PHP per hour. That's equivalent to $2.5 per hour. In contrast, the average U.S. junior software dev makes over 10 times as much, earning $64,750 per year or $31 per hour.

Senior Hourly Rate

A senior programmer has over five years of experience.

Since they have ample experience building, testing, and maintaining software for companies, they know how to start and manage projects by themselves. They also know how to collaborate with a multidisciplinary team of user experience (UX) and user interface (UI) designers, data scientists, and marketers. Most senior programmers are fluent in multiple programming languages, including Java, Python, and C#.

According to Glassdoor, the average senior programmer in the Philippines earns 60,000 PHP per month or 346 PHP per hour. That's around $6.3 per hour. In comparison, the average U.S. senior software dev makes $115,944 per year or $56 per hour.

Average Hourly Salary Rates by Tech Stack

Filipino devs' hourly rates vary depending on the tech stack. Here are the hourly rates for the most popular tech stacks in the Filipino IT-BPO industry:

Tech Stack Hourly Rate (PHP) Hourly Rate (USD)
ABAP 215 3.9
Android 237 4.3
AS400 263 4.8
Angular 210 3.8
C# 261 4.7
C++ 255 4.6
Front End 215 3.9
Graphical User Interface (GUI) 210 3.8
iOS 266 4.8
JavaScript 252 4.6
NodeJS 260 4.7
PHP 224 4.1
Ruby 225 4.1
Software Quality Assurance (QA) 230 4.2

How to Hire Outsourced Filipino Developers

If offshore outsourcing software development to the Philippines sounds like a good idea for your company, you need to follow certain steps. To start, you need to find Filipino software development companies. After that, you need to write a thorough project description and conduct remote interviews to ensure compatibility.

Where to Find Filipino Software Development Companies

Some companies locate candidates through job sites and university fairs. However, these methods take a lot of time. They're also not the best ways to find top-tier talent.

To hire the Philippines' top 1%t of tech talent, you should look for potential hires in tech hubs — cities, suburbs, regions, and office spaces that promote innovation for tech companies.

Biggest Tech Hubs in the Philippines

The Philippines is home to many tech hubs, including:

Manila

In recent years, the capital of the Philippines, Manila, has risen to prominence as a leading tech hub in Southeast Asia.

This bustling metropolis has numerous open office spaces and startup incubators, including Impact Hub Manila, an impact-first venture builder that supports corporations, startups, talents, and organizations with consulting services, training programs, networking, and membership. Over the years, this hub has run over 500 entrepreneurship programs and supported 500 enterprises.

Cebu

Cebu is another great Filipino tech hub. The second-largest metropolitan area in the Philippines, Cebu is already a major IT-BPO center. It's also home to the Cebu IT Park, a 27-hectare global gateway that features a diverse mix of local and international software research and development companies, contact centers, and BPOs.

Davao City

Last but not least, you should consider hiring talent from Davao City. The third-most populous city after Quezon City and Manila, Davao City is the most populous city in Mindanao, the second-largest island in the Philippines. Its universities are well-known for their computer science programs, so you can expect to run into a lot of impressive fresh grads and junior devs.

Write a Thorough Project Description

Once you've picked a tech hub, the next step is to write a thorough project description. Remember to include the following:

  • An easy-to-understand job title: Be as straightforward and succinct as possible. A good example would be "Junior Backend Software Developer." Many companies are tempted to give their jobs unique titles, such as "Rockstar Computer Programmer." However, these titles are often confusing. They may also be discriminatory. Research has shown that certain words — like "rockstar" and "badass" — can discourage women from applying.
  • Location: Tell applicants where your job is located. If your job is fully remote, write "online" or "remote."
  • A detailed project description that includes the following:
  • Main responsibilities of the position
  • Required certification, education, soft skills, technical skills, and job experience
  • Required and preferred skills and qualifications
  • Compensation: Outline how much you will pay and how you will pay your employees — for instance, every month through direct deposit.
  • Perks: Mention whether your startup offers benefits and perks, such as medical insurance and flexible hours.
  • Schedule: Talk about how many hours employees will be expected to work — for example, 40 hours a week, Monday to Friday.

Here's what a sample software development project ad could look like:

Remote Senior Software Developer — Revelo

Company Bio:

Revelo is Latin America's top tech talent marketplace. Our mission is to match Latin America's best programmers with companies around the world. Check out our website to learn more.

Roles:

  • Develop and refine new cloud architecture
  • Maintain legacy PC-based software
  • Collaborate with UI/UX designers, data scientists, software engineers, and quality assurance
  • Create and maintain software and architecture documentation to communicate product and development enhancements
  • Verify the work of others through development testing and code reviews
  • Refine UX designs
  • Develop architecture and implementation plans
  • Execute development plans by meeting or exceeding milestone and sprint targets

Required Qualifications and Skills:

  • Over five years of experience in software development
  • At least two years of experience working in an Agile environment
  • Proven ability and experience with developing and refining cloud applications
  • At least three years of experience with ReactJS, C#, HTML, CSS, and AngularJS
  • Experience developing Windows-based applications using C# and .NET
  • Creative problem-solving skills
  • Highly motivated and passionate about the cloud
  • Ability to rapidly learn and master new technologies

Nice-to-Have Skills:

  • Experience with continuous integration
  • Proven ability and experience using Telerik UI, Entity Framework, and Model-View-ViewModel (MVVM)

Compensation and Benefits:

  • Annual salary of $60,000 to $65,000, depending on experience
  • Disability insurance
  • Tuition reimbursement
  • Health and dental insurance
  • Work from home
  • Vision care
  • Five weeks of vacation

Schedule:

  • Flexible, but preferably 9:00 a.m. to 6:00 p.m. Philippine Time
  • 40 hours a week
  • Monday to Friday

Conduct Remote Interviews to Ensure Compatibility

Once you've posted your project ad, you will get thousands of resumes and cover letters from potential hires. Look through each submission and create a list of applicants to interview.

Here are some questions you can ask job seekers to learn more about their skills, personalities, and experiences:

  • What do you like the most about software development?
  • What is the most enjoyable part of being a software developer? What about the least enjoyable part?
  • What drew you to programming?
  • What are your top three programming languages and why?
  • Which programming languages do you dislike? Why?
  • Do you have any experience with machine learning (ML) and artificial intelligence (AI)?
  • What's your experience with Big Data?
  • What's your experience with backend, frontend, and full-stack development?
  • What kind of software have you worked on before?
  • How confident are you working with cloud apps and architecture?
  • What's your approach to software testing?
  • How do you maintain software after deployment?
  • What software development methodologies are you familiar with? Are you familiar with Agile, for instance? If not, are you willing to learn how to work in an Agile environment?
  • Have your bosses ever given you constructive criticism? What did they say, and how did you handle this?
  • What would you do if a manager or client didn't like your project?

The Disadvantages of Outsourcing to the Philippines

Although outsourcing to the Philippines brings many benefits, it also has some downsides. These include:

Large Time Zone Differences With the U.S.

The Philippines is 12 hours ahead of Eastern Standard Time, 13 hours ahead of Central Time, and 15 hours ahead of Pacific Standard Time. Since it's nighttime in the Philippines when it's daytime in the U.S., collaborating and meeting with your Filipino hires in real time will be extremely difficult. Your Filipino hires will have to spend most of the day working by themselves, since your U.S. team will be asleep when they're awake.

Cultural Differences

The Philippines also has many cultural differences from the U.S. While they speak fluent English and consume a lot of American media, most Filipinos have never lived in the U.S. Their field of reference is Southeast Asia, particularly ASEAN nations, such as Malaysia, Indonesia, and Brunei. As such, your U.S. staff may have difficulties bonding with them.

Learn More: In-House vs. Remote Developers: Pros and Cons

Why You Should Consider Latin America Instead of the Philippines for Hiring Offshore Developers

As you can see, outsourcing to the Philippines comes with several disadvantages. Fortunately, there's a cost-effective alternative — offshoring software development to Latin America.

Outsourcing development to Latin American countries provides many advantages. For one, Latin America is located in the same or similar time zones as the U.S. Latin American countries are also physically closer to the U.S., have a higher cost-to-quality ratio, and a larger tech talent pool that's less competitive.

Adjacent or Same Time Zones as the U.S.

All of Latin America is located in adjacent or the same time zones as the U.S. As such, your U.S. staff can easily collaborate and meet with outsourced staff in real time. Essentially, your Latin American hires will function as an extension of your U.S. team, which means you'll get to enjoy the following benefits:

Improved Camaraderie

Team members are less likely to bond with one another if they can't talk to each other in real time. On the other hand, teams that can talk to each other in real time will have more opportunities to work, laugh, and play together.

Cost Reduction

Companies that have remote employees in vastly different time zones often have to purchase subscriptions for recording meetings. However, if everyone is in the same time zone, you can cut costs by meeting at a time that fits everyone.

Saved Time

Having everyone in the same or similar time zones also saves time.

To illustrate, let's say you're holding a meeting today at 12 noon Eastern Standard Time. Your U.S. staff have no problems attending this meeting, but your remote staff in the Philippines would, since most of them would already be asleep. The next day, your Filipino staff would have to watch the recording of your meeting to catch up. If they have any questions, a U.S. staff member will also have to recap the meeting for them.

Meanwhile, if you hire developers from Latin America, their time zone allows them to attend the meeting in real time.

Closer Proximity to the U.S.

Latin America is also physically close to the U.S. Many nations, like Cuba, Venezuela, and the Dominican Republic, are only three-to-five-hour flights away.

Higher Cost/Quality Ratio

Latin American developers — especially those who are new to offshoring — tend to have impressive cost-to-quality ratios. This means that they have similar or lower rates than Filipino coders but have more of the skills, experiences, and knowledge you want.

Large Tech Talent Pool That’s Less Competitive

Last but not least, Latin America has a large tech pool that's less competitive. Unlike the Philippines, most Latin American countries are newcomers to the outsourcing world, so you'll have relatively few competitors. This means you can hire first-class Latin American devs with less time and effort.

Hire Latin American Developers With Revelo

Hiring Latin American devs can be difficult, especially if you've never done it before.

Luckily, Revelo's here to help. As Latin America's premier tech talent marketplace, we connect Latin America's best programmers with companies around the world. All of our developers have been rigorously pre-tested for their English proficiency, experience, and knowledge.

Interested in hiring the best software developers for your company? Contact us today to start building your team.

Time Zone Aligned

Our remote engineers are in US time zones or adjacent. Not 10+ hours ahead. Enjoy real-time collaboration with your hires.

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Luan Campos

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Full-Stack developer with 6 years of experience working with MERN stack. Worked for multiple transnational companies focused on web and cloud, technology services, and R&D. Major professional experience in Frontend with Javascript, Node.js, React.js, and Vue.js

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