Are There Any Hidden or Additional Costs to Consider When Hiring Offshore Workers?

Cherelyn – Accounting Assistant

Not really.

Hidden Costs

Having said that, we need to better define what we mean by hidden costs in order to give this question a better, more thoughtful answer.

Hidden costs, as usually those associated with hiring U.S. staff. Things like insurances including medical, workman’s comp, employer’s payroll tax, payroll processing, recruitment, HR services, infrastructure and office space. The true cost of these vary enormously from business to business and State to State. In general, it is necessary to budget an additional 10% – 20% to an employee’s salary to cover these costs.

When you hire offshore workers, you are essentially paying for a service, therefore, most of these things do not apply by default.

Further, when you hire through the Smart VA Staffing agency, we handle the recruitment and payroll then you are working with us, none of these things apply.

When you work with the Smart VA Staffing agency, you have one monthly rate and that’s it. Given that monthly rate is also usually only a fraction of the salary of hiring a U.S. person, the cost differential is substantial.

Additional Costs

Typically, these are minimal and few and far between. However, things to consider can include the following.

Bonuses

It is traditional to give Filipino employees a Christmas bonus. In the Philippines that bonus is called the 13th month and is equal to one month’s salary.

Optional performance bonuses. At the Smart VA Staffing agency, we recommend paying your offshore staff small unexpected bonuses from time to time, should they do a particularly good job or do extra work. This tends to help create a very positive work experience for the staff. Part of what makes this such a compelling thing to do is that the cost of doing this is minimal to the employer. A $50 to a $150 bonus at the end of a month makes a big difference to a Filipino, however for a U.S. Business it rarely impacts anything.

Equipment and Software Costs

In most cases when we hire a Filipino worker, we do so with the expectation that the worker has the equipment necessary to do the work. This usually means they will have a computer and an internet connection.

One thing you may want to take into account, however, is that if you want the worker to have access to any software specific to your business, you may need an extra license for them. This can include things like business email accounts, QuickBooks and office applications, depending upon what type of work you require them to do.

Sometimes we have had clients wanting to upgrade the hardware; laptops, monitors, and storage devices. Businesses sometimes choose to do this to improve the productivity of valuable staff. At the Smart VA Staffing agency, we recommend funding 60% of the cost.

See more detailed information regarding costs.