Purchase Power Parity (PPP) & Outsourcing’s Value Proposition

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Purchase Power Parity (PPP) and outsourcing’s value Proposition

Generally, you can save 70% when hiring staff offshore – especially in the Philippines and or India. A lot has been said about the ethics of this. There is concern that people need to get paid more.

However, little is said about each country’s relative cost of living.

While it is impossible to survive on a $6,000 annual salary in the US, it is more than sufficient in the Philippines. A $30,000 salary would put people well into the top 1% of the country.

Economists use Purchasing Power Parity (PPP) analysis to track this differential in living costs. In fact, PPP is actually one of the most succinct explanations for outsourcing’s primary value proposition.

The lowdown on PPP

➤ A popular metric used by macroeconomic analysts to compare different countries’ currencies using a “basket of goods” approach.
➤ It allows economists to compare economic productivity and standards of living between countries.
➤ Some countries adjust their gross domestic product (GDP) figures to reflect PPP.

The lowdown on PPP
The lowdown on PPP

For the nerds

➤ Here’s how you can calculate PPP, and here’s World Bank’s PPP index of all countries.

TL;DR

In short, $100 goes much further in the Philippines than in other more developed nations. People can earn a $10,000 salary, live well, support their family, and build a meaningful career.

While some people see low salaries as a disgrace, others see it as an opportunity – a win-win opportunity. It’s a big win for the employer, and also a big big win for the employee.

It’s healthy capitalism – and globalization – at its finest!

Here are some examples of good salaries for great staff in valuable roles. Plus, check out the next section in this email for two great real examples.

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the average all-in employment costs in the
Philippines are typically 70% less than its
Western counterparts

Philippines United Kingdom Australia United States
Software Developer
$7,221
$39,913
$62,653
$81,994
HR Manager
$9,506
$46,669
$66,518
$78,007
Team Leader
$7,152
$31,174
$45,428
$75,823
Accountant
$5,959
$58,479
$67,190
$72,923
Copy Writer
$4,767
$52,088
$56,600
$62,653
Customer Service
$3,337
$22,137
$29,717
$35,275
Virtual Assistance
$2,285
$39,066
$42,240
$31,797
Select a role to view salaries
Philippines $7,221
United Kingdom $39,913
Australia $62,653
United States $81,994

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About OA

Outsource Accelerator is the trusted source of independent information, advisory and expert implementation of Business Process Outsourcing (BPO).

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Outsource Accelerator offers the world’s leading aggregator marketplace for outsourcing. It specifically provides the conduit between world-leading outsourcing suppliers and the businesses – clients – across the globe.

The Outsource Accelerator website has over 5,000 articles, 350+ podcast episodes, and a comprehensive directory with 2,300+ BPO companies… all designed to make it easier for clients to learn about – and engage with – outsourcing.

About Derek Gallimore

Derek Gallimore has been in business for 20 years, outsourcing for over eight years, and has been living in Manila (the heart of global outsourcing) since 2014. Derek is the founder and CEO of Outsource Accelerator, and is regarded as a leading expert on all things outsourcing.