The Philippines is rapidly becoming one of the top international consumer markets on the back of government initiatives to support corporate prosperity. This has prompted many firms to consider setting up shop in the country.
With the increased business opportunities in the Philippines, there is a lot of responsibility in managing and maintaining a business compliant with local labor laws. Managing payroll, which involves accurately calculating the employee’s salary and statutory benefits, is one of the essential skills when beginning a firm.
Outsourcing Payroll in the Philippines
There can be endless reasons why companies need to outsource their payroll function but what makes it unique to the Philippines is a question we have asked not once but many times. One of the main justifications for outsourcing payroll is cost reduction.
Business owners are considering collaborating with a payroll service provider due to rising human expenses, time-consuming processes, and technology. As a result, cost savings are the decisive argument for outsourcing among multinational firms.
Another reason businesses utilize payroll service providers in the Philippines is the dearth of local expertise. As a result of the country’s expanding economy, new market segments have formed. They include offshore firms, international organizations, regional competitors, and many small and medium-sized companies that demand local payroll services.
The increased usage of cloud-based platforms and effective management systems are the key drivers for outsourcing. Small and medium-sized enterprises, in particular, turn to outsourcing as the cost of adopting and maintaining payroll IT systems might increase.
The Philippines is hopeful that it will soon establish a foothold in the global market for payroll outsourcing services, despite the obstacles and limitations to the industry’s growth.
To learn more about payroll challenges in the Philippines and curated regional insights, register for the Manila pitstop of Working Beyond Borders 2022, taking place on June 29.
What makes Payroll Unique in the Philippines?
The personal income tax rates in the Philippines have undergone a significant revision recently. Many low-wage employees are no longer liable to income tax due to these changes, and even full-time workers in Manila now need to earn more than double the minimum wage to qualify for the first income tax level.
The Philippines is a very appealing option for multinational corporations because of all these favorable aspects and a moderate corporate tax rate of 30%. But things aren’t always child’s play.
From Monday to Friday, most Filipinos work eight hours; nevertheless, certain occupations need 48 hours each week without additional overtime. Overtime compensation is generally negotiated between employee and employer and mentioned in an employment contract.
Setting up a business and handling payroll in the Philippines involves a lot of intricate details. In these areas, a global payroll solution excels as a quick method to learn from outside sources and a simple way to fulfill obligations while maintaining compliance.
The workplace business realities are changing quickly, and the HR sector is in the midst of a strategic revolution. The days of “typical HR” are long gone. In HR, change is occurring at an unprecedented rate. Rapid globalization, cloud platform migration, mobility, analytics, robotic process automation, and artificial intelligence have forced HR to change at a rate that has never been seen before. This has also taken a toll on the Global Payroll landscape as well.
Neeyamo’s global payroll solution combines cutting-edge technology, an in-depth understanding of global compliance, and service experience that spans more than 150 countries.
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