What is the Philippines gig economy?

You may have heard about the surge of freelancers in the Philippines, also known as the ‘gig economy’. It seems like everyone is talking about how talented and tech-savvy Filipinos are taking advantage of the freedom to work for themselves and cater to clients all over the world. With up to 1.5 million registered freelancers on international platforms¹, it's no surprise that the Philippines is one of the fastest-growing gig markets in the world².

As a small or medium enterprise, you may be considering tapping into the pool of freelance talent available in the Philippines to help you achieve your business goals, especially considering the current challenges in the recruitment market. However, it's important to note that not all freelancers are created equal. While Filipinos are known for their creativity, work ethic and customer service skills, not all of them deliver the same level of quality work and professionalism.

In fact, many businesses have ended up frustrated and out of pocket due to unreliable freelancers who fail to meet deadlines, provide subpar work or disappear without notice. That's why it's crucial for SMEs to do their due diligence when choosing a freelancer to work with.

While the gig economy offers the potential benefits of accessing top talent at a lower cost than hiring a full-time employee, it's important to weigh up the risks and potential downsides. Not all freelancers deliver the same level of quality and professionalism, and there may be issues with communication, availability and consistency. It's essential to take the time to find the right fit for your business and carefully consider the pros and cons of working with freelancers in the Philippines.

The risks of Filipino freelancing

While this may seem like a good idea, it's important to be aware of the risks associated with partnering with an independent freelancer instead of an established outsourcing provider.

1. Lack of background checks means less data security

Unlike outsourcing providers who conduct thorough background checks and adhere to ISO compliance for data security, freelancers often lack these checks and balances, putting your business at risk. They may also use equipment that doesn't meet the same standards as an outsourcing provider, increasing the risk of data breaches.

2. Quality of work could be jeopardised

Outsourcing providers have definitive guidelines and structures in place for their staff, ensuring quality work and measurable performance. Conversations with clients are scheduled to address any concerns and ensure high-quality work. Freelancers, on the other hand, rely on trust and hope in an individual rather than the established protocols of a professional organisation.

3. Your business becomes tax responsible

Another important consideration is tax avoidance. Many freelancers sell their services via online platforms without contributing tax, leaving the responsibility to the client. In contrast, outsourcing providers ensure their offshore staff contribute tax, benefiting the communities they serve.

4. Risk of ransom

Some freelancers have been known to threaten clients with not delivering work unless they receive a bonus payment. This, coupled with granting relatively unknown individuals access to sensitive information, can result in businesses being forced to negotiate with unscrupulous freelancers.

What does the future hold for the gig economy in the Philippines?

During COVID-19, 75% of new freelancers joined the gig economy³ to attain financial stability, resulting in over 1 billion freelancers worldwide⁴. While many of them deliver satisfactory work, businesses must be aware of the risks associated with directly partnering with Filipino freelancers instead of outsourcing providers. By eliminating the middle layer, businesses expose themselves to potential risks that are often only realized after the damage has been done.