The Questions to Ask Any Outsourcing Provider Before You Sign

Most Australian businesses shop for offshore staff the same way: three quotes, a comparison of monthly rates, a demo call, done. The rate is the easiest thing to compare and the least useful. Two providers can quote the same $2,400 a month and have completely different answers to who employs the person, who carries the risk, and what happens when something goes wrong.

The questions below are the ones that surface those differences. Ask them all. A good provider will answer without hesitating, because they’ve built the business to withstand the questions. A provider who deflects, changes the subject, or tells you “everyone does it this way” is telling you something useful.

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Who actually employs the person

1. Do you own a Philippine entity, or do you use a partner?

Plenty of Australian-facing providers are a sales and marketing operation with a local partner doing the actual employing. That’s not automatically bad, but you need to know. If they’re a pass-through, you’re two contracts away from the person doing your work, and neither contract is with you. Ask for the registered entity name and SEC registration. Ask who signs the employment contract.

2. What is the legal employment relationship between the provider and my staff member?

There are only a few real answers: the person is an employee of the provider’s Philippine entity, the person is an independent contractor engaged by the provider, or the person is a contractor engaged directly by you with the provider taking a fee. These are very different arrangements with very different risk profiles. If the provider can’t articulate which one it is in a single sentence, that’s the answer.

3. If they’re engaged as contractors, why?

Contractor arrangements are cheaper to run because they skip mandated benefits, 13th month pay, and government contributions. That saving comes from somewhere. Philippine labour law looks at the substance of the relationship, not the label on the document. Where a worker performs the core work of the business, on the business’s schedule, using the business’s systems, under the business’s direction, the contractor label tends not to survive scrutiny. Australian tribunals have also been willing to look past labels in offshore engagements. Worth reading current case law before you accept the cheaper structure.

4. What happens to my staff member if your business fails?

Nobody enjoys this question, which is why it’s a good one. If the provider disappears, who is the employer of record? Is there any continuity mechanism? Can you novate the employment to your own arrangement, and at what cost?

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Money

5. Show me the full cost stack. What’s in the monthly fee and what gets billed separately?

Ask for a line-by-line breakdown: base salary, SSS, PhilHealth, Pag-IBIG, 13th month pay, HMO, equipment, internet allowance, your management fee. Then ask what isn’t in that number. Common surprises include overtime, night differential, regular and special holiday premiums, government-mandated increases, HMO dependants, and equipment replacement.

6. What is my staff member actually paid?

Not the total cost to you. The gross salary landing in their account. Some providers treat this as commercially confidential. Consider what that means: they’re telling you the gap between what you pay and what the worker receives is something you shouldn’t see. You can decide whether that’s acceptable. Just decide with the information in front of you rather than without it.

7. Can you show me proof that government contributions are being remitted?

Deducting SSS, PhilHealth and Pag-IBIG from a payslip and remitting them are two separate acts. Ask to see remittance confirmations, not just payslips. This is the single most common place where things quietly go wrong, and your staff member only finds out when they try to claim a benefit.

8. What are your price escalation terms?

Philippine wage orders move. HMO premiums move. Ask how increases are passed through, how much notice you get, and whether your margin percentage is fixed or floats with cost.

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The person and their conditions

9. Who runs the recruitment, and do I meet the shortlist?

Ask how many candidates you’ll interview, who screens them, and whether you have the right to reject the shortlist and start again without a fee. Ask what happens if the person you hire isn’t who showed up in the interview.

10. How do Philippine holidays work under our arrangement?

The Philippines has a substantial calendar of regular and special non-working days, each with its own pay rules. Find out whether your staff member works them, who absorbs the premium, and how it appears on your invoice. Providers who haven’t thought this through will improvise the answer in front of you.

11. What’s your probationary process?

Philippine law does not have at-will employment. Probationary employees must be told the reasonable standards for regularisation at the time of engagement, in writing. Get that wrong and a failed probationer may be deemed a regular employee. Ask to see the standards document that goes to the staff member on day one. If the provider says probation means you can end it any time for any reason, they’re wrong, and you’ll be the one wearing it.

12. What is the actual termination process, and what does it cost me?

Ask for the specific grounds available, the notice requirements, the documentation required, and any separation pay exposure. Then ask who prepares the paperwork and who defends a complaint if one is filed.

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When it goes wrong

13. Who is my point of contact, and what is the escalation path?

A named account manager with a phone number is a different service to a shared inbox. Ask what happens at 4pm on a Friday when your staff member has stopped responding.

14. What’s your attrition rate, and what’s your replacement guarantee?

Ask for the number, not the adjective. Then ask what “replacement” means in practice: how long you wait, whether you pay twice, and whether the guarantee survives if the person resigns in month seven rather than month two.

15. What are the exit terms?

Notice period, minimum contract term, what happens to the staff member if you leave, and whether there’s a buyout if you want to employ them directly. A provider confident in their service doesn’t need a two-year lock-in.

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Compliance and data

16. What are the data security and IP arrangements?

Where is your data stored, what does the provider’s Data Privacy Act compliance look like, is there an appointed Data Protection Officer, and does the employment contract assign IP created by the staff member to you rather than to the provider? Check the third one carefully. It’s often assumed and rarely drafted.

17. Are there any Australian tax or payroll tax implications for me?

Usually the answer is straightforward, but it depends on how the arrangement is structured, and the contractor structures are where it gets interesting. Ask the provider to put their position in writing, then have your own accountant look at it.

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The shortcut

If you only have time for three, ask these:

• Do you own the Philippine entity that employs my staff member?
• What is that person actually paid, and can you show me remittance proof?
• Show me the full cost breakdown and tell me what isn’t included.

The answers, and the speed with which they arrive, will tell you most of what you need to know.

The offshore staffing market in Australia is growing faster than its own standards. There are excellent operators in it, and there are businesses selling arbitrage while quietly handing the compliance risk back to their clients. The difference is rarely visible on the pricing page. It’s visible in how a provider handles fifteen minutes of specific questions.

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Team Up Now is an Australian Employer of Record with our own Philippine entity. We’re happy to answer every question on this list, including the awkward ones. Get in touch.