One of my partners was telling me a story yesterday about his friend that just hired a VA from Philippines using Craigslist. He was so excited, he found someone that will do his assistant work for an incredible price: only $2 per hour! Sounds great!

I’ve been there, so now I must share my story.

Before I dive into that, let me first let you know that my wife is Filipina, and I absolutely love the Philippines. I will most likely retire there. I love the people, the food, the focus on family, the hospitality, and the pace.

I mention this because when I started down the path of working with independent contractors in Philippines, it was with eyes wide open about some of the realities I would face. I’m sharing my story in part because the vast majority of Americans have absolutely no idea what to expect, simply because they know little about what developing countries are like, and know almost nothing about Filipino culture.

That said, let’s begin. My first offshore hire was based in Philippines, and by all measures the work done was cost-effective. I hired him to set up a website, and when he finally got started on it progress was good.

Then the computer issues started coming up…

Reality. Did you ever wonder where old PC’s go to die? I’ve sent a few to family in Philippines – Fil-Ams do that a lot too, and your VA may have gotten theirs the same way. Did you ever stop to wonder how a VA being paid $2 per hour is going to be able to afford software? They can’t now, can they? I guess if that sort of thing is OK with you, pirated software is widely available in Philippines. As in many other nations, you can buy any current CD or DVD for $5 – in the mall.

Ghen's Internet Cafe near Bacolod, Philippines

Computer and software problems aren’t big problems, if you’re prepared. When the computer doesn’t work, depending on your need for productivity, you may need to ask your VA to work at the internet cafe until the computer gets fixed. Depending on where your VA lives, it could look like Ghen’s place above (though most are a lot nicer!) But at $2 per hour, you realize that you’re paying for labor, not internet cafe time.

Ghen would charge something like 20-30 pesos per hour (about 50 cents) and would likely allow downloads of software you need. Or, your VA could go to a larger cafe in town and pay 50+ pesos per hour to have a great computer, a firewall, and a no-download policy.  Since you’re only paying $2 per hour, which covers vital living expenses, you may well decide that it’s worth another $1 per hour to keep going and decide to pay for the internet cafe while you wait for the computer to be fixed.

We take for granted that computers are everywhere, and that they are “affordable.” Not so in most of the developing world. A PC, even a used PC, is something that will likely be shared by a few people – especially in a home environment. Remember, you’re only paying $2 per hour, so that certainly doesn’t include any office space. If data security is an issue to you, you might spend a little more to ensure that the computer is located in a secure office.

I wonder sometimes how you can pirate Norton Antivirus, but that’s done a lot. Do you suppose it works very well? True, there is a good chance that the problem with the PC is the fact that it’s a 2003 model running Windows 7, Adobe Photoshop, MS Office 2007, video editing software, a webcam, a headset, and lots of other free software. Or, it could be because Tito Jorge was surfing porn and the pirated Norton Antivirus just didn’t work up to snuff. It’s really hard to know unless you know who you’re working with – which isn’t going to happen with a Craigslist ad, is it?  One thing for sure is that your $2 per hour doesn’t include a secure office, licensed software, and current computing systems.

So, the computer doesn’t work one day, and it’s not your VA’s fault because she’s using what she can afford on $2 an hour. And you’re likely to think that it isn’t your fault, because she agreed to work for $2 per hour. Of course, you wouldn’t have hired her if she told you what it really costs to run a VA business, because you just want a cheap solution and didn’t think it through. Well, you’ve got a cheap solution now, so keep learning.

Both of you are now aware that your VA relies on your $2 per hour to pay bills, and you’re relying on your VA to get work done. You are now aware that the price you’re paying doesn’t pay for fixing a computer. All that stands between you and her getting what you need is a broken PC. So, you will likely agree to allow your VA to take the computer to the technician. Or, if she’s well-connected, she may happen to have a friend that will come to the house in exchange for a nice meal of pork adobo and pinakbet. You can assess what the quality differences might be for yourself. One is “free”, and the other costs real pesos.

Let’s assume you go with the paid technician… that wasn’t included in the $2 per hour.

Now you get to wait while they test. I’m not sure what they test, exactly, but they test things a lot there. For instance, if you buy a radio in Philippines, you test it before you carry it out of the store.  I once bought a 6-outlet power strip there, and the store clerk had to test 3 of them until we found one that worked for all 6 outlets.

The good news is that the good people of Philippines have adapted to a challenging economic situation by learning how to repair and reuse things in way we can’t imagine in the US.  It doesn’t cost $60 to open up your PC there, as it does here. That’s good, in a lot of ways, because getting things serviced is often cheaper than just throwing them away. But it opens the door to investing a lot of time in things that we simply don’t spend time on here.

When my VA took her computer to the shop, it went like this:

At some point in the testing, the techs decided it would be a good idea to wipe the entire hard drive clean and start over. You can imagine this decision makes sense in a country where time is worth very little, software is free, and computer components cost real pesos.  After about a week, we learned that the computer was working better, but they needed to load all of the software back on it. I waited for several more days… praying our data would be there when the work is done.

At this point a total of two weeks has gone by. The local internet cafe’s connection is up and down all the time (just like the one at her home.)  It’s a little better though, because the cafe pays for 3 different ISPs in the hope that one will be working at any given time. I know – it’s hard to believe we’re so accustomed to things that work here in the US that we don’t stop to think what unreliable infrastructure causes. Having 2-3 internet connections is common practice for many small businesses.

Speaking of infrastructure, I forgot to mention the brownouts, which is the term used in Philippines for what we call a blackout. Those happen a lot, so living on the grid in Philippines doesn’t provide the most reliable power supply. Let’s hope you don’t have a deadline when a brownout comes along. At $2 per hour, you aren’t paying the cost of backup generators. Depending on the internet service, it won’t do you much good anyway because the internet may be down right along with the brownout. That’s why large operations buy substantially more expensive and reliable internet services. Those alone cost more than $2 per hour though, so reliability isn’t part of what you’re paying for at $2 an hour for labor.

Photograph of one of the Questus5 professional centers in China.

One of our centers in Philippines

Finally, after a few weeks, your Craigslist VA will come back to you and say something like “Sir Greg, the technician will need some money before I can get the PC back.”  Pause…. “How much?” you might say. “Let me find out. I will try to get a deal.”  I’ve got news for you – the American price starts at about 3x the Filipino price, so get ready. After all, you have enough money to drive a car, and while you may think $500 for groceries is reasonable, to your VA it just means you have way too much money. And, she might even be right about that.

I don’t care where one goes in the world, there are good honest people and there are those that are not good and honest. My own experiences in Philippines are varied. One assistant turned out to be scamming me, and the other has proven to be one of the most wonderful people on earth. The first one approached the end of the project and started stalling, right before demanding rates that might be paid in the US. The other has been grateful to have the opportunity to work, and I would do anything in my power to help her.

But I digress. Remember why you hired the VA in the first place? You wanted some work done, right?

While I have had some limited success with this model, I honestly don’t think it’s the best way to go. First, it costs more than $2 per hour. A lot more. I have ethical issues about software piracy, so I sent a fully loaded PC with legitimate software on it to the VA I came to trust. I have endured blackouts and internet service disruptions that are enough to stretch the patience of any American. And in the end, I got what I paid for.

In my case, I have a heart for Philippines and the Filipino people. I’m afraid that my story my be interpreted as hurtful in some way, and that is not my intention. I’m really just trying to explain to an American that gets the idea that $2 per hour is going to give them an experience remotely like what they are expecting. Most Americans take a lot for granted, and have absolutely no idea what it means when a PC costs several months of wages to afford, and don’t understand that infrastructure has a lot to do with productivity.

I am thrilled to find that Filipinos are getting the recognition they deserve in the world market. The word is getting around about their friendly, gentle, and hard-working spirit, good English skills, and exceptional talent – and it’s available at prices that are globally competitive. The fact that an American would look to Philippines to find an assistant at all just shows how fast technology is moving us forward to truly global labor markets. As this progresses, Philippines is exceptionally well positioned to earn their share of the market.

Yet, having tried working with independent contractors there, I have come to believe that the infrastructure in Philippines is going to be an ongoing challenge. This is one of the reasons I founded Questus5, where you can hire a full-time, permanent VA that works in a top-notch office, with security, no kids or pets allowed, data security, current computing systems, back-up power generators, licensed software, supervision, technical support and a phone number. And one other thing that doesn’t get covered in the $2 per hour model – these businesses pay taxes and have business licenses too. And pay Social Security for their employees. And provide health care benefits.

It all depends on what you want to do. For anyone interested in $2 VAs, I encourage you to try it. Then call us when you’re serious about finding a business solution that really works.

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