How to Hire in the Philippines — A Guide for Foreign Companies (EOR vs Own Entity vs Direct Hire vs Marketplace)

If you’re a US, UK, Singapore, Australian, or European company, the Philippines is probably already on your hiring shortlist — and if it isn’t, it should be. This guide walks through the four ways foreign companies can actually engage Filipino talent, what each costs, what each forces you to manage, and how to choose between them.

Why the Philippines

A short version of the long answer:

• Global #1 in voice BPO. The Philippines overtook India for voice BPO leadership around 2010 and has held the position since. Tholons, IBPAP, and DICT data consistently rank Metro Manila and Cebu in the top 10 global outsourcing destinations.
• Global #2 in IT-BPM overall. Behind India in headcount, but with structurally different strengths — Western-facing accent, communication clarity, customer-experience design.
• English fluency at scale. English is the medium of instruction from primary school onward. The EF English Proficiency Index ranks the Philippines as one of the highest-proficiency non-native English markets in Asia, regularly above neighbors like Vietnam, Thailand, and Indonesia.
• An IT-BPM sector of ~1.7 million workers. Per IBPAP industry data, the sector generated upwards of USD 32 billion in revenue in recent years. The talent pool is deep and oriented toward serving foreign clients.
• Time zone overlap with both US and Australia. Manila is roughly 12–13 hours ahead of US East, 4 hours ahead of London, 4–6 hours behind Sydney. A PH-based team covers either the US night shift or the AU day shift naturally.
• Cost arbitrage that’s narrowing but still real. A senior developer earning USD 80–120K in the US or USD 100–140K in Singapore costs roughly USD 24–48K in the Philippines for a comparable skill level. Customer-service and operations roles are even further apart.
• Cultural compatibility. Decades of US and Spanish colonial history, a Catholic-majority population, Western legal traditions, and a strong service-industry culture combine to make Filipino professionals comfortable working with Western clients — more so than many other Asian markets.

If you’ve decided the Philippines is the right talent market, the next question is how to engage that talent legally and operationally. There are four real options.

The four options at a glance

Option	What it is	Best for	Setup time	Per-employee cost (typical)
1. Employer of Record (EOR)	A third party legally employs the worker in PH on your behalf	1–10 hires, urgency, low risk tolerance	1–4 weeks	$500–700/mo on top of salary
2. Own PH entity	You incorporate a Philippine subsidiary or branch	25+ hires, long horizon, equity participation	3–6 months + ongoing	Internal HR + statutory + setup amortization
3. Direct hire managed via PH workforce platform	You contract or employ workers directly through a properly structured PH arrangement, using software (like Steer Workforce) to manage compliance, payroll, and reporting	10–50 hires, ops capability in-house, cost-conscious	1–8 weeks	Software fee + your direct salary spend
4. Curated marketplace / managed talent network	A platform sources, contracts, manages, and pays talent on your behalf as a project workforce	Project-based work, variable headcount, test-the-market phase	Days	15–30% markup on talent rate

There’s no universally right answer. The right answer depends on your headcount target, your timeline, your operational capacity, and your risk appetite.

Option 1: Employer of Record (EOR)

What it is

An EOR is a Philippine-registered company that legally employs the worker on your behalf. The worker has a Philippine employment contract with the EOR. You direct the work; the EOR handles payroll, taxes, statutory contributions, BIR forms, DOLE compliance, and termination logistics. You pay the EOR; the EOR pays the worker.

Examples in or serving the PH market: Remote, Deel, Velocity Global, Multiplier, Globalization Partners, Mantle, NEEDED, plus several smaller PH-based EORs.

Pros

• Fastest path to hire. Onboard a worker within 1–4 weeks. No entity setup required.
• Compliance offloaded. The EOR carries the regulatory burden — PH labor law, BIR registration, SSS/PhilHealth/Pag-IBIG, BIR Form 2316 at year-end, DOLE filings.
• Lower upfront risk. If you’re not sure the hire will work out, you avoid setup costs. EOR contracts are typically month-to-month or short-term commitments.
• Single vendor for global hires. The larger EORs operate in 50+ countries. If you’re hiring across multiple markets, one EOR provides one bill, one workflow.

Cons

• Cost stacks fast. EOR margins typically run USD 500–700 per employee per month on top of salary, statutory, and benefits. For 10 hires at PH market rates, that’s USD 60–84K/year of pure EOR overhead — often more than the cost of setting up your own entity.
• Limited customization. EOR contracts have standardized templates. Custom benefits, equity awards, specific termination clauses — most EORs charge extra or refuse.
• Information asymmetry. The EOR knows the local market; you don’t. Hard to verify whether their salary benchmarks are calibrated to your benefit or theirs.
• Termination friction. When you want to let someone go, the EOR’s risk management dictates the process. Some EORs are excellent here; some delay or push back to protect their own labor-law exposure.
• Equity is awkward. Granting RSUs or options to a worker employed by an EOR (not by you) creates structural complications. Most EORs route equity via parent-company grants with tax pass-through, which works but isn’t seamless.
• Brand distance. The worker’s payslip says the EOR’s name, not yours. Some workers care; most don’t, but it matters for retention in tight markets.

When EOR makes sense

• 1–10 PH hires and you don’t expect rapid scaling
• Test-the-market phase: you’ll evaluate at 6–12 months whether PH is the right hire location
• Single hire in PH while your main operation is elsewhere
• Tight legal risk appetite — your board doesn’t want any direct PH regulatory exposure
• Time-pressured hires that can’t wait for entity setup

When EOR stops making sense

Past 15–20 hires, EOR economics break. Per-employee fees scale linearly with headcount; running your own entity has a roughly fixed cost. The breakeven is typically 15–25 hires depending on EOR pricing.

Option 2: Own PH entity

What it is

You register a Philippine subsidiary (usually a domestic corporation under SEC), or a branch office of your foreign parent, and directly employ workers under that entity. Common structures:

• Domestic corporation (SEC-registered) — most common for active operations
• Branch office (SEC-registered as foreign corporation doing business in PH) — used when home country tax treatment favors branch over subsidiary
• Representative office — limited to liaison/promotional activity, cannot generate revenue or directly conduct business; not suitable for hiring billable workers
• PEZA-registered IT-BPM company — special economic zone status with tax holidays and incentives if you qualify

Pros

• Per-employee economics improve fast. Once you’re past the breakeven (~15–25 hires), the per-employee cost falls dramatically vs EOR.
• Full control. Your own HR policies, benefits structure, equity grants, contracts, terminations. No EOR intermediary.
• Strategic permanence. Signals long-term commitment to the PH market — attracts better talent, easier to retain.
• Equity is clean. Direct employment makes RSU/option grants straightforward.
• PEZA option. If you qualify (export-oriented IT-BPM activities), PEZA registration provides income tax holidays for 4–7 years and ongoing 5% gross income tax in lieu of all national and local taxes. The savings often exceed setup costs in the first 2 years.
• Brand presence. You’re a Philippine employer, not a foreign client. Helps recruitment, retention, and local supplier relationships.

Cons

• Slow setup. 3–6 months from “we’ve decided” to “we’ve signed our first PH employee.” SEC registration, BIR registration, mayor’s permit, SSS/PhilHealth/Pag-IBIG employer registration, bank account opening — each is a sequential dependency.
• Capital requirement. Minimum paid-up capital varies — typically PHP 5M for a fully-foreign-owned domestic corporation in service activities, less for some structures, more if PEZA-registered. Branch office requires a USD 200K initial inward remittance.
• Ongoing compliance load. Monthly BIR returns (1601-C, 1601-EQ, 1601-F, etc.), quarterly SSS/PhilHealth/Pag-IBIG, annual ITR, GIS, audited financial statements. You need someone running this — internal or external.
• Termination and severance liability. PH labor law is employee-protective. Wrongful termination claims, separation pay computations, DOLE inspections — all become your operational concern.
• Limited liability ≠ zero liability. Even a subsidiary can expose the parent in specific scenarios (piercing the corporate veil for serious violations, transfer-pricing audits, etc.).
• Local director / nominee requirements in some structures. Easier than it used to be (post-Revised Corporation Code reforms), but worth budgeting for.

When own entity makes sense

• 25+ PH hires projected within 12–18 months
• 3+ year horizon in the PH market
• Equity participation for PH workers is part of your offer
• PEZA-qualifying export-oriented IT-BPM operation
• Significant operations — multiple departments, leadership in PH, real P&L

When own entity is overkill

Below ~15 hires and uncertain horizon, the setup cost and ongoing compliance overhead exceeds what EOR fees would total. Don’t optimize for the long term if you might pull out at month 18.

Option 3: Direct hire, managed via a PH workforce platform

What it is

The “in-between” option that’s become viable in the last few years. You engage PH workers directly — typically as contractors initially, employees later if the relationship continues — and use a PH-resident workforce management platform (Steer Workforce, for instance) to handle payroll, statutory compliance, BIR forms, and reporting.

You’re not creating a PH entity. You’re not paying an EOR’s margin. You’re using software that knows PH compliance and a service partner (accountant, fractional HR, or shared back-office) for the local-presence pieces that require physical signatures and bank accounts.

This works best when:

• The workers are independent contractors, not employees (which removes a lot of the entity-required obligations)
• The contracts are direct between your foreign entity and each contractor
• Compliance is managed via software (which handles 2307 issuance, year-end forms, payment rails)
• You have a PH-based payroll partner for the parts that need a local entity (BIR 1601-F remittance, optional)

The honest version: this is a hybrid. It’s less compliance-bulletproof than EOR (you’re the contracting party, so misclassification risk sits with you). It’s far less overhead than your own entity (no SEC registration, no local director, no audited financials). It’s substantially cheaper than EOR (the per-employee software fee is USD 5–15/month rather than USD 500–700/month).

Pros

• Cost-efficient at any scale. Software fees don’t scale linearly with headcount the way EOR does.
• Full operational visibility. You see what each worker is paid, what’s withheld, what’s filed. EOR opacity goes away.
• Faster than entity setup. Days to onboard, not months.
• Flexible engagement types. Mix employees (via your foreign entity), local PH contractors, and foreign-to-PH arrangements in one workspace.
• Equity is direct. Your foreign entity grants equity to your foreign-entity contractors; standard mechanics.

Cons

• You carry misclassification risk. If PH labor authorities or BIR decide a long-term, full-time, exclusively-engaged “contractor” is actually an employee, the back-employment liabilities land on you. This is the major operational discipline you have to maintain.
• Currency and payment mechanics are on you. Wise, Payoneer, bank wire — all your decisions. The software helps with payroll computation; it doesn’t move the money for you.
• Limited dispute backstop. If a worker raises a labor complaint with DOLE or BIR, you don’t have an EOR’s local presence absorbing the first response.
• Requires more in-house savvy. You need someone (in-house or fractional) who understands PH contractor mechanics. Not a software-only problem.

When direct-hire-via-platform makes sense

• 10–50 hires, where EOR fees are prohibitive but entity setup is overkill
• Contractor-friendly engagements — knowledge workers, project-based scopes, deliverable-defined arrangements rather than ongoing-employee-like roles
• Existing PH local relationships (accountant, fractional HR) you can lean on
• Cost-conscious scaling — startups, growth-stage companies where every dollar of overhead matters

Why Steer Workforce fits

This is the engagement model Steer Workforce was specifically built for. The product treats foreign contractors as a workforce class, multi-currency payroll runs are first-class, BIR 2307 generation is automatic, and the platform produces the documentation BIR expects without you having a PH entity. We’re not an EOR — by design — but for the direct-hire model, we’re the operating system that makes it tractable. Join the waitlist if you’re scaling PH headcount and want this as the backbone.

Option 4: Curated marketplace / managed talent network

What it is

The newest option, and the one that’s evolving fastest. Instead of you hiring people (via any of the above), you engage a curated talent marketplace that sources, contracts, manages, and pays the workers as a project workforce. Upwork is the consumer-grade version; the enterprise versions are more curated, vetted, and integrated.

This sits at the intersection of staff augmentation and pure freelance marketplaces. The talent is real, vetted, and engaged for substantive project work — but the marketplace handles the contracting, payment, and replacement-if-needed mechanics.

For Steer Workforce specifically, this is part of the planned Steer Marketplace — a curated network of PH professional services talent that foreign companies can engage as a workforce, with the platform handling all the operational mechanics. The marketplace launches in Phase 2 of the product roadmap. Until then, this option is best served by Upwork or vetted talent agencies.

Pros

• Zero setup. Engage talent in days, not weeks or months.
• Variable headcount. Scale up for a project, scale down when done. No termination logistics.
• Risk pooled by the platform. Worker disputes, compliance issues, replacement-on-non-performance — all handled by the marketplace.
• Try-before-commit. Project work establishes whether a worker is right before any longer-term engagement.
• No misclassification exposure for you. Worker is contracted to the marketplace, not to you.

Cons

• Per-hour cost premium. Marketplaces typically markup talent rates 15–30%. For a senior PH developer billing USD 30/hour on the platform, the underlying rate to the worker might be USD 22/hour.
• Project-bounded. Hard to build long-term equity relationships, deep institutional knowledge, or cultural cohesion when talent rotates.
• Variable quality. Open marketplaces (Upwork at the consumer end) have wide quality dispersion. Curated ones (the Steer Marketplace approach, enterprise networks) are tighter but smaller.
• Limited control over working hours, methods, exclusivity. You’re buying outcomes, not commanding a workforce.
• Cultural integration is shallower. Marketplace workers aren’t on your Slack, don’t attend your team rituals, don’t carry your culture.

When marketplace makes sense

• Project-based work — discrete scopes, defined deliverables, time-bounded
• Variable demand — busy season + quiet season alternation
• Test-the-market at the most cautious end: validate whether PH talent fits your needs without any commitment
• Augmentation rather than core team — you have a core team (in-house or via options 1–3), and the marketplace fills gaps

When marketplace is wrong

For your core team, the people who carry your culture and build your institutional knowledge, marketplace engagement is too transactional. The four-fold test problem (Option 3’s risk) doesn’t apply because the worker isn’t yours — but neither do the loyalty, retention, and growth dynamics that make a long-term team valuable.

The decision framework

Five questions to settle which option is right:

1. How many PH hires within 18 months?

   • 1–10: EOR or marketplace
   • 10–25: EOR, direct hire via platform, or marketplace
   • 25–50: Direct hire via platform OR own entity
   • 50+: Own entity

2. What’s your timeline pressure?

   • Days: Marketplace
   • Weeks: EOR or direct hire via platform
   • Months OK: Any option, including own entity

3. Will workers be long-term employees or project-based?

   • Long-term: EOR, direct hire, or own entity
   • Project-based: Marketplace

4. How much operational PH knowledge can you build internally?

   • None / unwilling: EOR
   • Some / via partners: Direct hire via platform
   • A lot / full team: Own entity

5. What’s the cost ceiling per worker?

   • High (>$500/month overhead OK): EOR
   • Medium ($100–500/month): Marketplace or direct hire
   • Low (under $100/month overhead): Direct hire via platform (provided you accept misclassification discipline) OR own entity at scale

For most growth-stage foreign companies scaling PH headcount from 5 to 30 over 12 months, the answer trajectory is:

• First 1–3 hires: EOR. Validate the talent pool, learn the working dynamics.
• Hires 4–15: Direct hire via platform. Cost discipline matters, and you’ve learned enough to manage the operational pieces.
• Hires 15+: Decide between continuing direct-hire-via-platform vs. setting up your own entity, based on long-term horizon.
• Project augmentation throughout: Marketplace, in parallel with whichever primary path.

What this means for foreign companies considering Steer

Steer Workforce is not an EOR. We’ve deliberately scoped against that — owning the workforce platform layer is a different strategy from being the legal employer.

Where we fit:

• Option 3 (direct hire managed via platform). This is our primary use case. We provide the operating system; you manage the workers directly. PH compliance, payroll, BIR forms, statutory contributions, foreign-contractor 2307 issuance — all automated.
• Option 4 (marketplace), Phase 2 onwards. Our planned Steer Marketplace will list vetted PH talent providers, including curated EOR partners for companies who want Option 1 but routed through Steer. We won’t be the EOR; we’ll route you to one.
• Option 1 (EOR). Use a real EOR. We integrate with several and recommend specific partners depending on your situation. Don’t expect us to compete with Remote, Deel, or Velocity Global on legal-employer services — we don’t.
• Option 2 (own entity). If you’ve built a PH entity, we’re the workforce platform for it. Same product, different customer category.

Join the waitlist if your PH hiring is past 5 people and you want to scale without EOR overhead — that’s the segment we’re built for.

FAQ

What does an EOR actually charge? Typical pricing is USD 500–700 per employee per month on top of salary, statutory contributions, and benefits. Setup fees are usually waived; some EORs charge USD 99–300 per onboarding. Annual contracts often have volume discounts.

How long does it take to set up a PH subsidiary? 3–6 months realistically. The fastest path: 8 weeks if you have local counsel, an accountant onboarded, and capital ready to deposit. Most companies take longer because dependencies stack.

Can I just hire PH workers as contractors via my US/SG/UK entity? Yes, technically — and that’s Option 3. The compliance discipline that has to hold: the worker has to genuinely be a contractor (controls their own hours, has other clients, uses their own equipment), not a misclassified employee. If they functionally work like an employee, PH and your home jurisdiction can both reclassify retroactively.

What’s the cheapest way to make a single PH hire? EOR. Setting up your own entity for one hire is wildly uneconomical. Direct hire via platform is cheaper but requires operational savvy that’s hard to justify for one person.

Does PEZA still grant tax holidays? Yes, under the current CREATE Act framework, with restructured incentives. The mechanics changed in 2021 — talk to a PH tax advisor before assuming pre-CREATE incentives still apply.

Can I use multiple options simultaneously? Yes, and many companies do. Core team via EOR or own entity; project augmentation via marketplace. Mixing is fine if you’re clear about which worker is engaged under which model.

What if I want my PH team on US payroll? You can’t run a PH-resident worker through US payroll without either an EOR or a PH entity. The worker is a PH tax resident; US payroll mechanics don’t apply. Most “US payroll” arrangements for foreign workers actually mean USD-denominated contractor payments, which is fine.

Are PH workers covered by US labor law? Generally no. PH labor law governs PH-resident workers. There are narrow exceptions for specific industries and extraterritorial provisions, but the default rule is PH law for PH workers regardless of where their employer is based.

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This guide is reference material; cross-border hiring has jurisdiction-specific nuances. Consult counsel before structuring any long-term engagement, especially around employee misclassification, equity grants, and tax-residency transitions.