Here’s the complete transcript of our outsourcing webinar 2017 led by Tallant Asia CEO Anthony Bowers. We talk about the history of outsourcing in the Philippines, different models and terminology for outsourcing, pros and cons and outsourcing, and how to build a successful team.
I. History Of Outsourcing
Large companies like Telstra, JPMorgan, and Accenture had been outsourcing to places like the Philippines and India since the 90s. One of the changes that has happened in years is that outsourcing is no longer the domain of larger companies.
Small and medium-sized enterprises and now entering the market. There has been a large movement with working with the cloud, so servers are no longer under the basement. It means that if you’re doing your software with Xero, you could also be doing it in Philippines or anywhere in the world as long as there is a stable infrastructure. The barriers and constraints of locations have been removed, you just need to reach out and find the solutions to your staffing.
In the 1950s and 60s, businesses tried to do all functions in-house and this led to unwieldy and bloated structures. In the 80, that’s when it really took off.
In 2015, the BPO industry employs 1.2 million people in the Philippines. It generated around US $25 billion in revenue for the country and numbers are set to double by 2022. A really important date for the BPO industry is when revenue from the BPO sector overtook foreign remittances for the first time.
II. Models of Outsourcing and Terminology
In the past, most work was call center-oriented. As companies have seen how successful teams can be here in the Philippines, the nature of the roles has changed. That more complex analytical tasks that are being done by remote teams.
Roles You Can Outsource
Marketing – social media, content writing, graphic design and web design
Client service such – customer support, tech support a really big move in recent years
Accounting and HR – bookkeeping business and personal tax returns
IT support – a software development team and programmers here
Secretarial function – corporate secretarial, managerial, admin personal and executive assistants
Understand the jargon
Outsourcing refers to any event of getting work performed by a third party. When you were a publisher centuries ago, you would get your bookbinding done somewhere else you wouldn’t do it yourself. This is a form of outsourcing.
Offshoring is a type of outsourcing specifically refers to the work by the vendor being done in another country.
The BPO (Business Process Outsourcing) industry means business process outsourcing that is the general catch-all term when referring to office work that is being done by a vendor.
Knowledge Process Outsourcing (KPO) and that is a new word that is emerged to capture the increasing highly skilled work that is being done by outsourcing / offshoring company. It refers to work that’s being done by engineers such as business analytics.
Why Cebu City, Philippines
Cebu City, Philippines may not be the first thing that comes to mind when you’re looking at building a team in the Philippines but it certainly should be because of its rise as a preeminent destination for outsourcing.
Geographically, Cebu City here is down in Central Visayas Philippines. This is important because we don’t get hit by a lot of typhoons because we are protected by the surrounding islands.
Tholons recently ranked Cebu number seven in the world as an outsourcing destination . We’re located centrally in the IT Park. If you’re coming up here, we recommend you take the time to see some of the great places near Cebu. Bohol is the 5th biggest island in the country and has some of the best diving around the world. It would be a fantastic place to do a team-building exercise for you and your local staff.
Cebu City is the center of education trade commerce, so it attracts individuals from all around the country. There is quality infrastructure here proven by the presence of very large multinational corporations such as Accenture, IBM lexmark lexmark, Telstra and JPMorgan.
Local talent here excellent English speaking skills. They also have a very Westernized culture, predominantly Spanish and American and Filipino culture mixed in.
III. Pros and cons of outsourcing
Cons of outsourcing
#1 The hidden costs
The costs of management and coordination – An example of this would be not documenting company procedures. People often shocked when they realize how much of their day-to-day work procedures are not documented. When you are considering offshoring, you need to have run books and manuals written, so that you can pass that on the staff member in the Philippines.
We can help you with that. We get our staff to build manuals and read books and you can use record videos using Zoom. It helps when so you don’t have to retrain all the time. The first team member – your lead team member – can act as a trainer to other staff members, allowing for realistic scalable growth that doesn’t trip you over.
Another one is additional work and make sure that everything is outlined in the contract. Make sure that there are no hidden costs and find a vendor with straightforward pricing. We break down everything for our clients – salary, benefits and fees are all out in the open.
#2 Security and privacy issues
We make sure to follow strict privacy procedures such as hardware lockdown, staff training on basic security measures such as using password and sensitive data handling. We also strictly enforce Non-Disclosure Agreements (NDAs). If you have your own that’s fine too. Our staff work from offices and not from home, so the managers can help them.
#3: Lack of collaboration and communication inside the company
You need to manage the apprehension of your local team. This is not about taking jobs from Australians or Americans or the Dutch. We’re about liberating your time and making sure that your valuable staff in Australia are fully utilized on high-value tasks.
#4: Language and cultural barriers
In Cebu City, Philippines, the language is not a huge problem but the cultural barriers can. You may be confused as you have to deal with a culturally different background with a different focus.
One big thing is that family is everything. The workplace is seen as a second family and if the staff member buys in mentally and emotionally, it will result in a very loyal and productive staff member. The Asian value of “face” which i know a lot about from being in China and Hong Kong is probably more so more important in the Philippines.
Avoid any public reprimand it. It doesn’t mean you can’t reprimand your staff member if something is not going right. We bring in our HR people to sit down and talk with the staff to see what’s going on and see how we can improve things, but it should be done privately and should not be a public event.
There are 23 million Filipinos with some trace of Chinese ancestry, so if you think it’s a very Chinese culture you’d be right. The Philippine culture also places an enormous amount of weight on age and seniority so it can be very difficult for your staff member to tell you that something is wrong if they don’t understand something because it’s a hierarchical system. We work hard here to create an open culture and open environment where the staff doesn’t fear speaking out, which helps our clients make sure that they know everything that’s going on.
Here’s an excellent portrayal illustration by an artist called Yang Liu. In the West, when dealing with problems we are direct and straightforward. On the right, we can see the Filipino way, which is skirting around the problem.
Pros of outsourcing
#1 – Focus on your core business
if your company is rapidly growing, your back office work is also increasing. Don’t let this expansion consume all of your HR and financial resources, get the admin and HR done in the Philippines so that you focus on your core services. This will help you to expand to compete without sacrificing your quality of service number
#2 Tap in and leverage global knowledge
The barriers to location have been removed you can source your staff anywhere in the world. You can open yourself up to a global talent pool and allows you gain access to talent around the world.
#3 Expanding and gaining access to new market areas
Having an offshore team allows things such as 24/7 customer support. You can get call centers setup here very quickly and it allows you to service your clients like never before.
#4 Lower operational labor costs
IV. How to Build A Successful Outsource Team
Some things to look for in having a BDO partner in the Philippines:
– Do they have management experience in building teams in the Philippines?
– Are there western managers in the company? There are great Filipinos that I’ve met here that would fit in any fortune 500 company around the world and but we also believe that it’s really important that Western managers here so that they can act as a bridge between you and the local staff.
-Is the infrastructure stable and is there large talent pool in their location? We sit down with you to find out what are your business goals. What do you want to achieve where you want to be in five years and what roles are going to help you get there?
Once we’ve worked out those roles we start sourcing candidates. We have a large pool already in our databases and we also actively advertise for roles if needed. Once we’ve got candidates for you then sit down and talk to them in a virtual meeting. We use the software Zoom where you can talk to the candidate, interview them, check that they are right for you. Then, you pick the candidate and we hire and onboard them. We manage all the day-to-day HR and all the other administrative nightmares that can happen.
Question #1: Would we need to go to Cebu to set up staff?
Answer: No you don’t, but we recommend it. It will solidify the relationship between your team and the team in abroad. I’ve had people that have set up very large teams here that haven’t seen their team for quite. You can do team building exercises and the staff will love having a visit from their client
Question #2: We’re a small business and we have a couple of different job roles. Do we have mixed teams for the same company?
Answer: Yes, of course! We’re not a company that specializes in just one area. We think that the best teams the ones that have mixed roles. One example started off as a personal assistant (PA) to the CEO and then moved on that the second hire who was an accountant. The next two hires were customer service people. It was a mixed team and a very successful team
Question #3: How does the pricing structure work?
Answer: We have a very simple the pricing structure. We give you a breakdown so you have a total cost of the staff member their salary and our Tallant Asia fee. We don’t hide any of our costs.
Question #4: What’s the timeframe from choosing a candidate to them starting work?
Answer: It all depends on their availability. Generally speaking, it’s 30 days, although quite often people that are in the job market can start straight away. I’ve had people come in be interviewed and start within days depending on the role. If they are currently employed, we don’t want anyone to break their contract, so usually they give a 30-day notice.
Question #5: What about the fixed costs – Is rent included in the price structure?
Answer: Yes, it’s absolutely included. We have set up fee for the hardware, depending on what you want. We have a standard package but it’s up to you if you want to upgrade for an additional cost.