Cloudstaff CEO, Lloyd Ernst on Offshoring Essentials & Embracing AI Tech

In this week’s episode, we get to the center of transformation in outsourcing with Cloudstaff, a company that has grown into one of the leading providers of staff augmentation for SMEs.

Its founder and CEO, Lloyd Ernst, has been in the industry long enough to see the cycles of hype, disruption, and reinvention. 

Lloyd shares Cloudstaff’s story, his perspective on technology and AI, and the challenges and opportunities facing the sector today. 

Cloudstaff

Cloudstaff has been branded as a “next generation of BPO.” As Lloyd explained, “We’re not a call center. We don’t fit into that high-end of town category. Our customers are small to medium enterprises all around the globe.”

The company started in 2005 before expanding to the Philippines, with just seven QA testers. “Everything just snowballed from there,” Lloyd recalled. “We still have about four or five of those people working with us 15 years later.” 

Today, Cloudstaff employs close to 7,000 people across the Philippines, Colombia, Kenya, and India, supporting over 360 different roles from accountants to software developers to designers, and even landscape gardeners.

As Lloyd quips: “If it can be done remotely, it can be done with Cloudstaff.” 

The company’s philosophy rests on pairing people with strong systems. “Our secret sauce is technology and people,” Lloyd stressed. “It’s pretty easy to come along and set up a BPO. It’s really difficult to grow and scale these things… you need systems.”

AI integration

Cloudstaff’s growth has been powered by its deliberate embrace of technology. Lloyd emphasized that while many outsourcing firms rely on lean, bare-bones setups, scaling to thousands of employees requires robust systems. 

“If you want to scale these businesses, you need technology,” he said. “Alternatively, [you have] to make your offering so narrow that nothing goes outside that very vertical sort of offering.”

Because Cloudstaff works with SMEs, flexibility is non-negotiable. Unlike enterprise clients who can adapt to rigid vendor structures, SMEs need customization. 

“If we come along and say, no, you can’t do that, then all of a sudden it’s like, no—well, we need to be able to use this tool, we need to be able to do it this way,” Lloyd explained. That flexibility is possible only with systems designed for scale.

AI is a natural extension of this philosophy. Three years ago, Cloudstaff hired a Chief AI Officer to lead adoption across the company. 

The focus has been on embedding AI in practical ways, starting with talent acquisition. 

“One of the biggest assets we have is the 1.1 million candidates in our database,” Lloyd said. “We’re creating embeddings so that the system can start to do the matching. 

We can literally take a customer and say, who are your five best staff? That creates a lookalike file and shows you the next three people you want to hire.”

This kind of augmentation, Lloyd argued, is the real promise of AI. “AI is not going to replace the roles of your staff,” he said. “What AI has to do is deliver a 20 to 30% productivity improvement. If you’re not getting that return, you’re going to price yourself out of the market.”

Cloudstaff has gone further by building a skunkworks team dedicated to experimenting with AI use cases for clients. The goal isn’t to hype technology but to find meaningful applications. 

“We provide private cloud tools for the staff to use. We’ve got agents that we’re deploying for the staff to help them do their job,” Lloyd said. 

For SMEs juggling multiple roles and limited resources, even small gains in efficiency make a tangible difference.

Outsourcing with SMEs

Despite outsourcing’s potential, Lloyd acknowledged that many SMEs approach it with unrealistic expectations. He’s written an article that delves into what leaders overlook when selecting an outsourcing partner. 

According to Lloyd, the three major factors are price, scalability, and talent. 

“Price works for some customers and that’s fair enough,” he said. “But I think the business owners need to look at their structure and go, ‘what’s my goal?’

Then all of a sudden you need to be thinking about due diligence and compliance.” 

Scalability is another common stumbling block. Many BPOs grow quickly to a few hundred seats but then falter. 

“The BPO will start off and they’ll have a couple of connections. But then everything starts to unravel when you get to that three or four hundred-seat mark.” 

Talent is the final piece of the puzzle. SMEs aren’t looking for raw entry-level recruits; they want experienced professionals who can add value quickly. 

Lloyd shared how Cloudstaff invests in both retention and attraction, including throwing the largest Christmas party.

“It’s about saying thank you to staff and their families, but it’s also a recruitment drive.”

But pay remains central. “If you don’t have a policy on reviewing salaries, staff get left behind,” Lloyd said. “That’s the reason people lose good staff.” 

His philosophy on the matter is both sharp and memorable: “Pay peanuts, you get monkeys. Pay bucks, you get funky monkeys.”

Transforming staff with technology

Despite the noise around AI and automation, Lloyd sees outsourcing’s future as bright—especially for SMEs. 

“For them, AI is about making existing staff more productive, not replacing them.”

He believes the most meaningful gains will come from re-examining processes. 

“There’s always an opportunity for businesses to go back and reinvent themselves. A lot of this stuff is actually automation, not AI. Even if you just use this as an exercise to do some automation you’ve been meaning to do, it’s a dividend for your business.”

Looking ahead, Lloyd expects a mix of human and machine. 

“Why do you want to do everything yourself? Your job is to spend time with customers. Having your staff use AI tools makes them 10x more powerful. That’s where the real opportunity lies.”

You can reach out to Cloudstaff through their website or to Lloyd through his LinkedIn profile.