Why Outsource – 7 Answers to the ‘Big Question’
Last updated August 15, 2019
Today, Derek and Arnold will talk about why companies should outsource. They shared their insights and first-hand knowledge regarding outsourcing and focused on seven reasons why companies should consider outsourcing to the Philippines.
- Outsourcing is sometimes called offshoring but it is well known by the term BPO.
- First, According to Cal Newport, “any work that can be done by someone that can be trained to do that job in a week or two should not be done by you”. This is mainly about creating a more efficient and productive way of doing things.
- Second, if you choose to outsource, staffing and labour costs are a lot cheaper. You can cut salaries up to 50%
- Third, 24/7 coverage for a cheaper cost resulting to quicker response rate when it comes to answering customer queries.
- Fourth, it provides the owner additional skillsets that might be quite difficult to develop by themselves.
- Fifth, The Philippines also has access to specialist’s skillsets. Good examples are VA’s and contact centers. Freelancers are also increasing in number these days, like in Upwork and Freelancer.
- Sixth is that if you have a company servicing the UK then you are stuck in the UK. Having said that, servicing the US at the same time would be a crazy leap. Whereas, if you develop a significant operational hub in the Philippines then it’s not big a step if you create another executing hub in the US. It is almost a stepping stone towards internationalization of your business.
- Seventh, Outsourcing forces you, as a business owner, to go through a maturation of your company processes.
- Outsourcing, not only cuts a company’s staffing cost by more than 50% it also gives companies the opportunity to reallocate their savings to more important functions of their company.
- Outsourcing allows companies to gain the upper hand from their competitors. Since they can enjoy 24/7 coverage for a cheaper cost resulting in quicker response rate when it comes to answering customer queries.
- Outsourcing allows company owners to learn new skills that they normally would have the difficulty developing on their own.
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Derek: Hi, and welcome to another episode, this is episode eleven of the Outsource Accelerator. My name is Derek Gallimore and I am joined by my co-host, Arnold San Miguel.
Today we talk very broadly, we talk about; why outsource? That’s one of the kind of fundamental questions of why we are here, I suppose. So, we cover some points on that, there is some good information in that.
If you want any of the show notes then go to outsourceaccelerator.com/podcast/episode11. Enjoy.
Derek: Good morning I am Derek and with me is Arnold. Hi Arnold, how are you?
Arnold: Hi Derek, yeah, doing good.
Derek: Good. Today, we are gonna talk about the broadest of broad topics; it’s why outsource?
So, outsourcing is BPO, outsourcing is off-shoring, it’s got a lot of names, so, we are just gonna talk broadly about… We have got seven points here that we wanna cover and we are gonna run through them now.
So, the first point I wanna cover, there is two references here, the book “Deep Work by Cal Newport”, which is popular at the moment. He says, “any work that can be done by someone that can be trained to do that job in a week or two should not be done by you.” And so, that’s about creating a more efficient productive you and really you don’t wanna be doing work that other people can be trained to quickly do.
Equally, there is another quote going around that, “if you don’t have a secretary then you are one.” The points there are, don’t get stuck doing stuff that you can outsource and particularly if you can… the VAs is very commonly outsourced into the Philippines or into outsourcing world and that’s a really great place to start if you haven’t considered it before.
So, number two is the obvious fact that there is cheaper staffing, cheaper labour costs, and that’s predominately why it is done.
Now, bear with me here but there is two options with cheaper staffing, the obvious one is you can cut salaries. Let’s pick a number out of the air, say, you can cut salaries by 30% to 50%, that is one thing, that’s awesome and life is good. There is the second option and second approach, so, imagine if you kept salaries the same but you were able to double the workforce or increase it by 30%. Imagine then from a strategic business point of view what you could do with an extra 30%, 50% to a 100% more staff, in regards to your competition and your market; developing your marketplace, developing your products, so, I find that really exciting. It’s not just about cutting salaries and everything’s the same, if you could actually leverage cheap staff; where could you be? What could you do? That’s pretty exciting to me.
What have we got for number three, Arnold?
Arnold: Yes, so number three is very exciting which is 24/7 cover for a cheaper rate, of course, everyone wants a quick response rate when it comes to answering customer queries, but we can’t expect ourselves to sit idly by in our computer or by the phone waiting for the next inquiry to happen. So, that’s one of the key advantages that outsourcing can provide, something that you could do ahead of your competitors.
Derek: Great, I agree. And it’s… In the West now there is not many people there that are keen to sit in an office overnight and do nightshifts, whereas, because of the time zone difference it’s very easily accessed here and people are used to working nightshifts.
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So, if you are in a business where 24/7 customer service, 24/7 customer sales, could be an advantage then it’s a massive opportunity here and it’s something that you could quickly move into that could help you out to compete with your competitors. Thanks Arnold, and what have you got next?
Arnold: Yeah, I think another advantage that outsourcing does in general is provide you, the owner, additional skill sets that you might have trouble developing on your own. Of course, people often say that we are a jack of all trades when it comes to the business but you can’t expect an owner to be a human resource manager and then jump on to being a great I.T. or web designer all of a sudden. So, I think that’s one of the good things about outsourcing; you get very specialized people that fits perfectly for the role that you want them to do.
Derek: Yeah, absolutely. I am a big fan of Philippines outsourcing, they have basically been doing this for 25 years now and business process outsourcing strictly means that they will outsource a process and they will take that process apart, they will break it down into its individual bits, they will rebuild them, look for efficiencies, rework them and they have become very specialized in business process outsourcing now.
If you have never managed much of a call centre before, then this is almost the capital of the world to do that, and inherent in that is a lot of knowledge and a lot of skills, so, I agree, some awesome opportunities there.
So, number five, we have this access to specialists skill sets. So, everyone knows outsourcing for the VA’s and call centres, but equally, if you are looking for a website to be built, try and resist looking around your home town or your home country, in Manila, in the Philippines, there is a huge number of normal contract businesses like there are in your town, in your country. That they are gonna be looking for I.T. clients, web based clients, design clients, any range of things. And you have got to shop around there, good vendors or bad vendors like anything else but those services where the majority of things are done online through email communications, through telephone. Look further abroad and try and save when you can because costs are so much lower right here in the Philippines.
Arnold: Yeah. Also Derrek, just to add on to this one. Again, you made very good points. Just to add on to this, I would just like to mention that freelancers are very abundant nowadays, there are certain websites like upwork.com is one wherein it like guides you step by step in order to create your first job posting to find that perfect candidate for you.
So again, a very broad range of skill set.
Derek: Yeah, absolutely. That’s a good point.
And Upwork, and freelancer and all these sort of things… They are a great start and a great introduction to… Not just working with overseas outsource people but about setting projects, about setting expectations, about managing people and doing that over an interface, email, phone and things like that. And also, possibly with the little bit of culture and language differences. So, those are really good platforms and a great place to start, and obviously have opportunity for accessing cheap skills.
And number six. This is a sort of slightly more easy concept, but what I really enjoy about if you have a company serving, whatever, U.K. clients, the offices in the U.K., then you are pretty much stuck to the U.K.. And if you try to envisage servicing the U.S. then it’s a crazy big leap.
Whereas, if you develop a significant operational hub in the Philippines, for example, you outsource more and more roles to your office in the Philippines and you then have a hub in the U.K., then it’s not that big a step to create another executing hub in the U.S. So, I like to see it as almost a stepping stone towards internationalization of your business.
Now, arguably, if you have a lawn mowing business, then it’s not gonna be that suited but arguably maybe even lawn mowing it can because you can then set up a franchise in the U.S. and then you can reach out to the U.S., but, significantly, if you are selling Web services, I.T. services, then it’s a great stepping stone to internationalizing your business, which I find really exciting.
Great, and then, we’ll move along. So, number seven, and the last one is that outsourcing forces you as a business owner to go through a maturation of your company processes.
Now, I don’t know if you have one staff member or a hundred staff members. If you outsource, then it forces you to think about your processes, to split them out, to create standard operating procedures, KPIs and really analyze; what is that process? Is that process necessary? Can we change that process?
And that is a necessary step of maturation of a company. I think in the West we can get a little bit kind of lackadaisical and we can just sort of think everyone can run by the seat of their pants. It does happen but if you move into a hundred staffing, a thousand staffing, then it’s gonna happen less and less. So, it’s a really good stage which forces you to think about the processes in your company. Do you have any thoughts about that, Arnold, from your experience?
Arnold: Yeah, I think we already covered seven points I would just like to add one more which I think would you know pique the interest of some of our listeners out there.
So, the number eight would be now you have a valid reason to travel abroad. Once you set up outsourcing, once you try it, you can tell your wife, your partner, “I need to meet them eventually, once it grows.”
Derek: This is true, this is a great point. And it really opens up an entire new world, and come on over. And then Philippines is also fantastic for a holiday, so bring the wife over as well and enjoy the Philippines.
Now that’s great, thank you Arnold. And that’s the eight points and we will talk to you tomorrow.
Alright, hope you enjoyed that episode, if you want any of the show notes then go to our website, it is www.outsourceaccelerator.com/podcast/episode11. See you next time.