Nick Sinclair – Strategies that Can Transform your Business

Ep 111 Nick Sinclair

In this podcast episode, Derek is joined once again by Nick Sinclair of The Outsourced Accountant. He came to the Philippines and built a back office and then pivoted into BPO that offers accounting niche. In the discussion, Derek talked about Nick’s journey about outsourcing and the fantastic opportunities for business.

 

Summary

  • Nick’s background prior to The Outsourced Accountant was in financial planning. He was a financial planner and accountant for 10 years and ran a full financial services practice in Australia.
  • Nick shares that The Outsourced Accountant will turn 4 years old in December this year. So, as they stand today, they’ve got 612 staff working in their offices, and they’ve got 4 offices spread across Manila and Clark.
  • He also shares the benefits of having a strong global executive team but then also having a strong local legislative team which would drive the business strategy and day to day operation.
  • Nick discusses his business model and the products and services that they offer.
  • He also shares how he ensures the quality and caliber of the place of candidates since there are different taxation standards in different countries.
  • According to Nick, with the right training process and the client dedicating the time and effort required, it can be scalable and you can retrain really fast.
  • He gives an insight into service cost and the typical cost differential between what the firm would normally be paying in their hometown.

 

Key Points

  • The challenge is that they could be fundamentally a really strong accountant but if they don’t have strong communication skills and the ability to learn at a fast rate then they’re just not going to work in the BPO or the outsourcing environment.
  • It’s easy to get 10, 4, 5 staff up and running in the Philippines.  If one leaves, then you still have more trained staff compared to that 1 person you can hire in Australia. They’re going to use you for experience and then they’re gonna go off to somewhere else and get paid more.

 

Resources

Transcript

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Derek: Hi and welcome to another episode of Outsource Accelerator podcast, this is episode 111, my name is Derek Gallimore and today we are joined by Nick Sinclair again of The Outsourced Accountant, Nick we spoke in episode 106, we explore his journey with outsourcing.  He was originally a different kind of business owners own right and he pivoted into providing a niche outsource service offering, so it’s within the accounting niche and effectively wholesaling accountant to the accounting industry in the west, super interesting so I spend time with Nick and dig into his business not only the offering but kind of behind the business, I find it super interesting and I’m sure you will  too.  If you want any of the show notes or get in touch with Nick then go to outsourceaccelerator.com/111. Enjoy.

Derek: Hi and welcome back everybody today we are joined again by Nick Sinclair of The Outsourced Accountant.  Hi, Nick how are you?

Nick: Thanks, Derek thanks for having me back in the show.

Derek: Absolute pleasure, and so today as promised I want to deep dive into your company which is The Outsourced Accountant and you know without kind of want to introduce it myself it’s basically growing at break neck phase you built it as a result of an effective pivot through outsourcing in the Philippines and now it’s sort of leading the space in terms of innovative account and services so super excited to discuss this with you, Nick I suppose for those that haven’t listened to the previous episode can you just give a quick bio and background and introduction as to who you are.

Nick: No worries thanks Derek, So firstly, The Outsourced Accountant my background prior to this was as a financial planner and accountant for 10 years so I ran a full financial services practice in Australia on the Gold coast  in Australia for 10 years before looking at putting it up back-office over in the Philippines which pivoted and turned into The Outsourced Accountant which is what it is today.

Derek: Fantastic, so give us some of the quick steps to The Outsourced Accountant, when did you start it’s about 4 years old now?

Nick: Yes so we’re 4 years old in December this year so as we stand today we’ve got 612 staff working in our offices we got 4 offices spread across Manila and Clark which is roughly just under 5.000 sqm of wall space for those team members we’ve got a bit over a hundred and 10 people in recruiting and waiting to start at the moment as well so been growing at a rate of about 100% per annum so year on year growth has been strong and half of that growth coming from existing client are putting on additional people with us.

Derek: And these are just staggering numbers aren’t they I wanna dig in to this business not because you know this is an infomercial because I’m sure a lot of people are sniffing around and if I can sort of refer you to good people then that’s absolutely fantastic and we’ll dig into your business but also from a business perspective it’s super exciting the fact that your almost at a point of 750 people within 4 years of starting a brand new business it’s staggering in growth per year isn’t it?

Nick: Yeah I mean it’s been fun and interesting for me the growth is when I tell people about it seems really big and but it’s not from a process point of view and from a business point of view I don’t treat it like that our 5 year goal from here is to be 10,000 people so I look of where we are today at you know we’ll end up 750 either the end of the year for us to grown at 10,000 people but you know there’s a lot of work to be done but it’s easily achievable.

Derek: And just give us an insight into your internal structure you know I would imagine if you had 750 people you wouldn’t get a minute sleep in a day because there’s so many things to do but it’s quite the opposite in the Philippines because I would have imagined you have commenced administrative structure on top of that?

Nick: Yeah, definitely we’ve got a global executive team of 6 people so these executives that are running the different division and parts of the business and then in the Philippines we have a full leadership teams so we have a support team in the Philippines of about 90 staff and now range across HR recruiting which we call talent acquisition, a training division which includes tax training we do as part of our service, we have IT obviously part of all of that some of these managements all of our office have cafes in them and recreation areas and we have a facilities team, we’ve got sales administration, we’ve got drivers but there’s about 90 support staff supporting the business and we really need that sort of support level with the growth rate that we’re going through at the moment so I get plenty of sleep and that’s one of the benefits of having a really strong executive team a global executive team but then also having a really strong local legislative teams really drives the business strategy and day to day operation

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Derek: It’s Incredible isn’t it? And because of course that a ratio of about 10 to one administrative staff for roundabouts and are you finding that you’re able to keep up with growth, are they growing pane growth it’s sort of a fairly big operational task to double every year?

Nick: Yeah look it’s an interesting one because when compare our support staff compared against an industry which is in the outsourcing report, we are heavy or over in support staff but we really have done that strategic way to keep up with the growth because we are growing in about the rapid rate.  We do need a higher level of support staff compared fee earning to handle this growth and that has been a part of our strategy a lot of our competitors you could say in the marketplace are running support staff are nowhere near the level that we are they maybe running 20-25 people but that’s the reason strong part of why we’re doubling every year and they’re putting on you know 5 to 10% growth or 20% growth that we’ve got the support to really scale on the scale fast.

Derek: Yeah growth is fundamentally inefficient isn’t it you can’t really have a vision growth but obviously the upside is you’ve got growth.

Nick: yeah and one of our big things is we want to continue to have that wow experience with both our clients and our people that we employ so to do that we really need to have the support to be able to do that we could certainly run lane, we could scale, we could still scale but when does not kind of give the level of service that our clients deserve and expect from us and also our attention rate of the staff would not be what it is today if we didn’t do what we’re doing with the amount of people that we employ that’s the manager.

Derek: So outsourcing takes on so many different shapes and sizes and you know even contract workers on Upwork is outsourcing to degree you are kind of offering an outsource service within a specialize vertical of accounting but specifically, what is your business model and what is your product and service that you offer and who is your client?

Nick: Yeah so our nature is I suppose a lot different to traditional outsourcing work so our niche is a 100% accounting firms and those accounting firms typically also own finance, brokerages or financial planning practices so that’s really the market we operate, we’ll pretty much most of the western countries so the US is a big market were in Australia, New Zealand, and the UK. we have fines spread across Hong Kong and different areas as well but typically the main markets we operate is Australia and the US and the UK and their accounting firms from soul practitioners right out a second to your firm’s with you know thousand staff across the country and everything in between that so, what we offer is seat leasing it’s a different type of model so we basically provide the people to the accounting firms so an accounting firm will come to us and say we want an administrative assistant or we want to a marketing person or we want someone to do audit or we want to do business tax returns we will then basically recruit 3 to 4 candidates for them and then do interview and then they select the person they want then that person works within our facility but works solid for that clients and the clients really responsible for training and managing them on a day to day basis so the easiest way to look at it is we’re like a services office and that we provide the environment for the person to work and we’re also like a layby company where we provide the people but the difference is that the accounting firms treat these people like they are their employees they have full control over everything they do on a day to day basis, all we do is provide the environment the HR support the payroll and those various.

Derek: And how do you ensure the quality and caliber of the place candidates because there are obviously different taxation standards for different countries how do you ensure quality?

Nick: Yeah it’s an interesting question so our talent acquisition area is obviously one of the biggest area that we do, I mean last year we had over 15,000 applications for 220 roles so we have a significant amount that what comes in and then we filtered down based on experience, filtered down based on testing that we do and our testing process is very rigorous to make sure that we only getting the top 10 to 20% of applicants coming through to work with our clients because part of I suppose the challenges is that they could be fundamentally a really strong accountant but if they don’t have a strong communication and strong ability to learn at a fast rate then they’re just not going to work in the BPO or the outsourcing environment that we provide so it’s really sub-structured testing around that and at the end of the day all of our applicants most of them don’t have any experience in the country where they are  going to be operating and that’s a lot of coming back to our training division so then  for the country that they’re working because most of or probably 99% of the staff that come to us have never had experience in those markets but in saying that there 3 to 10 years where the commercial experience in the Philippines.  There’s strong accountants that they understand, it’s just tax that they need to learn and that part can be taught they can learn that quickly as well.

Derek: Yeah because the sort of localized knowledge I suppose pretty quickly transferable especially if they’re relatively effective accountant and they give the right textbook to study up on then I suppose they can get up to speed relatively quick.

Nick: Yeah with the right training process and the client is really dedicating the time and effort required it can scaleable and it can retrain really fast.

Derek: And what is the cost differential than you know give us an insight into your service cost and the typical cost differential between what the firm would normally be paying in their on hometown.

Nick: Yeah so typically and this is a global thing we found across the US, UK and Australia New Zealand is it typically you can employ 4 of them in the Philippines for the cost of one in those western countries so you basically getting an increase of 300% capacity because you’re going to employ 4 people versus 1 person and how that broken down how we charge there’s 2 components of how we charge we are transparent pricing so we charge a flat fee of $700 per month to provide all of the services that we do then the facilities the HR the IT support all of the cost of running our operation is covers in that fee so  that’s $700 per month per employee and then on top of that we charge whatever the cost the employee is depending on the role that the clients employ whether be a junior accountant up through to a senior accountant to a insolvency expert or a marketing or administration role the cost does very depending on what the role is but if we’re talking about a standard accountant with you know 3 to 5 years experience the total cost including our cost would be roughly $20,000 per annum which the equivalent of you know a quarter of the cost of someone in Australia or the US.

Derek: And is the productivity is the output pretty much equivalent to 1 on 1 or do you get a slight reduction in terms of quality and output?

Nick: It’s actually quite interesting I mean we’ve said track a lot of these with our clients so in the first 6 – 12 months productivity rate are lower but a lot of that train staff involved in training and also the Philippine staff so that’s part of the long term strategy so it’s really around the initial training requirement means that the productivity will be lower in some cases but we see after the 6 month 12 month mark that the productivity rate in the Philippines are actually higher than where they’re operating the accounting firm in the western whether been US, UK or Australia so we are seeing the Philippine staff are produced the staff in those countries and a lot of that has to do with the environment that is provided in the Philippines and the productivity over here it’s a lot more productive environment I suppose to in Australia and our sales office over there you go to get a couple of teams you talk to 5 staff from the way in you go to bathroom you bump into 4 other people and have a chat to them as well cause in the Philippines is very structured they have 15 min morning tea 15 min afternoon tea now a lunch break and besides that they’re sitting down and actually working.

Derek: Yeah. and especially the accountants in the Philippines they seem kind of pretty determined bunch, aren’t they?

Nick: Really professional, really clever. 70% of our staff are females so it’s a very female orientated industry, very intelligent and very good worker, it’s fantastic in the other part of that is also it’s a large percentage of our staff primary income produces for their family and they’re the main breadwinners so they’re there to work they’re not there to have a social life there to actually be productive a lot of them so they are mature but I know I say they’re mature but our average age of our employee is 30 so it is quite young.

Derek: And it’s incredible isn’t it, as you mentioned there’s an onboarding period where productivity is reduced but when you’re looking at an annual and annual cost of 20 grand a year then actually the kind of risk and exposure from doing these things and the carry cost of training people are so so significantly lower than any similar kind of endeavour in the west you know?

Nick: In fact that there is an investment time to get this strategy up and running but when you look at the cost of the average 10 years foreign accountant in Australia or the US and how long they stay with an accounting firm.  The time and money you invest in getting someone up to the point where you need them for them to go on leaving work somewhere else the cost of that is significantly higher than the time and energy cost to get a team say 4 or 5 up and running in Philippines so it’s easy to get 10, 4, 5 up and running if one leaves is now issued so to invest all that time and money and the 1 person in Australia they’re going to use you for experience and then they’re gonna go off to somewhere else and get paid more anyway.

Derek: Yeah of course and then most of the west you know you have recruitment fees and they’re really significant chunks of money where is I assume coming to you then the recruitment is just included within the set price?

Nick: Yeah it is it’s all part of the costing and the other part of that is when you look at globally and the last 12 month accounting wages globally have increased around 6% in the west so if you look at an $80,000 salary that’s about 4800 increase in wage you then put that back to an equivalent increase in the Philippines that would be close to 25% increase in wages so even when you’re looking at waging process and things like that the fact that have an outsource team you can almost put on if you had 4 staff in Australia or all have 6% increase you could put on another team member in the Philippines for that, that cost alone.

Derek: Yeah it’s incredible and you know I mean there’s salary inflation in the Philippines but there’s a huge amount of accountancy produces in the Philippines and also just in the Philippines there’s about half a million University graduates per year so I think there’s probably a lot more capacity in the system in the Philippines than there is in the west, it seems.

Nick:  If you look at it there’s number that I’ve seen there’s over 20,000 accounting graduates coming out of University or 1 of the top 3 courses in the Philippines so when you’re looking at the significant supplied talent like I said last year we had 15,000 applications last calendar year for 210 roles this year I think we’ll go close to 25,000 applications for about 3 to 400 dollars so significant amount of talent and they’re only the ones that are aware of us so there’s more accountants there that don’t even know who we are.

Derek: It’s just such a huge scale isn’t it? Well, congratulations it sounds an incredible enterprise and if people want to get in touch with you how can they do that?

Nick: best way is just go to our website the outsourceaccountant.com and all of our contact details are on there or you can email me personally [email protected]

Derek: Fantastic, thanks Nick

Nick: No worries, thanks for having me.

Derek: Okay, so that was Nick Sinclair of The Outsourced Accountant if you want to get in touch with Nick then go to our show notes at outsourceaccelerator.com/111 or if you want to get in touch with us just drop as an email to [email protected]

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