In this podcast episode, Derek is joined 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, Nick talks more broadly about the opportunities of outsourcing and his thoughts potential for the future.
- Nick states that the costing is a significant opportunity in the outsourcing sector.
- He thinks that there’s a huge opportunity in outsourcing; certainly sees it by the number of speaking engagements and the increased interest over the years.
- According to Nick, one of the biggest misconceptions is that he put on a team overseas. It takes away jobs, but he’s saying pretty much all of the firms who utilize them for growing their Australian based teams, US teams, UK teams and then, on flip side, they’re also growing a global team in the Philippines so he certainly see it as a positive.
- Nick also shares that the real niche if there was 1 to 1 revenue of the business is good and more than double and probability would be more than triple so it’s not just putting on 1 person for 1 person. It’s the revenue the capacity, the income, the profit which means more taxes as well for the local countries where they’re operating you need to be win-win.
- Australia is one of the most kind of protectionist states in many ways and it is an island. It’s kind of in the middle of nowhere, it has a very limited workforce migration mobility and so as a result salaries are very high and kind of margins of pinch from every angle.
- The niche is prime for outsourcing because of technology, because of the dynamics of what that industry is and that’s why it’s one of the fastest growing.
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Derek: Hi and welcome to another episode of the Outsource Accelerator podcast. This is episode number 115 my name is Derek Gallimore and today I’m joined again by Nick Sinclair of The Outsourced Accountant so we were joined previously by Nick in episodes 106 and 111 so if you want to catch up on his back story and also an in depth dive into his business, The Outsourced Accountant, then please do. Today I’m just chewing the fact with Nick he has a lot of business insight, he’s a lot of outsourcing insight and so you know that’s what I like talking about the most there’s a lot of great content here a lot of learning specially if you’re in business if you’re thinking about outsourcing or if you’re even thinking about operating within the outsourcing sector so I’m sure you’ll get a lot from it. If you want to get in touch with Nick or get show notes then go to outsourceaccelerator.com/115. Enjoy! And just quickly I want to apologize for the slight sound issues we had there’s sometimes a little bit dodgy internet here in the Philippines so I tried my best to edit it out but there’s still a lot of content.
Derek: Today we’re lucky to be joined again by Nick Sinclair of The Outsourced Accountant. Hi, Nick.
Nick: Hi, Derek. Thanks for having me on the show.
Derek: Absolute pleasure and want to just wanna spend time with Nick because of his outsourcing insight and talk more broadly about the opportunities of outsourcing of course Nick has joined us previously where we have a spoken in depth about his accountant service offering here in the Philippines so today Nick I just want to explore you know your journey with outsourcing and your thoughts on the potential for the future. You, personally, The Outsourced Accountant you are planning to grow to 10,000 staff in the next 5 years, is that right?
Nick: That’s correct.
Derek: And you know where do you see the potential for the outsourcing industry going generally, there’s about a million people board by the outsourcing now and you know in many accounts it’s kind of plateau or reducing because the big multinationals are kind of they’re full but do you see still growth and opportunity in outsourcing?
Nick: Yeah and the costing is significant opportunity with the outsourcing sector, I mean I see more and more specialty providers popping up on a daily basis but I think in the past a lot of the outsourcing being done by large providers where they basically deal with anyone and anyone and i’m practically saying in especially without business the real niche where there is specializing in certain areas over the classes growing with in the outsourcing sector so it’s probably more instead of BPO or an outsourcing provider the dealing with anyone and everyone it’s going to more focused around specific niches and really targeting services towards those.
Derek: and you focus on the SMEs with your sort of first-hand knowledge. What is outsource? What is the penetration of outsourcing like into the SME world? Is still a long way to go?
Nick: I think, to be honest you know what I mean on me now niches accounting firms so when you look at the market said that we have in the industry where in Australia we’re probably less than 3% of the actual industry using us and when you look at the statistics that it done from the research by industry groups less than 20% of the industry are actually outsourcing in some capacity so look I think there’s a huge opportunity we certainly see it by the amount of speaking engagements I do and the increased interest over the years it’s becoming more and more common now but I still think that is in our mind you and I deal with this every day so we probably think the market is a lot more knowledgeable than it is I really honestly believe that the still in a lot of cases unaware of the opportunities of outsourcing and I think there’s a significant amount of growths to come but more specifically probably those niche sort of markets.
Derek: Yeah we you know Outsource Accelerator we are also targeting that top end of the funnel where people really have little or know awareness of outsourcing and we actually get a little bit of kick back you know of some of our Facebook advertising we can actually get comments saying that we are traitors for terrorist and things like these there is a little bit of obviously apprehension and kickback with outsourcing because there’s potential that i take jobs but do you resistance from accountants? is it a kind 100% conversion or where do you see there apprehensions standing from?
Nick: Yeah look I mean when I was first on stage 3 and a half 4 years ago I was getting yelled at this me, I was getting on Australian I was taking jobs away but the reality in the statistics within our own business is that out about 227 of clients that we have now pretty much a 100% of them are growing their employees number in Australia they’re not using it as a staff productions strategy it’s actually uses a growth strategy and dealing with capacity so that’s one of the biggest misconceptions is that you put on a team overseas it takes away jobs but we’re saying pretty much all of the firms who utilize us growing their Australian based teams US teams UK teams and then on flip side they’re also growing a global team in the Philippines as well so we certainly see it as a positive there’s just a lot misunderstanding around it whenever we’re published in internals and industry wants us always a negative comments saying you’re taking jobs away but a lot of the time is people making those comments just don’t understand it and the first reaction to them is that we are taking jobs away and once you actually challenge them or talk to them about and they understand it they quickly recheck those comments.
Derek: Yeah and Australia is maybe one of the most kind of protectionist states in many ways and it is an island it’s kind of in the middle of nowhere it’s very limited workforce migration mobility and so as a result salaries are very high and kind of margins of pinch from every angle do you think that’s why Australia has embraced outsourcing to such a degree?
Nick: Look I mean there’s 2 camps. The camps that don’t understand it and they don’t know how to run a proper use to this so they’re very much the patriotic people but then on the flip side of it i see a significant amount of Australian businesses that are that have got team members over here in the Philippines or spend over here and just amazed that when i’m walking around it with different meeting that I do and saying how many different Australian businesses over here the question is more which ones aren’t here all your big brands are here you just don’t hear about it or see it until you’re actually over here so look I certainly think that Australians are rarely adopting this there’s a lot of things I think they embrace change so I think the top end of businesses are certainly been doing this for couple of years not if not longer and it’s the rest of the market that are now catching up on the awareness and just getting familiar with what it is in an hour could actually be a benefit to their business.
Derek: And do you think that outsourcing can be stopped and where is it going do you think eventually will have a large chunk of their company outsourced?
Nick: Definitely, I definitely believe will be because and this is what I suppose the reality of outsourcing is a lot of it is processed orientated work that even with technology advancements and AI in everything else automating a lot of things you still need people to be involved in the process and the reality uses and this is the most common thing that we did is the firms that are using us they can’t find people to do that work in Australia or the US or the UK because people don’t enjoy them they get bored with it they want to do different types of work but our Philippines team absolutely thrive and love that style of work and the detailed process work they really enjoy doing in and they stay in roles doing it so when you looking at the roles actually being done a lot of these are difficult recruit and retain people in the western world anyway so I think that for a lot of misconception comes is actually what roles are being done offshore and what’s being onshore and could you really simply scale in the western world for these roles because most of the time you can’t find people to do that type of work.
Derek: Yeah and also I find the interesting thing about accounting is different sectors have they’re in kind of applicabilities to outsourcing and I think accounting is probably one of the best sectors for outsourcing because it’s a professional services sector. The tradable asset is human resource for highly skilled high-cost human resource and you know that is the main cost space so if you can actually reduce that cost space by getting good well-trained staff in a cheaper location then actually you’ve kind of won the game haven’t you where’s other kind of industries where you know like if you’re a painter, for example, you need to be on site, you need to be in the houses painting and you can maybe just get a bit assistance with the few back end staff so it probably won’t completely change the business model so yeah do you see that some industries can benefit more than others from outsourcing?
Nick: Yeah look definitely there are certain industries over here which it’s really scalable like you mentioned with painting business it’s a bit harder cause you still make people professional services businesses like the niche that we operate in accounting. It’s all on process and system it’s all utilizing cloud technology which is a real enabler when you look in the other industries like radiography so you get an x-ray done a lot of that is being red and diagnosed over in the Philippines, Architects design there’s so many industries over here that where it doesn’t require a person physically doing your task so a lot of the trade related roles in the western world you can’t do this certainly they’re back offices you can do but you can’t have someone building a house offshore, it needs to be done locally so we certainly see the niche that we playing is prime for outsourcing because of technology because of the dynamics of what that industry is and that’s why it’s one of the fastest growing.
Derek: Yeah and it’s definitely sort of you know betters or worst sectors but I actually speak to a lot of builders about outsourcing and they’re probably very good candidates for outsourcing because commonly again they can afford the staff they can afford the support so when they’re off building a house they’ve got 0 business development they’ve got 0 administrative support and they could actually benefit the most by having a business manager having a back office manager having all their accounts done in the Philippines and so that they have a sales machine working while they’re building a house so that it have you know more houses to move on to the kind of scope and opportunity for outsourcing is pretty incredible.
Nick: I agree and that’s where you look at outsourcing really benefit any type of business and you look in a from like from your example there what you really setting up is a business and the product of their building is the house but they’re running a business typically a building, building or a small SME builder in Australia for example where I live normally they’re on the tools and managing onsite, they’re not really running a business because they don’t have the back end people because they can’t afford it to have real team driving all the marketing and administration you know client service and account and all that it’s typically you know small business but the benefit of outsource team is you call to build a professional business and they’re like to be able to deliver a lot more product being in house or whatever the product is.
Derek: And so we commonly sort of preach and you know I’m building this business of effectively Outsource Accelerator that is with a completely Philippine based team but I am selling my product into the west so my clients are in the west charging, western prices but you know the entire cost is at a Philippines level so that’s almost the ultimate for any businesses isn’t it to kind of charge those the cost and income figures but do you and I refer to it as kind of inverting the pyramid when a lot of businesses might start outsourcing with 1 or 2 backends back office staff but then eventually you could in theory flip the entire pyramid so that you’ve got the entire company ran from the Philippines including to some extent senior management and decision makers and then you really just have the home country in an inverted commerce having the whatever you need client facing kind of hubs do you see that happening more in the future?
Nick: Definitely I mean for our own business in The Outsourced Accountant that’s exactly what we have so we have our face to face sales team in Australia and now executive team but in the Philippines or the lead generation if I’m in setting you know the free marketing through the funnels e books or the content video and everything is done in our Philippines office and Australia purely just sitting in front of people on a day to day basis they don’t do any administration anything other than talk to customers and prospects but when you look it from our times point of view our accounting firms we really see outsourcing success being if you’re doing it well you’ve got 1 person in Australia to 1 person in the Philippines, if you starting to make it work you’ve got 2 people in the Philippines to 1 in Australia if you really nailing the process and getting it up and running and really investing in your business to make it work you’ve got 3 people in the Philippines to 1 company in the western world.
Derek: Yeah and if you look at those ratios the opportunity is just magical isn’t it not least for both countries you know because it is a win-win like for the home country and the Philippines it just provides fantastic opportunities for everyone. We you know we’ve done a white paper analyzing the SME market and the applicability of outsourcing and there’s 35 million SMEs in a high-cost English speaking west and they employed 100 million people and so you know if they employ a 1 for 1 ratio that’s 100 million and that’s officially every person man, woman, and child in the Philippines employed it’s you know and the companies then of course also added incredible rocket fuel to their business the potential is huge.
Nick: The real niche if there was 1 to 1 I mean revenue of the business is good and more than double and probability would more than triple so it’s not just putting on 1 person for 1 person, it’s the revenue the capacity the income you know the profit which means more taxes as well for the local countries where they’re operating you need to be win-win.
Derek: Yeah I mean that’s a reality isn’t it like healthy company mean healthy communities and that means healthy country it’s very much a win-win.
Derek: So that was Nick Sinclair of The Outsourced Accountant if you want to get in touch Nick or know any more about any part of the show then go to our show notes at outsourceaccelerator.com/115 and of course if you want to ask us anything then please do just drop us an email to [email protected] See you next time.