Derek Gallimore talks with Andy Schachtel, the President and CEO of Sourcefit. Sourcefit is a Philippines-based BPO firm focused on providing custom offshore staffing solutions.
In this episode, Derek and Andy discussed Sourcefit’s beginnings, expanding to the Dominican Republic, EOR and PEOs, and building an offshore team.
Andy came to the Philippines in 2009, and started Sourcefit “as an offshoot of a large-scale application development project” that he did for Vodafone.
He was tasked “to build a social networking platform [for Vodafone] back in the days of the flip phones and brick phones… and it would be the first large-scale mobile social network.”
Being part of a small company working on a big project, Andy “knew he needed to outsource.” Outsourcing to India didn’t work out, so he decided to hire developers in the Philippines.
The Sourcefit CEO recalled the experience, “We built a .net development team in the Philippines and built the application, launched it on Vodafone networks around the world, and it was quite successful.
So we got the customer service team and a content moderation team to support the application, and it worked out great. We were operating that for Vodafone for several years.”
When Vodafone decided to exit the industry following the rise of social media sites like Friendster and Myspace, Andy “repurposed the team to other telecom clients, and that’s how Source Fit was born back in 2009.”
Andy says the company has “grown since then in the same way that initial project did, where clients will come to us with a certain process that they’re interested in outsourcing and then over time they may identify other processes.”
As a company, he says they “try to understand the businesses of our clients and then offer them solutions that work for their unique set up, their way of doing business.”
Currently, Sourcefit has about 1300 employees. Andy noted that the “labor market, even in the Philippines is quite tight,” so they’ve recently opened an office in the Dominican Republic.
“We’re thinking of expanding into other markets just to help us to meet the demand in certain areas where it’s difficult in one country,” he added.
Outsourcing to the Philippines vs nearshoring
The Sourcefit president shared that they have clients who are not closing the deal when they were only in the Philippines “because they had some mandate to only work nearshore just from a comfort standpoint or a time zone standpoint.”
This became one of the impetuses for Sourcefit to establish an office in the Caribbean.
Comparing the outsourcing experience between the Philippines and the Dominican Republic, Andy noted the following:
- Closer bond. He says even if the cultural affinity between the Philippines and the United States is “already quite strong,” there is an even closer bond between the latter and the Caribbean.
- English proficiency. “The sheer number of great English speakers in the Philippines is much larger than in Central America or the Dominican Republic.”
- Mature processes. “There are really mature processes in the Philippines, lots of talent with a lot of experience providing customer service in the United States. And that mature market creates training opportunities, educational opportunities to bring up the next generation of people who will be working in this industry.”
Andy thinks that the Philippines’ “momentum will continue” and that it will continue to be “a leader into the future, especially in those kinds of areas like customer service, design-oriented jobs, CAD and construction estimation, and back office.”
While he doesn’t think that nearshoring is “necessarily a threat to the Philippines,” he warns:
“The Philippines still has to not rest on its laurels. There needs to be a lot more investment in education, in language ability, especially value added types of services, not only tech and I.T., but also accounting and back office roles.
Those are kinds of roles that are not going to be replaced by automation any soon. So there needs to be that investment to continue to provide the kinds of resources that the industry needs.”
Evolution of the BPO sector over the years
Andy stated that it’s “really a great time to be in the outsourcing industry” post-pandemic, since the acceptance of remote work, especially among SMBs, has completely changed.
“If someone’s working remotely down the street or in the next town over, why not hire someone for a fraction of the cost who can do the same work, who just happens to be sitting in another country?”
The rise of remote work, plus “the labor shortages that we’ve seen in developed markets. has created a kind of a perfect storm for clients who might not have thought of outsourcing offshore before, who are now doing it.”
Andy noted that they’re seeing a big uptick in their growth, and they’re taking advantage of the situation “to make companies even more aware of how easy it is to outsource.”
“And as economic conditions become more unstable, it’s a great way for [clients] to ensure more business continuity and also lower costs, competitive pricing going forward into the future.”