We are being joined again by Jethro Marks of thenile.com.au. Jethro joined us back in episode 251. If you want more of his backstory, more information on The Nile and his journey in outsourcing, then go back and listen to this episode but in this episode, we get a broader view of outsourcing from his perspective.
Jethro has been outsourcing for the last six years to the Philippines, and he’s an Australian/ New Zealand businessman. So anyone out there wanting testimonials or insight, then this is an excellent podcast for you.
The Nile is a family-and-friends-led enterprise that started in a living room with two guys and a computer. It has now grown to become an employer of over 80 people in the fields of customer service, logistics, marketing, and creative design. The Nile has a successful outsourced operations center in the Philippines.
Founders Jethro Marks and Mark Taylor witnessed the dawn of online retail and withstood its tests of time. They are now beyond 15 years of online retail experience and that is not their collective experience. 15 years is how long together Jethro and Mark have been contending with the challenges of the online marketplace, while flourishing, to guide The Nile to the place it is today.
Derek Gallimore: Hi, welcome back. Today, we have Jethro Marks of thenile.com.au joining us again. Hi, Jethro. How are you?
Jethro Marks: Hi, good. Thanks for having me on.
Derek Gallimore: You recently joined us in a previous episode. So I encourage everyone to go back and listen to that more about your evolution into outsourcing in thenile.com.au. You have a wealth of experience in not only business, you’ve had over 15 years running this, starting in this business, and over five years now in your outsourcing team, which is a major part of your business.
I want to pick your brain in terms of the outsourcing insights and learnings that you’ve made along the way. Thanks again for joining us and I suppose just quickly, to give an outline for those that haven’t listened on what ‘The Nile’ is, and how you came to outsource?
Jethro Marks: We’re an online retailer, we started in 2003 and our business is predominantly in Australia and New Zealand, we started out being a bookseller a little bit like Amazon and we have subsequently branched out. We now do DVDs and baby products and toys and about six or seven other categories that we claim including home and kitchen.
We started outsourcing to the Philippines about five or six years ago and we have evolved quite substantially and to the point where we have the majority of our staff there, we have incorporated. We have done the whole journey from outsourcing recruiting to in-house and really happy with the results there today.
Derek Gallimore: It’s my job here at Outsource Accelerator to encourage everyone to explore outsourcing because I think that it’s an incredible, transformative tool, maybe the most powerful tool out there for businesses of all shapes and sizes.
As they say in business, you’re either selling a painkiller or a vitamin and obviously, the painkiller is more of a compelling product than the vitamin. Having you see outsourcing, because now you’re doing it I’m sure you see it as a critical part of the pie but before you were outsourcing, was it more of a vitamin or was it more of a give or take this kind of business solution?
Jethro Marks: That’s funny. It’s one of these things that before we started doing it, we didn’t see it as being there. It wasn’t something that we thought was important. Now, several years later, I’m trying to figure out how we lived without it. It’s interesting, it’s just the perspective has changed quite substantially.
When we first set out, we had a particular goal, I think almost everybody else does. When you have your first thoughts when you outsource, it’s going to be cost reduction. It’s always number one, how am I going to reduce costs, if I go find a place where I can employ people to do the same work or low cost? That will be great.
That’s where the journey began and I think when we’re first listening to the call with you. You know, once we got to the Philippines and start looking around and seeing what other people were doing, and just what the depth of talent was. More people were actually up to all of a sudden, it changes very quickly from being a cost reduction to actually what are the value add.
Derek Gallimore: Before you made your journey over to the Philippines, you were doing a lot of DD, a lot of due diligence, a lot of investigations, and a lot of interviews. In reflection, what are some of the key considerations you need to think about when you’re outsourcing? And maybe in comparison to some of the things that you did think were quite critical, but actually, aren’t.
Jethro Marks: One of the difficulties that I was having was identifying who the potential partners were that we were going to work with. The methodology I’ve introduced was to just find people that I knew who had operations and then get an understanding of what their experience has been like and what the experience was ongoing. And then to refine it down to those who were happy with what they had.
Now, that’s probably not the most scientific method, I think we potentially didn’t cast the net far wide enough in terms of potential other companies. We were very lucky in that we did find and ended up with a very good provider, but there was a strong chance that it could have gone either way.
At the time going back six, seven years, there wasn’t any one source of truth or one type of a portal or guidance on being able to do comparisons between different providers, it was very much about doing either Google searches and just coming up and trying to figure out what you came in, or all relying on word of mouth.
I think that the business that you’re creating, yours is helping solve their problem a lot in terms of being able to give a lot more information upfront so that people can make better-informed decisions. I think the action that I would have done differently, is I probably would have got on a plane a lot sooner, I wouldn’t have spent quite as much time trying to do the analysis from offshore.
I would have found a host of companies that will match my basic minimum criteria, and then I would have gone there because my biggest learnings came from actually just been spending time with the owner spending time with the managers and actually spending time in their offices and seeing how they did and what they did. And then I got a lot more out of that.
Derek Gallimore: It’s incredible. That value of actually seeing things firsthand. And seeing the people working, seeing that the people working are people as well, it adds a three dimensional view to it for the first time, doesn’t it?
Jethro Marks: Absolutely.
Derek Gallimore: You’re a successful businessman, I know that you have a big network of successful businessmen, even across Australia and New Zealand now. And outsourcing is a major part of your business, almost like accounting or bookkeeping is a major part of your business.
Yet the uptake of outsourcing isn’t universal amongst all of your business network or amongst businesses in Australia or New Zealand generally? Where do you see the friction points? And how do you see the level of awareness still about outsourcing?
Jethro Mark: I should think the awareness is pretty low. For the most part, I think people are sort of becoming more aware of it. I still think the first thought is just that it’s cost reduction, if anything. And it’s not yet embedded in the majority of the people that I talked to as being a necessity or even as an option, but not one that they’re necessarily prepared to venture down anytime shortly. And I think that that will change.
The conversations in the last five, six years have changed dramatically, and the witnessing effect was going up all the time. I think it takes some kind of impetus, there’s got to be some kind of a reason why people start to look at it. In a minute, they go well, we’re just not able to scale a particular part of our business.
Because every time that we grow, we have to add a whole bunch more expensive, it’s expensive, it is too high. And if we’re not making money, or it can be a situation where they’re forced to drop costs, and they have to find a way around that situation, we just couldn’t find the employees that we needed quickly enough and be able to keep them long enough to be able to do what we were trying to do.
As that happens, then you start to look at alternatives. What else can I do and in our case that works to the Philippines, which then solved the problem that we’re after, we’ve been able to hire a great caliber of people who are very motivated and very well educated, and very keen and eager to do the work that we’ve given them. And within that time period, we’ve been able to identify some stars and grow them for leadership positions, from within those initial staff, he came on board with us. Really happy it worked out and the decision we’ve made was the correct one.
Derek Gallimore: Outsourcing is very much a journey, isn’t it? It’s a little bit like learning karate, I suppose, in that you’re never going to be that good on day one. And you can’t skip ahead a lot without putting in the time and gaining the experience little bit the same as business generally.
But then again, on reflection, do you see any ways that you could speed up your outsourcing journey, the efficiency of it, avoid a few of the pitfalls and kind of speed up that learning curve?
Jethro Marks: Absolutely. Things that we did, which I think helped a lot. We’re pulling staff from the home office into the Philippine office on day one, and kept them there for as long as we needed them there. That meant that we, too, it was a two way thing, miscommunications between us and staff on the ground or if anything, can, Matthew, we weren’t sure about there was always somebody we could go to get an explanation or an answer from there cleared things up very quickly for us, because I think too much gets lost in translation, not because we’re not speaking the same language. But because people are in one office and in another, there’s a bit of a cultural divide.
They’re not necessarily wanting to give you the answer that unless you’re comfortable enough to be able to give you a very frank response with having someone there, we knew exactly what was going on and we were able to adapt quickly. The second thing that I think we would have benefited from but we didn’t do at once was around the structuring and then the process mapping, just making sure that we were very clear on what people have to do.
An irony of that one is I think we talked about in our last discussion was that had we done that early, we probably would have got better benefits in Australia from the same thing we just hadn’t done the work. But once we’ve done that, we were in a much better position. I think one of the key learnings and the benefits that we got was about embracing the staff from day one as being our own, rather than this idea of throw it over the fence and hope that somebody on the other side will deal with it, we took the view that they were asked of doing often, working with us to try and help us help our customers and run our business.
They changed the mindset of our staff and local staff in terms of dealing with them, and also to change the approach that we took towards dealing with them and I think that was the absolute panel. In terms of importance, when I’ve talked to some people who have said, I’ve had a bad experience outsourcing and there’s no way I’m ever going to do it again.
Whatever you think to dig deep enough, what I find more often than not is that they just assume that there was some computer in another world that you know, is supposed to do stuff just because it could rather than see the understanding that there are people there. And if you treated them like people and work with them then that will get you a much better outcome. Whereas I find those companies that take a much more inclusive approach generally tended to produce much better outcomes.
Derek Gallimore: It’s the simple things isn’t it, demystifying outsourcing. And I try and do that just by saying that outsourcing, really is just employment and they’re sitting in a different location. And there are endless management books on how to build teams, manage teams, inspire teams, build culture and teams, get them working along with the same mission and yet it seems to be forgotten in the context of outsourcing.
It seems that people are building a relationship with a computer monitor and not a team of humans. It’s certainly something that I think we can maybe do better in terms of helping people build their teams. And what do you think?
Jethro Marks: I think on day one a lot of people start with is to just get one or two people. And the problem there is that they don’t necessarily bring them in straight away as they treat them as an outsourced resource and just treat them as like somebody who’s somewhere else.
I think what it requires and what we certainly see from day one was, if we are going to do this, we need to do this well, like we’ve got to do it, we’re going to get to scale, we’ve got to keep growing, and we’ve got to make this work. And so yeah, what we have initially is a small team, we had a view towards the idea that we wanted to build out a much bigger team.
Keeping a view on that meant that we persevered through some of the initial difficulties to be able to build out the culture and the team that we wanted, and then get the results that we were looking for.
Managing a remote team
Derek Gallimore: What I find is the difference between small businesses and big businesses, there’s a small business mentality in that you need to be sitting next to someone otherwise they’re not valid teammates or valid colleagues.
I had a conversation with an employee of the major bank in the UK and she had an IT project that she was building and she was working with completely bank employees. So all of her colleagues, before she was based in London, some of the team were based in Scotland, the other part of the team was in Cornwall, and then she had another part of the team in India, and these are all bank employees but because banks are so big, inevitably people are sitting all around the place.
It can be quite natural if you’re a big company, that you just simply have to build relationships and project, deliverables with teams that are spread across geographies. So maybe it is just small businesses going through that mentality of so they’re not in the same room, we need to get over that and build processes to enable ourselves to work well together.
Jethro Marks: Yeah, I think there’s a lot of truth in that. In addition, I don’t know if it’s more entirely a small, big mindset shift, it’s just that it requires a change in approach, especially if you’ve always done things in a certain way to say there might be an alternative way to do things.
It comes down to a realignment around, I have an expectation that this person will be at this desk next to me for a certain amount of time to my expectation is that this person is going to deliver the following results for me, and I’m not as fast with how they get to those results, those are just the results I’m looking for and if we become much more results focused, then the locality of the person, the ethnicity of the person, all of that goes away, and it just becomes, this is what this team will see this individual, the opposite of what I’m looking for as long as I’m getting that that’s the most important thing for me.
Because whatever that is, is generally what’s going to be good for the company, what’s good for your customers, and what’s good for the entire industry enterprise. And I think that that gradually, we’re getting more used to the idea of flexible work hours, the ability for people to do days out of the office, I still feel that that first-day connection is really important, but it doesn’t need to be all the time. Once we get our minds aligned to being results oriented, that it doesn’t put as much focus on where the individual is.
Derek Gallimore: Absolutely. When you see all this going, it’s incredible, I just wonder if whether I’m naive or to blink it, but I still find it incredible that people don’t naturally consider outsourcing for their staffing solutions. But inevitably, I think that the world will continue to converge, and it will be increasingly globalized.
There will be a single global workforce, we’re certainly seeing, huge growth in outsourcing and that also reflects in the Philippines economy going through incredible growth spurts. But where do you see the evolution of outsourcing and generally businesses, staffing and fueling their business?
Jethro Mark: I think kind of building on a point that we were discussing earlier, what happens is that there’s a catalyst event in many companies’ time when all of a sudden they have to start considering an alternative way of doing things.
I was reflecting on a friend of mine who ran a software development company, who had all of his staff, I think, in Australia at the time. And what he found was his competitors who were head staff in the Philippines or one or two other countries, we’re consistently able to deliver the same outputs as he was, but at a much lower cost. And he started to lose work because he just couldn’t get it.
When he was going in and saying, well, I’ve got my workforce here, but the results were no different from what he was getting with the other guys getting it made. It made no sense from a consumer’s point of view, or customers’ point of view, to want to use his services. And he immediately went and started outsourcing.
My understanding is that his business grew massively as a consequence. And he was able to have a successful exit recently. So I think I’m not attributing directly the outsourcing to his success, but it certainly was a block that he was able to get out the way. And then that enabled him to then start growing again. That means other businesses will have similar experiences where all of a sudden, your competitors or the needs are the requirements for change, that you can’t deliver them from just within the confines of where you are. And you’ll need to find alternative ways of doing things.
I certainly thought we came to that point and I’ve been very happy with the results. Where does this go? I guess as people around the world become more accessible and more amenable to this form of work, I would love to be able to start to eventually have ‘Centres of Excellence’ in all around the world, wherever we happen to find the right people to do a specific job. You know that certainly, large multinationals have done that for many years.
You look at a lot of the tech businesses, they’ve got r&d facilities across 10 different points of the world, why do they have them in 10 facilities around the world, there’s no cost reason for that. It’s because that’s where the best people for their job. And as this continues to evolve, if we can emulate that to some degree and be able to hire people, no matter where they are in the world, hire the best person for that particular job and that’ll be a great outcome.
Automation and outsourcing
Derek Gallimore: It just makes so much sense when there’s little or no friction to connecting everyone through SaaS or project management software and things like that. And then the future is often pulled into question in terms of AI automation machine learning. Are there going to be any jobs at all in 20 years, specific to your business, your industry? I’ve seen a lot of automation, things drastically changing maybe every month, but there are even more jobs to do because you’re already sort of always coping with the change. Do you see a lot of machine learning automation and things in your sector? And do you think that directly threatens jobs within your business?
Jethro Marks: I think the AI or the implementation of whatever kind of new AI could be something off the back of, but it’s something any kind of automation that is successfully implemented is generally for me is done in areas where people probably shouldn’t have been doing that work in the first place.
It’s primarily highly repetitive, very straightforward tasks, where a person is not necessarily the best thing to do that. Now, I guess the argument is that AI will develop to such a degree that they’ll be able to take on a lot more versatile functions. I think that’s still way off. I mean, if I think through one of the biggest functions like customer service, I detest having to deal with the checkbox or anything like that simply because to me, it’s just a different way of positioning an FAQ or some kind of a written page.
If my problem is not specifically answerable because there’s an FAQ is generally it never is, then I’m frustrated by the experience. Whereas if I get a human on the phone, I expect that they would at the very least be able to say to me, you know what, I can’t question but I will find someone who can. I haven’t gone into the same trust when it comes to dealing with some bots. So I’m not such a pessimist.
When it comes to the rollout of AI think there will be some benefit, and it will be some job losses. But typically, those jobs are probably not the ones that I think people should have been doing anyway. And we will see other jobs will be created. The critical fact matter is that once we take resources away from one part of the business because we’ve been able to automate that away, we can devote our attention to building another part of the business which inevitably will result in new jobs.
The example I can give is it’s not directly analogy. It’s not directly linked to outsourcing, but it’s analogous. And it was when we first started up our business and we introduced barcodes scanning into our warehousing. And we didn’t have that on day one. Because we didn’t know what we were doing. And I remember a particular function within the facility went from three and a half jobs down to half-person between three and a half full-time jobs to half a person’s job. And we were able to increase the volume fourfold with that half a job being done. Those other three people ended up and other jobs which paid more and more you know, a higher level.
Derek Gallimore: Thank you so much for your time and your insights and you know the wealth of experience you have with outsourcing and of course, anyone can I encourage everyone to go and visit thenile.com.au and check out your store. Thank you so much for your time. Jethro.
Jethro Marks: Thanks for having me on. Thank you.
Derek Gallimore: That was Jethro Marks of thenile.com.au if you want any of the show notes, go to outsourceaccelerator.com/256 and as always, if you want to ask us anything, then just drop us an email to [email protected]. See you next time.