hipages and offshoring
Derek Gallimore interviews Nathan Platus of hipages about offshoring in the Philippines and how to overcome the struggles in handling a remote-based team. hipages is an Australia-based company founded in 2004 with offices in Sydney and Manila. They aim to easily connect tradies with customers for their home improvement needs.
Being in the country for five years, Nathan has handled and seen their offshore team (based in Manila) expand from 10 people to more than a hundred full-time dedicated staff. This episode covers the tips on building a small team, preparing the processes, and getting the in-house and remote teams working together.
Nathan Platus: I came to the Philippines almost five years ago. So I worked for hipages, obviously. At that point in time in our business, we were looking to scale our business but operationally, we just weren’t capable of being able to deliver on what it is that the business needed to deliver on.
We explored a few different options and the Philippines was at the top of our list. We came over here, with my CEO, and did a bit of a discovery tour. We spent, what was it five days over here and in those five days, I think it really cemented for us what was possible over here.
We visited a number of different BPOs and listened to a lot of people on the phones. We realised that what we want to do over here is certainly capable of being done at a third of the cost of doing it in Australia.
So at that point in time, our physical office couldn’t handle any more people. The business couldn’t sustain any more cost in Australia necessarily for the vast number of paper we needed to get in there. So we made the large jump, came over here, and set up a team.
Ramping up outsourcing
Our first team only had 10 agents and a team leader. We were calling consumers on their platform to get a written recommendation for our tradespeople. So whilst that, maybe it’s something that we could have done through the tech side of things, we had a goal of wanting to achieve 100,000 random recommendations, and we didn’t have the tech capabilities nor the resources in that team to do it.
We were doing it from two people in Sydney, ramped up to a team of 10 people over here, and they were super successful. At the end of the two-month mark, we decided that this was our way forward.
A couple of things happened. Number one is that I put my hand up to come over here and run it. Number two is we went from 10 on day one up to 114 at the end of the first year. Then we were at 140 by the second year.
We had an incredible state of growth over the first couple of years and got excited about what was on offer over here. We brought over about eight or nine different lines of business.
Derek Gallimore: So you did it a little bit differently. It’d be good to know what tipped you off to the Philippines. But typically, people don’t come over here before they set up the office. Why was it that you thought it was worth actually physically coming to the Philippines?
Nathan Platus: Primarily from a governance perspective, the CEO is a co-founder of the business. We asked to report to the board, he is on the board. At the end of the day, it was his reputation. He needed to be able to go back to the board and say that he had the full confidence and can do it.
In his mind, it was never going to be a light engagement. He knew that we needed a severe scale. He knew that it was going to be more than 10. For him, it was important that he listened to everything from day dot.
Derek Gallimore: Absolutely. That reflects on how you set up. So you started the operation with 10 people then quickly grew from there. What were you expecting before you came over here? I imagined you were maybe thinking to get the lowest, most basic jobs done. Then when you came over here, you were injected with a lot more certainty and enthusiasm for the true skill set.
Nathan Platus: Absolutely. And I think that from the very beginning, we went with a role that was going to be low impact. We went for a role that if didn’t work well, it wasn’t going to kill their business at the end of the day, and it wasn’t going to leave us with bad customer experience or any brand reputation impact. So that was the first role that we brought over here. But after that, we saw that not everything, but most things are possible over here.
There are a few key things that we do when assessing a role in being able to bring it over to the Philippines. Number one is that we make sure that that role works in Australia or has worked in the past in Australia, it may not be a functioning role there now. But the role has to have a process behind it and has to have been proven that it’s capable of being done.
The reason is it’s difficult to manage offshore teams at the best of times but to give them something that you don’t know if it works, or it doesn’t work, becomes a lot more challenging to try and manage and lead people through something like that.
We pioneered everything in Australia. If we hadn’t done that before, we built processes around things. Then we brought it over here with a very sound process that sat behind all of it. We knew how to train people on what that process was.
Derek Gallimore: So you’re effectively outsourcing your staffing requirement. A lot of people come over to the Philippines hoping to not only outsource their staffing requirement but almost their business processes and problems.
It seems that you made the delineation of this isn’t actually outsourcing the problems; you need to build the processes and structures first and then you can start them in the Philippines.
Nathan Platus: I think that’s an important point because I have never looked at us as being outsourcing. I’ve looked at us in an offshore capacity because for me, the staff being here, being culturally-aligned to hipages as a business was actually number one.
Trying to almost separate them from who their BPO was and had them look at themselves as being hipages employees was something that was really important to us because we wanted them to feel like they were a part of the team.
We wanted them to feel as though they’re a part of hipages because my view is that if you feel as though you’re more part of the company, you’re going to serve the customers a lot better, and you’re going to be more emotionally attached to who that business is.
Derek Gallimore: Absolutely. So I counsel people that are concerned about how do they get out of offshoring if it doesn’t work, one of the clauses in the contract. Commonly instead of it not working out, it works incredibly well. Then people face a situation where they weren’t necessarily designing something that would then have 10 or 100 or 200 people just a couple of years down the track.
Dealing with high growth
It seems as well with your organisation, this was a resounding success. There are some things with high growth that you often see or you could tell people to look out for?
Nathan Platus: Yeah, like things can very quickly spin out of control. With high growth came high attrition. So in the early days, when we were growing from, from zero to 140 by the end of the second year, we had a lot of attrition. We had a very high turnover team.
Industry standards are somewhere in 50 to 60% and we were, probably at that point, sitting around 40, which was a lot higher than where we expected to be. But what we did was double down on engagement, knuckle down on the type of person we wanted, and refine the profile for the agents we were bringing on board.
We were making sure that we were bringing on people that can do those roles, not just another bomb on the seat. So yes, the high growth brought a lot of attrition, but we still knew that we wanted to get it lower. Today, we’ve got less than about 12% attrition. And in an industry that’s still operating, it’s somewhere between sort of 50 and 60%. We’re pretty happy with where we’re at.
Derek Gallimore: There’s a lot of factors involved, isn’t it? It’s about solidifying your own culture and processes. Also, when you’re in the high growth stage, you have to scramble and do things and maybe not everything is as consolidated as once you get a moment to really settle down and build the structures better.
Nathan Platus: Absolutely. And the other thing I can add to that is the leaders in the team. We haven’t employed an external team leader; we’ve got team leaders, and we haven’t employed an external team leader now for close on three years.
Derek Gallimore: So you just promoted from within.
Nathan Platus: Promote from within, train, develop, give people the opportunities to grow their careers.
Derek Gallimore: So you started with customer service roles effectively. What have you expanded into and where do you see opportunities for offshoring versus where would you recommend that offshoring is maybe not prioritised?
Nathan Platus: So we’ve brought some roles here. We’ve been taking them out from over here and brought them back into Australia but then started bringing them back over here again. I’ll expand a little bit more. One is customer services is done better over here than I believe in Australia. So I think customer service in multiple facets is really great over here.
Back of house, administrative stuff is really great. Anything that’s got a very sound process behind it where one doesn’t need to think big laterally and have to make a lot of decisions on the fly is something that I would say it’s absolute bread and butter over here.
The roles that become a little bit more challenging, technical roles, and sales roles. So we’ve got a few technical people, we’ve got some technical marketing people, SEO, and SEM. We’ve got some technical people in data analysis and some software engineers as well.
The challenge we found with those is it takes a lot longer to recruit for them. So our recruitment cycle on those guys is typically three to six months. Whereas for an agent, it’s two weeks. A customer service agent, I should say.
Outsourcing vs offshoring
The area where we’ve come in and out a little bit on the Philippines is in sales. When we first came over here, we saw that there were a lot of companies who were selling over here. Then within about 18 months, teams of 30 to 50 salespeople were completely let go. And there was no one left.
We set up a very small sales team, but we didn’t invest in the training and development of those people properly in the beginning, and then it essentially failed. So out of the 15 old salespeople that we had to begin with, we were left with one. But that was a bit of a shining light that came through. That person just kept plugging away for two and a half years.
We then decided two and a half years later to roll back and say, Well, there’s no such thing as a unicorn, right? We know that one person is capable to do this thing over here. They were competing within the top three of a team of 12 in Sydney.
We knew that that was something that if we were to invest more in, we could do over here. And if we found the right people to do it, we could do it over here. Slowly, over the last 12 months, we’ve now grown the team to five.
It’s taken a lot longer. We’ve had to put a lot more training, a lot more investment in bringing people over from Sydney, to do training with them. But it’s reaping the rewards because we’ve now got a team of five that are doing well. We still have a team in Sydney, and they’re competing pretty well to that team.
Derek Gallimore: Where were the points of weakness, then, for the sales team? Was it the cultural nuances of dealing with Australian tradies? Was it, maybe, the fact that they aren’t so assertive in terms of sales? Where was the team falling down?
Nathan Platus: The team was falling down is that they weren’t able to think laterally enough through the conversations. Maybe they didn’t have enough ammunition to play that game with the tradie in order to try and win them.
Everything over here is a little bit more black and white, so the [inaudible] that comes along with sales sometimes, it doesn’t really happen as much over here as what it can do in Australia. The ability to relate to the person that you’re trying to sell also doesn’t happen as much. That’s where it fell down in the beginning.
I don’t think that they still necessarily have that entirely, but they have that enough to get the traders over the line to sell them. Look, don’t get me wrong, they’re close to the team in Sydney but they aren’t as great.
The team in Sydney seemed to step it up into another gear than the guys over here, so they tend to struggle with a little bit more. We’re able to give them things that still benefit the company, but will always still hold sales in Sydney.
Derek Gallimore: You’ve been here five years now and you’ve built this team, from zero to 10 then up to 140 people. You’ve been through thick and thin of this team. You’ve no doubt built all of the processes that they are now adhering to, you’ve done a lot of A B testing.
In people trying to encapsulate what offshoring is and how to effectively build and manage teams in outsourcing, is it any different to managing and building a team in Australia? Or is it completely different? How can you sort of encapsulate the differences and similarities of just building and running a team?
Nathan Platus: I think we first need to split out what outsourcing and offshoring are because they’re two very different things. Outsourcing is giving the responsibility of those KPIs, those SLAs through to a third party if you will. It’s their responsibility to ensure that those targets are being met.
Our case was what I would refer to as offshoring, where we had a team in the Philippines, but they still had myself over here leading that team now. I am with hipages for 10 years before I moved over to the Philippines. So I had an immense understanding of who hipages was and how they operated.
One of the reasons I moved over here was that I was able to work across a number of different disciplines because of my vast experience within hipages. I think that what’s helped a lot.
It’s that I’ve been able to do a lot of cultural engagement with the people and get them to understand who hipages is as an organisation, get them to be aligned to the values, mission, and vision of who we are as an organisation, in an offshore capacity.
As opposed to an outsourced capacity, where they would want you to adhere to the BPO’s vision and mission. Not the company that you’re actually on the phone to the clients for. I think that’s been a really big difference for us.
Derek Gallimore: How do you- because you are predominantly placed within a BPO but you are effectively just managing that team. I explained it to people that it’s a little bit like a co-parenting situation in that they’re typically officially employed by the BPO. Although, the identity, culture, and day-to-day management is run by the client.
It is a bit co-parenting because they come into the BPO office. A lot of their sort of colleagues and who they see at the water cooler from other accounts. How do you see the complexities of having this almost jewel identity for the staff?
Nathan Platus: I think it’s challenging for people but I suppose that at some point in time, they need to identify with who they are and who they’re talking to. I suppose we went over the top a little bit with it, particularly around t-shirts, lanyards, paraphernalia, and branding up on the wall everywhere.
A very big thing in the Philippines is people refer to external companies as clients. So when they were in the BPO environment, they talk about their clients being hipages. I was very quick to tell people not to refer to hipages as a client but refer to themselves as hipages.
So instead of saying hipages, the client, they say me or us, because that’s who we are, and that’s our identity. I know 100% of how people feel about it. The short answer is no. I’d like to say that people are more loyal to hipages now than they are to the BPO.
But I suppose at the end of the day, the BPO is the one that they’ve walked in the door and they’ve tried to be employed by and they’ve been happy to be profiled whichever particular account they want to be moving.
I suppose it’s an uphill battle for us and I think that if you’re in a captive environment, it’s quite different. But I’ll take the wins that I have today about people feeling aligned and loyal to hipages, even if it’s only in my heart, as opposed to the reality on the ground.
How to start offshoring in the Philippines
Derek Gallimore: I think people respond to the day-to-day actions, whether they’re officially employed by X, Y, or Z, or I think the day-to-day actions actually determine people’s loyalties and behaviours and things like that. So it’s often the things that are put in place that determine the actions of people.
So if people are looking with your operation, you really went like a racehorse and quickly grew up to 140. Now, that’s quite an unusual situation. But if people are looking to offshore, to build a team, what would you recommend the steps are?
Would you recommend that everyone always comes over to visit first or just get started with one person? What would you see as the guaranteed win of staffing and offshoring exercise?
Nathan Platus: I think you need to, for me, there’s a stepping stone as a path. I think that if you’re not wanting to move scale over, to begin with, I think outsourcing your first few roles are probably important. So, not moving to try to bring someone over here too quickly.
But if you’ve got a couple of roles to begin, feel free and feel comfortable to outsource it. Take a couple of seats in a smaller organisation where you don’t necessarily want to be in an organisation that’s got two-plus thousand people because you’re really just another name and a number.
That was something important for us. We knew that we wanted to get to a reasonable size, so we didn’t want to go for businesses that had more than 15,000 people over here, because we really didn’t want to be a name and a number. We prefer to be one of the larger accounts if you will, as opposed to being one of the smaller ones.
So if you’re setting up anywhere from one to five people, go for a mid or lower size BPO that’s maybe got 500 to 1000 people because they’re going to give you a little bit more special attention. The larger you get, the less attention you’re probably going to get from any way from one to five people.
Number two is to bring things over slowly. Don’t try and push things too quickly. If it takes a year to double in size and it takes a year. That’s okay. But make sure that you bring things over that you know will be successful or you invest the time with the people to help them do it.
Suppose the third biggest thing for me is to bring your culture over here. Help the staff identify with who you are as an organisation, come over meet them from Australia, you’re looking at $1,000 return, a few hundred bucks for accommodation.
It’s not the end of the world, you’re saving a lot of money by having people over here. So invest in the travel to be able to connect with the people the same way that you would want to connect with the people that are in your office.
For us, we do monthly drinks with everybody. So end-of-month drinks, we go out, we have drinks, we celebrate. We do end of month awards. We also do two to bigger parties. So that’s a thing that we do in Australia. So we do an end of financial year party that we run in July, and also an end of year party that we run in December time. Those parties have been super successful.
We had a lot of awards, the guys really love it. We always bring the CEO and a few other executives over from Sydney at the same time. To be able to connect with people we do strategy roadshows. We make sure that everybody’s very visible and make sure that everybody has the opportunity to connect with people
Derek Gallimore: Fantastic. Just going back to the BPO facilities, I think there’s not too much clarity over exactly what a BPO does, what they don’t do, what they should be doing, and then also, these people very rightly so considering just building a remote team working from home not necessarily paying all of the official government taxes and things.
What would you suggest is of critical value within a BPO? Why outsourcing supplier and how do you choose a good one?
Nathan Platus: A couple of really basic things: good internet. Internet in the Philippines a time is a bit average. It’s doesn’t have fantastic shape. My view is that having people working in is always better than having people work at home because the internet domestically can be average.
Commercially, it’s expensive and people need to invest in having good internet. I wouldn’t be going with the BPO that had less than two internet connections. Very technical thing, but very important.
Number two is a good building. There is a lot of Zed grade, if you will, buildings over here and having people in a nicer facility is very important. That doesn’t necessarily mean it’s going to cost more money. There’s a lot of BPOs over here that have a good scale, which means that they can actually offer a seat or in a facility that’s much better than a much smaller business at a reasonable price.
The third thing and this is a personal thing for me, is that someone has their own desk. So that they have a sense of belonging, a sense of their home if you will. There’s a lot of desk sharing that goes on over here.
Just paying that little bit extra, say, that that person has a dedicated desk, knows that they can pin photos up of their family and that’s their home for their eight, nine hours a day that they’re in the office for. For me that that’s really important.
Derek Gallimore: It all contributes towards that culture doesn’t it, and just to give the staff a sense that they’re a part of your team, they’re being looked after, and their interests are aligned with the interests of the company.
Nathan Platus: Correct.
BPO community in the Philippines
Derek Gallimore: Good. So we have met socially and there’s a lot of communities around the BPO and outsourcing community. Can you describe to people what the outsourcing, BPO community is like in the Philippines and how this industry is contributed to what the Philippines is now today?
Nathan Platus: There are somewhere between 110 and 130 million people in the Philippines. There’s maybe somewhere between 15 and 20 million people that live in Manila. And they say that there are about 1.3 to 1.5 million people employed in this industry. This industry generates about $25 billion for the country every year. It’s the largest or second-largest contributor to GDP along with OFWs.
It’s got a big spot in the Philippines. It is a very well paid job. It’s created a pseudo middle class and it’s a job that a lot of people aspire to get into. There is a lot of talent around people that are constantly wanting to join the industry. In Australia, it’s not a glamorous thing to be in the call centre anymore, but over here it is. It’s a big thing to be able to get into a call centre and support your family. So it means a lot to people
Derek Gallimore: Also to be working very closely with Australian firms, American firms. It really is quite exciting for this younger generation now.
Nathan Platus: Absolutely. And the benefit of being Australian, or working for an Australian business, I should say, is the hours of work. America is obviously working graveyards, Australia works a day shift. Typical style is somewhere between 6 am and 7 am, which is really great for people from a traffic perspective.
It also means that they finish early so they’re finishing at three or four o’clock in the afternoon. So that their commute home is not as bad as it would be if they’re finishing at five or 6 pm.
Derek Gallimore: For sure. What is it with Australia and outsourcing? Over the last sort of five to 10 years, it’s really come leaps and bounds, isn’t it? Obviously, the beginning of outsourcing was founded by the US, which as you mentioned is fully graveyard shifts, it was predominantly standard call centres.
Now the explosion over the last five to 10 years has been, a lot of different countries, Australia is coming strong, but also a lot of different professions and higher-value activities. How do you see offshoring, outsourcing from an Australian perspective? Are businesses in Australia waking up to it more quickly now?
Nathan Platus: I think it’s very simple. Recently, there was a study that Australia has the highest minimum wages in the world. That’s not sustainable. The cost of living in Australia is too expensive. You can’t just keep increasing your face on consumers in order to cover your cost as a business anymore.
Everybody’s obviously in business to make money. You have shareholders that want to be getting a return on their investment. So the short and the very blunt truth is it’s too expensive to only have staff in Australia now.
My belief is that people if you haven’t already, you need to start outsourcing in order to reduce some of your costs. Even if it’s one customer service person, there’s an extra $50,000 there, they have to reinvest into different things in the business over the back into the owners of the box on the shareholders.
We recently have gone to market to try and employ three or four-person customer service personally in Sydney and it took us about four or five months. It’s just not the desired job for people anymore. People don’t want to be doing as a career. The money they can get for that in Australia is not enough for them.
Whereas, you can come over here and pay a quarter or 10th or a fifth of whatever it is and people are super happy to have that job and will work double as hard for it. So my view is really simple. If you haven’t already, you need to explore it. And if you already have it, then you need to look at what else you can do.
Derek Gallimore: And it is hard. We often talk about running teams and building teams in the Philippines and it is fraught with complication and difficulty. But that is actually its business, isn’t it? It’s difficult to build teams in Australia or the US to balance budgets, but also to get the right people on the bus. It’s complex and ever-changing, isn’t it?
I think sometimes we lose the forest for the trees in that. We’re in the Philippines and discussing how difficult it is to build successful teams, but it’s just the nature of building and expanding businesses.
Nathan Platus: I would really agree with that. I really share your thoughts and it doesn’t matter where you are, it’s hard to build it. But I really can’t emphasise enough that just because you found a cheaper resource in a different country that you cannot take some of that money and reinvest it into travel and connecting with the people over here as well.
Friction with remote-based teams
Derek Gallimore: Absolutely. When you see, just on the last point that the friction with remote-based teams, I think we’d all agree that if it wasn’t for the discount if money wasn’t necessarily an issue, you would ideally have everyone in the same office in the headquarters. But obviously, there’s a huge opportunity to access fantastic resources at a cheaper price.
But where are the points of friction? Is it with communications? Do you see concerns are a lot of perspectives? People see concerns in terms of security, really knowing that people are working and then sort of conveying the culture across the airwaves. What have you come across as, maybe, the main points of friction?
Nathan Platus: I think not being able to walk up to somebody’s desk and have a chat with them, and maybe keeping them in the loop of what’s going on. So those water cooler, those corridor conversations that you would typically have in your home office don’t tend to make their way over to a remote office as well.
I think the important thing that you need to remember with all of that stuff is you need to double down on it. So something that we’ve done recently here is we have TVs or large screen computers, in every single office. We’ve got zoom, so somebody can walk into a room, they can start up a meeting and they can have a video conference with their team in Sydney.
They use the same booking platform to book a room based in Sydney or in Manila and I can connect them with the Sydney team very easily. It’s about reducing the friction to have a video conference and see somebody’s face and to be able to gauge your reaction from them.
I think is what’s helped us reduce some of the friction. That didn’t happen day one, that didn’t even happen after sort of two or three years. It’s something that’s happened over time that we’ve realised is really helping. So we obviously continue to double down on that stuff that helps.
Derek Gallimore: Well, thank you so much, Nathan, you’ve been over here five years. And you’re, you’re really an expert in your field now in terms of managing operations, building teams. I really appreciate your insight.
Nathan Platus: Thanks, Derek, it’s been an absolute pleasure.
Derek Gallimore: That was Nathan Platus of hipages. If you want any of the show notes regarding this episode, go to outsourceaccelerator.com/270. And as always, if you want to send us an email, then just email us at [email protected] See you next time.