How to Make Outsourcing Work for Your Company
There are cautionary tales about offshore services among chief executives and their companies, whether they are outsourcing to India, the Philippines, or another country.
I was witness to the gaps in this business model years ago when I outsourced my companies’ outbound service needs to a Business Process Outsourcing (BPO) company in the Philippines.
I was convinced that offshoring is a good business model with legitimate gains and manageable risks. On the first day I arrived in Manila, I met our offshore team and they were impressive. However, the longer I stayed, the more I got acquainted with the faults of the outsourcing system and many BPO providers: lack of transparency, and being built on a culture where people come and go and no relationships between clients and employees are formed (the perennial problem of poor employee retention).
That didn’t work for me: I wanted to know how my staff operates, I want to know what Employee A was paid versus Employee B, and I wanted my team to have the latest in IT equipment and redundant Internet connection. I wanted to have the same control of the team in the Philippines as I did with my onshore team.
EMAPTA Founder and CEO
Advantages of outsourcing
If you ask Australian companies where to outsource, they are increasingly making the commercial choice of employing three to four staff at a lower rate in the Philippines compared to one in Australia. See some examples of the benefits that EMAPTA’s client partners are experiencing :
- Flexibility and business focus – A boutique financial advisory firm can transfer 80% of financial planning paperwork to its offshore paraplanners, giving its onshore financial advisors more bandwidth to close sales and service customers.
- Profitability – If you are wondering how can outsourcing lead to increased revenue, additional capacity allows you to have a team where you can pass on leftover work to get it done overnight. This is how a mortgage processing company improved the number of their processed loans from 1,000 to 2,000 within their first month of offshoring.
- Solving skills gap – A financial company faced with a limited talent pool in the US was able to expand through different expertise and areas of outsourcing. They built a diverse, multi-skilled offshore team of engineers, accountants, developers, loan officers, and even marketing specialists.
- Faster service delivery – A car rental company improved operational efficiency leading to faster service times since their offshore outbound specialists took immediate action with each lead.
- Lower costs – A software solutions firm obtained 77% savings from labour costs of a six to 10-person team, compared to spending $200,000 for setting up their own office in Manila.
RELATED READING: How to Overcome Offshoring Hurdles (BONUS: Podcast with EMAPTA Founder and CEO, Tim Vorbach)
How to outsource the right way
So how do you make offshore staffing work for your company as well as be more competitive and profitable using this model? How does it become a worthy investment? Straight from own offshoring experience, here are some tips to get you started:
Decide which activities can be outsourced
Learning how to outsource begins with defining the scope of work. The answers will come from a combination of your insights and discussions with your team. I’ve been able to squeeze the right information with these questions: Do you want to simply get rid of routine tasks to shift your focus back to your core operations? Do you need offshore talent who has the same skills and competencies that your local team has so they can help you with high volume work? Or do you have to outsource an entire department such as marketing because you require the expertise? Having a clear vision of how you’ll distribute work among your local and extension team will help you how to manage outsourced employees.
Look at the value proposition.
How does a company decide where to outsource services? The devil is always in the details. Flesh out an offshore staffing plan and see how scalable and effective the delivery platform is. Investigate the visibility of all staff and related costs. Does the provider add a margin to staff salary? Are the providers’ fees sustainable for your company? If you have a high-volume, low margin business (like I do), an offshore staffing provider with unreasonably high margin likely isn’t the right fit for you. There are different outsourcing strategies offered by various providers out there, so don’t settle and continue exploring until you’ve found the right fit.
Even with the remote setup, you should never lose full control and direction of your offshore staff, along with security over your proprietary information. No hidden agendas and surprises – the offshore provider should involve you in every decision made, from talent acquisition to staff training and evaluation. It should put a premium on your employees’ wellness and satisfaction; in short, it should take good care of them and not foster sweatshop-like operations.
Get all the support you need.
Adjusting on how to outsource work overseas should be seamless when you have the right partner. You won’t be able to focus on your core business (typically one of the main motivations for offshore staffing) if you are preoccupied with every important HR administration and IT connectivity problem. Choose a provider that offers operation management oversight once your team goes live. This way, you are free to concentrate on the things that matter, such as company productivity, performance, and profits.
Hire the right people.
We cannot emphasize this point enough, because you can only hire the right staff if you cover all bases – the physical, geographical, and social contexts. For instance, your offshore staffing partner should be strategically located in a business-friendly location with reliable, redundant telco infrastructure. It should have access to a large pool of English-speaking, university-educated, aptly skilled professionals.
10 years after Tim Vorbach built EMAPTA, the company has helped over 300 client partners from multiple locations and industries in building high-performance teams. All of them had the same realisation: an effective offshore team can make a huge difference for your business, especially if you are struggling with rising costs at home. You can re-channel your savings back to your customers, optimizing customer relationships and expanding your front end. But this model is only as good as how you execute it – if you are equipped with the right plan, people, and partner for success.
EMAPTA is the No.1 Business Process Outsourcing (BPO) in the Philippines. We have been helping small businesses accelerate their growth fully managed outsourcing that includes high-calibre talent, world-class offices, cutting-edge technology, and a rewarding work environment. In the last 10 years, we have acquired the experience and expertise to attract, onboard, and retain high-quality offshore talent in the Philippines.
Get in touch with us today to discuss how we can help your small business outsource with our customisable and flexible solutions.