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What is Outsourcing?
September 21, 2018

What is Outsourcing?

Written by: Mark Engelmann

Whether you are the business owner, a manager or someone else working within an organisation you have more than likely been in a position where you have received a new task, which takes you away from more important work you would rather be doing. I’m sure it would be much better for you and the business if someone else could be given that new task and all the other low value tasks that need to be done. You do not want to be in a position where your staff aren’t doing what they were hired for, because their time is being stolen by admin churn or by tasks that do not align with their core strengths and key responsibilities.

This is where outsourcing comes into the picture. Outsourcing goes a long way to taking care of the above scenario in that it provides you with an avenue for having someone else complete those low value tasks that take you and your people away from what is important; and allows you to get on with the revenue-generating, high value business.

Basically, outsourcing is a fee for service contracting arrangement; however, it can get a little bit complicated trying to understand the various outsourcing models available to businesses. For the purpose of this article I am going to focus on what is commonly referred to in the industry as ‘Staff Leasing’. Staff Leasing is a lot like working with a contractor, where you contract an individual on a full time basis via a provider. The provider looks after HR, payroll and other aspects of employment; and the contractor undertakes work for your business under direction from you. Generally, you are responsible for allocating tasks and providing feedback directly. At Beepo, we take care of basically everything, except the day-to-day tasking, including:

  • Provision of a computer, internet connection, desk, chair and office space
  • Data management and information security
  • Recruitment
  • Payroll
  • Onsite management of your person’s behaviours e.g. time in attendance, productivity etc
  • Account management
  • Employee Satisfaction and retention
  • Plus we add a supervisor who acts as your eyes and ears in the office

Remember that each provider is different e.g. some will provide a degree of training and support while others will not, account management practice will vary, as do data security practices.

There are some obvious cost benefits when you do not have to worry about paying for or resourcing the above tasks. Imagine if you didn’t have to pay for or manage a payroll system, or maintain and manage IT equipment, or worry about the recruitment of your own staff! But this is only the beginning…

ENTER THE PHILIPPINES

This model is especially popular in The Philippines. The Philippines is categorised as a developing country, but is very quickly transforming itself into the next Rising Tiger of Asia with some of the fastest economic growth rates in the world! And with 18% year on year growth, The Philippines outsourcing industry is the second biggest contributor to the country’s GDP and a significant factor in its high economic growth. This isn’t surprising when over 1.3 million Filipinos are employed in the country’s outsourcing industry.

YOU’RE PROBABLY WONDERING HOW THE PHILIPPINES IS RELEVANT TO YOU?

There are 5 favourable factors that should make outsourcing to the Philippines a very legitimate strategy for your business:

1. The Economic Arbitrage

The Philippines is a low cost economy. This means that the value of the Philippines Peso is significantly lower than the Aussie, NZ and US dollars. So basically, everything in The Philippines costs less than what you would expect to pay in a Western Country. Think about that for a few seconds…

If everything costs less, that means the average wage is also less; since Filipinos do not need as much money to live a very comfortable lifestyle. Now don’t get the wrong idea - Outsourcing Workers in The Philippines get paid very well and enjoy similar comforts to what we do at home.

2. English Ability

The Philippines has two official languages: Tagalog and English. Tagalog is generally spoken outside of work, but 100% of Filipino outsourcing workers speak English in the workplace. In fact, The Filipino education system is taught in English all the way from Pre-School through to University. And Guess what? According to this New York Times Article, Bilingual people are smarter than dummies like me who only speak one language.

3. Education System

The Philippines Education system is excellent. With around 500,000 university graduates per year, the majority of outsourcing workers are university qualified; in fact 86% of the team at Beepo have an undergraduate degree as the bare minimum. So don’t worry whether the skills you are looking for exist or not, just work closely with your provider to find the right person for your role.

4. Technology

Obviously, The Philippines’ Government is well aware of the benefit and future potential its outsourcing industry has to offer. That is why over the past few decades it has been investing in world leading infrastructure to support industry growth. The Philippines has better fibre connectivity than Australia; so don’t be concerned about how the internet connection is going to be between your office and your outsourced worker.

5. Timezone

The Philippines is in the same timezone as Perth in Western Australia. This means that you do not have to be concerned about your offshore team working at night and eventually burning out. Your offshore team can be online at the same time as you to participate in meetings and turn work around ASAP.

SO THAT’S A WRAP

What’s stopping you from handing off all the low cost, admin clutter to a team in The Philippines? Who wouldn’t want low cost, English speaking, University qualified staff working in their business? The efficiency gains alone will be transformational.

To get into more detail about how outsourcing can work for your business download my 5 part Education Series which covers off everything from identifying which tasks in your business should be outsourced, how to get buy in from your existing team, through to recruiting the right offshore team members and how to manage them to ensure ongoing success and great results.

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