An Outsourcing Story – Offshore Philippines
by Nick Hastings - Director, Business Development & Partnerships, hammerjack
Originally posted on LinkedIn
This story looks at the journey of an Australian business, who 12 months ago decided to take the leap offshore (again). Having failed in their last attempt they knew there were benefits to outsourcing, but hadn’t yet cracked the right model for their business, landed in the right country to complement their vision, or partnered with the right service provider to execute their strategy.
According to The Gartner Group, 25% of outsourcing contracts will be cancelled or re-negotiated within 3 years. Fortunately, this business didn’t take their initial negative experience of outsourcing offshore personally. They understood that in a market of 2500+ providers servicing the Australian market from the Philippines the chance of partnering with someone that couldn’t support their strategy was high.
To provide some context, the company which started in 2008 operates out of Sydney and now turns over $15-20M+ a year, has 12 sites across all major cities in Australia and has recently expanded into New York. A real success story from two gents (let’s name Rob & David) who spotted a need and took it on.
According to Rob the reason for them bullishly continuing to look at outsourcing offshore was due to two major factors:
Savings on overheads and operating costs
To free time for key people in the business to focus on core areas
The business went through a rapid growth phase from $2-10M revenue. With this, key stakeholders took on multiple responsibilities to ensure their customers came first, while large investments were also made in support areas such as an internal finance team.
The solution required more than just a traditional “staffing” model offered by offshore providers and this is where the team had previously failed. Note: Staffing is simply where a service provider offshore will recruit and place a resource for your business, taking care of payroll and HR requirements while you train, develop and manage those staff.
It took a commitment from Rob and the team to build a serious offshore component into their ongoing business strategy, not just seeking cost savings. This didn’t mean going all in to start with, but it did mean a commitment to a serious solution. It started with a detailed scope, solution build, knowledge transfer, process documentation and training plans in conjunction with recruitment and knowledge transfer. This level of managed service was traditionally only available to enterprise businesses has now been commercialised to businesses of all sizes. The key is finding the right service provider with the experience to execute.
The business started with a strategic decision to focus on their internal finance work through a Senior Accountant, 3 months later an Order Management Agent was added to the team. Within the 6 months following, 2 more accounting resources were added (1 to service the U.S expansion). Shortly after through a consultative approach and identification a LiveChat & Customer Services Specialist was added to the mix. Today the team is 7 strong, being managed by a Service Delivery Specialist responsible for performance and continual improvement, and with a back-end developer working on their online needs full time.
The business has cut approximately $450K per year on overheads and operating costs and provided freedom to their key business stakeholders to focus on their core competencies.
After meeting Rob recently, he commented that not only had his goals been achieved faster than planned (by 6 months) but the business was realising benefits that weren’t initially on his radar such as:
Increased efficiency compared to onshore benchmarks (Accounting processing)
Advantages of time zones (sales coming in overnight via their 24hr LiveChat)
Access to specialty resources and capability (Outsourcing Service Delivery Specialists)
Process and workflow documentation (reducing speed to competency and adding multiplier value to the business)
If you haven’t already considered outsourcing, you should. It can be a field of dreams or a false economy for your business so understanding the options available is key. However, the experience of employing a global team that contributes positively to your needs and you to theirs can be a rich and rewarding experience.