TheEFFICIENT · for a Philippines-based company typically grosses $45 a week. This worker will have...

An Effective Guide to Increasing Your ROI when Offshoring

Mike O’ Hagan

TheEFFICIENT$100-A-WEEK WORKER

Copyright © 2015 by Mike O’Hagan

This book or any portion thereof may be reproduced or used only with the acknowledgement of the Author - Mike O’Hagan.

MikesManilaTours.com

http://www.MikesManilaTours.com

Table of ContentsBackdrop 4

HowItAllBeganForMe 6

HowOutsourcingGotaBadName 7

QuickCaseStudies-What’sWorking 9

DifferentEngagementStructures 13

Incorporating 13

Third Party Providers – BPO and KPO 13

Staff Leasing 14

Freelancers 15

Specialized Services 17

IssuesandResolutions 18

Language 18

Inexperience in Australian Accounts 19

Security 20

CanIFindtheTypeofSkillsINeed? 21

Think“BranchOffice” 24

Summary 26

AboutMike 27

Disclaimer 27

The Ef f icient $100-a-week Worker

A Guide to Effectively Increasing Your ROI with Offshore Services

4

BackdropOffshoring is rapidly changing the way businesses worldwide operate. It’s indeed happening, and nothing can stop it. It’s your choice whether to remain competitive or lag behind. If you are not already offshoring even as your competitors are, you would be playing catch-up.

Around 53% of Australian businesses stuff up their offshore operations. Therest nail it, reaping massive rewards. This eBook can help you avoid being in the 53%. It is also a guide to maximizing productivity when offshoring part or yourentire workforce to the third largest English-speaking country in the world – thePhilippines. As of 2015, the offshoring industry in the Philippines is growing bycloseto20%ayear.With105millionpeople—1.2millionofthesealreadyworkingfor Western businesses—and an annual addition of 500,000 college graduates,it’s boom time for the offshoring industry. Western businesses of all sizes, be



5

it individual entrepreneurs or publicly listed corporates, are moving computer-basedjobstocountrieswherethelevelofeducationishigh,Englishistheoft-usedlanguage, and wages are a lot lower.

Let’s take an example. A Filipinooffice worker employed in Manila for a Philippines-based company typically grosses $45 a week.This worker will have at least one university degree and his medium of education has been entirely English.Filipinosarekeenforworkand even keener to impress their employers, particularly Western employers, as they pay much higher – more than twice thelocal rates. Employing Filipinos isactually quite easy. Yet, engaging them in a resource that suits your long-term business requirements is often done wrongly. Getting them to understand your business and your processes can be challenging. Understanding what they can and cannot do, what they know and probably don’t know is critical. Understanding how to use this great opportunity to maximizeproductivityistherealkey.

This eBook has been designed to address these concerns.

A Filipino office worker employedin Manila for a Philippines-basedcompany typically grosses $45a week. This worker will have atleast one university degree andhis medium of education has beenentirelyEnglish.



6

How It All Began For MeI’m Mike O’Hagan, a serial entrepreneur. I own or have interests in businesses in Australia, Hong Kong, and the Philippines. I first started hiring Filipinos nine years ago. Today, I have three businesses operating in the Philippines. My team sizesrangefromassmallasthreetoas largeas45. I intendto“giveback”bycreatingmore entrepreneurs. I believe the future living standards of my grandchildren can only be shaped by entrepreneurs. If entrepreneurs such as Lang Hancock and Holmes à Court hadn’t pushed and developed the mining industry in Australia,it’s hard to imagine where the country would have been today. The point is the governmentcertainlydidn’tbuildtheindustry–entrepreneursdid.

After completing a three-year Master’s Program in Entrepreneurship at MIT inBoston, United States, I augmented my learning by visiting outsourcing providers in different countries. During this period and since then, I’ve also been building myinterestsandteamsinAsiancountries.Icomefrombothsidesofthefence–Ihave studied offshoring and I’m practicing it as well. My studies, and the mistakes I made along the way, have given me a unique insight about which businesses are invogueandwhat’sworkingandfailing. In2012IstarteddemonstratingWesternbusiness owners what’s working and not working for them as far as offshoring is concerned, and where the latest trends and opportunities lie. I do this through a three-day intensive Business Learning Tour conducted in the Philippines. I run these tourswhenI’mfree–usuallyeverytwotothreeweeks. It’sbeenverysuccessfuland has received rave reviews.

This eBook is part of what I teach on my business offshoring tours which you can find at MikesManilaTours.com.

http://MikesManilaTours.com



7

How Outsourcing Got a Bad NameIf you understand where the outsourcing industry came from, you will better understand your options today. Twenty years ago, major international companies discovered the value of getting their voice/phone processes operated from low-wage countries such as Poland and India. They soon followed it with back office processes. Because incorporating a company in most of these countries is difficult, the concept of a third-party provider evolved, wherein the provider would be the legal entity, employ and fully train the workers, and manage them while they run the set structured processes. I call these providers ‘Corporate BPOs’. BPO stands for Business Process Outsourcing although today it is more often used as a general term for the Offshoring Industry. Today, many of these providers are large in size, with a staff strength of 50,000 quite common across the industry. In fact, aheadcountbelow5000wouldhardlyrateamention,suchisthesizeandmannerthis ‘outsourcing industry’ has evolved. This formula worked really well, and for many years, drove the competitiveness of large businesses over small business.

About five years ago, cloud computing, coupled with the efficacy of the Internet, opened the doors for businesses - irrespective of their size - to access offshoreworkers. Some approached the corporate providers. These providers typically charged $15 to $18 an hour. They usually didn’t entertain anyone starting withless than 20 seats, and made an exception only when they felt that this numberwould grow. However, a few decided to take on small businesses. Some even came up with industry-focused solutions, particularly in areas such as accounting, engineering, and the like.



8

The elephant in the room was the ‘set structured processes’. Corporates had honed these –that’s how these Goliaths function. Small and medium business (SMEs),however,usepartprocessmixed with tacit knowledge todrive their business models. When you start employment with an SME, typically you will be shownseveral work flow processes, and thenanexperiencedworkerwilltakeyouthroughtheropesandshowyou‘howit’sreally done’. If you ask the corporate BPOs, they will say these smaller businesses had poor processes and systems. On the other hand, if you ask any small business owner who tried using a corporate BPO, they would often compare themselves to a small fish in a big ocean, lacking the guidance and help needed to navigate through. Their concluding remark, more often than not would be: “outsourcing sucks!”Nevertheless,itwasamess.Thisgaveoutsourcingabadname.

Today,theCorporateBPOmarkettooisbeingsqueezed.I’mstillfindingoccasionalcases of mismatched providers. Salespeople, incentivised by commission, will do anything to convince you how ‘their solution’ is ideal for you. There’s an ‘outsource everything’mantrathatunsuspectingbusinessownersgetinvolvedin–withouttheset structured processes.

Ifyouarebig(startingwithmorethan20seats),haveprovensetsystemswhichyoudon’t need to change, then you should check out these corporate BPOs. If you are not,oryouareexperiencingrapidchanges,thenyoubetteravoidthispartoftheindustry.

Aboveall,it’sNOTaboutoutsourcing–it’saboutoffshoring!Moreonthislater.

The elephant in the room wasthe ‘set structured processes’.Corporates had honed these –

that’showtheseGoliathsfunction.Smallandmediumbusiness(SMEs),however, use part process mixedwith tacit knowledge to drivetheirbusinessmodels.



9

Quick Case Studies - What’s Working ManyAustralianSMEstodaystartoffshoringwith2or3‘all-rounders’(generaloffice/ back office workers). The SMEs then teach themselves “how to develop andmanage” offshore people while they train them. After about three months, theyseemto“getit’thenweoftenseethesebusinessesrapidlyexpandingtheirFilipinowork force. Typically, they place all roles in one office, so their people are all ‘together’.Whatprimarilydrivestheirproductivityistheirstaffexperiencing,hearing,andexchangingissuesandsuccesses. Italsogeneratesan‘internalknowledge’–the tacit knowledge within the business. The sharing of tacit knowledge is a major factorinthedevelopmentofSMEs.

Building a team in a shared space is the most common structure that is driving high returns on investment. One of my businesses suffered a 60% dropin market size and acomplete change in customer purchasing habits when the global financial crisis hit in 2008. After a couple ofyears of job cuts—weshed 300—and werestill cost cutting, I realised this strategy was a boat to nowhere. Progressively, as peopleleft,wemovedmostofthebackendofficeprocessestoManila.Everystaffmemberweengagedrepresentedanadditional$1000aweekonourbottomline.It didn’t take too long to turn the numbers around and get the bank off our back. We

The sharing of tacit knowledge is a majorfactorinthedevelopmentofSMEs.



10

then moved an Australian Marketing Manager to the Philippines, where we rebuilt anentirelynewwayofmarketingourservices–LeadGen,orassomeofyouwillknow, lead generating. At the rate of 2000 leads a day, we are contacting about80%ofourtargetmarket–justbeforetheyrealisetheyneedus.Theprocessesweuseareverylaborious–nowayyoucouldeventhinkofdoingthisinAustralia.Ofthe35workersthisbusinessemploysinManilatoday,20arecompletelynewjobscreated from our new marketing process. The same business uses Filipinos on the phones to sell its services. Mind you, this works brilliantly! The structure we used to achieve this we will cover later.

On the lines of LeadGen, a US-based company uses high resolution aerial photographs to ‘measure roofs’. They have 400 Filipinos sitting at computers using small red dots on their screens to measure the exact size of every roof, while recording the address, type, and condition of the roof. They are working their way through the United States. What do you think roofing companies would pay for a list of roofs – by size, type, condition, and address?

Then there’s an Australian company that sells sun shades for swimming pools. The company engages Filipino workers to work their way down every street on Google Maps using the satellite view, spotting swimming pools in backyards with no cover. They zoom in and take a screenshot of a likely house, and then drop the picture into a personalised flyer that they address and set up. By simply hitting the ‘Print’ button in Manila, a copy comes out of a printer in Australia, where someone folds and mails the pile each day. The business owner says this targeted and personalised strategy featuring an aerial photo of a house is the most cost-effective marketing he has ever done.

An Australian security company gets all its alarm monitoring done from its Manila office 24/7. With lower wages and even lower office costs, the company tells me their all up costs are 80% lower than their Australian operations.



11

The Philippines has a massive oversupply of qualified accountants. Six-monthinternships (no wages) are the norm, following which graduates typically earn$38aweek.SpokenandwrittenEnglisharefine.Coreaccountancyskillsarefine.Like graduates in the West, they lack practical application and the specialised knowledge of the country they would be servicing.

An entrepreneur recognised this opportunity and gap in the market. He set up and hired 50 graduates—all for “free”—and focused training on practical knowledge pertaining to his local accountancy needs. They learnt fast. Within a few months, he kept the great ones for himself and leased his specialised accountants to other accountancy businesses.

Many Western accountants tried to imitate this formula but failed. They didn’t understand the real money came from generating the quality of the worker.

An Australian who is a construction engineer, found himself at a loose end living in the Philippines. Using his contacts and goodwill in the industry, he used LinkedIn to establish contacts and then sell 3D drafting. Initially, he struggled to find suitably trained people for his Revit 3D software, but persistence paid off when he discovered a university that specialised in teaching an architectural stream, much suited to his software. When he entered the market with his team, Australians were paying over $100 an hour for 3D rendering. His Filipino staff was costing him a mere (including office and computers, and management) $9 an hour. His staff were also quicker and more creative than their Australian counterparts. It didn’t take long to build his market with these fundamentals.

American health insurance companies commonly process their claims in the Philippines. Like accountants, there’s a massive supply of nurses. They make for great admin workers in this industry, given their understanding of the medical terms and processes.



12

A similar trend can be seen in specialised services. A Manila-based accountancy used to provide back-end services for Australian accountants. They have now switched from this “wholesale” model to direct “retail”. They are now servicing Australian businesses directly. I am one of these businesses. Where I was paying $300 an hour for routine accounting in Australia, today I’m paying $20 an hour in the Philippines. I’m seeing very little difference in the standard of the services. FYI, I still use an Australian for tax planning!

Marketing is no different. We are seeing high-end Philippines-based marketing services providers to top-end advertising/marketing firms in Australia switch from wholesalingtodirectretail–directlytargetingAustralianbusinessesatamere$20an hour.

An Australian company specialising in converting cars from right-hand to left-hand drive struggled to stay afloat in Australia. It shut down its Australian operations and shipped all its equipment to a “tax-free zone” in the Philippines, where mechanics earning $48 a week are in oversupply. From $45,000 per conversion with no profit, the company was able to bring down the cost to $17,000 per conversion along with a decent profit. The real shot in the arm was when the company discovered that shipping from the Philippines was substantially easier and lower in cost. This opened up its market to Thailand, Singapore, Hong Kong, and England. Today, this company is thriving and selling all round the world.

An entrepreneur, who wants to be known as the premium vintage and classic car restorer in the world, set up his business in the Philippines, in an area where motor mechanics too earn $48 a week. He was quick to notice that Filipinos also excelled in the allied trades of panel beating, painting, and upholstery. Today, the entrepreneur has a 400-strong staff restoring a fleet of Rolls Royce’s and Jaguars worth $55 million, which he resells around the world. He’s well known in the top-end auction houses for being the one who achieves “close to original” end products with this team.



13

Different Engagement StructuresThere are five different ways you can engage people or services.

Incorporating

In the West, you typically start a business by registering the name, incorporating a company, leasing premises, and hiring people. In a low-wage country, this is a strict no! You have no idea of the bureaucracy and frustrations involved. You may come across people who might tell you that you can incorporate a company in the Philippinesinameresixweeks.Whattheydon’ttellyouisthatforseveralpartsoftheprocess,thedocumentationorpre-approvalswillextendthat6-weekperiodformanymonths.Inotherwords,6to12monthsisthenorm.Thenafteryoubecomeincorporated there is a massive bureaucracy involved in ongoing compliance. Not surprisingly, even the big companies avoid incorporating.

Third Party Providers – BPO and KPO

Thisbringsustothird-partyproviders.Athird-partyproviderisalocal(Philippines)incorporated company that provides support services to offshoring businesses. Theyarethe“gobetween”.Theylegaliseyouractivitiesandtheyhaveatendencytokeepthelocalpoliticsandissues(read:corruption)awayfromyou.Ofcourse,youcannot hire directly. Employers and workers in every country must be registeredand comply with a stack of tax and employment related laws. It’s reasonablycommon for Westerners to get caught employing directly – the authorities don’tmess with you. Furthermore, you need real good legal advice about the Australian endaswell.Australiahasmanydifferentdefinitionsofwhatanemployeeis–afewdo not mention that the worker has to be in Australia.

At the top of the tree, as I described earlier, are the corporate BPO’s. If you wish to hand your processes to a third party who returns just the outcome, doing



14

everything for you, at a premium and you are starting with about 20 seats, youshould talk to these people. However, be careful! You must have very structured, tried,andprovensystemswithnomissingbitsthatrequireyourworkersto“think”.

Staff Leasing

A relatively new solution is “co-managed” or “staff leasing”. Thissolution, which emerged 4–5years ago, is growing rapidly. We are seeing real results, where this solution is being used to build a team. In brief, these businesses provide the legal entity to employ the worker, along with the office space, desk, and computer. They typically offer recruitment services (often free), humanresources (they need to protect themselves; the Philippines has strict employment laws), andoften middle management who manage“behaviour”.Iseemanypeopleassumingthat“staffleasers”wouldselectbetter people who will be trained by them to manage your workers’ work. However, this is not the case. YOU need to assess and select the best workers for your roles. YOU need to train your workers, install your processes, and instil your company’s culture. After all, they should become YOUR people. Typically, you can start with 1or2, learnhowtotrainthem,andintegratethemintoyourteam.Then,youcanramp it up so you end up in a designated office space. Your team, your space, your processes,yourculture–thisiswherehugegainsinproductivityareoccurring.

Your team, your space, yourprocesses, your culture – this iswhere huge gains in productivityareoccurring.



15

There are a myriad of such staff leasing offers around. I believe you need to understand exactly what each does and doesn’t do, and ignore silly promisesaround selection and training. Look at the location with an eye on competitors poaching staff (corporate BPO’s in Manila consider 60% annual staff turnover aslow!) and suitability of the skills you need compared to where they live or wantto live. Staff leasers need not just good internal processes to handle the different requests and situations but also a caring helpful attitude. Bigger isn’t always the best, neither is shinny and glossy. Filipino workers have a completely different idea of the ideal workplace than western workers.

StaffleasingworksforSME’s,withproductivityappearingtosoaroverfiveworkers.You still, in my opinion, need an expat overseeing your operations – a Filipinomanaging Filipino. More on this will be covered shortly.

Freelancers

It would be amiss of me to not mention the online virtual providers. These providers use websites designed to match workers with employers, either for projects or hourly rate workers. The standout in this field, among the several, is oDesk. It featuresworkers,mostlyhome-based“virtual” individuals(occasionallyverysmallteams), with skills ranging from basic to the top end of town. They are not all inlow-wage countries; many western workers have chosen to work via oDesk. I once hiredanamazingmarketingpersonwholivedinaremotetowninthesouthofNewZealand. She has risen to the top of her career in a big city, married a guy who lived in this remote town, started a family, and was happily working for flexible hours,earningextraincome,allthiswhilewatchingthekids.

oDesk could work wonders in some cases. Whilst you can get workers for $2and$4anhour,thelowendactuallycosts$5anhourforofficeworkers,andcango up to $8 an hour. At these rates, I’m getting all-rounders—office workers withgoodEnglish,goodcoreofficeskills,andgoodMicrosoftOfficeskills—whomyou



16

can instruct and manage. Note these rates are your final cost – no upfront fees,superannuation, work cover, computers, office space, wages preparation, etc. All you have is a weekly deduction from your credit card, provided there are no disputes about the charged hours.

For nine years, I have had a full-time Filipino personal assistant on oDesk. oDesk charges10%.Ithink10%isacheapwaytogetridofaheapofadministrativeneedssuch as government forms, payroll, and the usual employment on-costs. My PA and I have complete access to each other’s emails. She reads my sent mails to keep abreast of what I’m doing. She takes care of a heap of the repetitive tasks, freeing up my time so that I can be more productive. This includes having my Credit cards and making booking etc as I need.

This brings us to an issue to watch out for. Teams of online virtual workers often becomeaproblemastheygrow.IhavedismantledtwolargeoDeskteams–oneof40andtheotherofover60people–andputthemintoanoffice/staffleasingsituation. The difference in productivity when workers are able to share and help each other in an office space is huge. So, if there is a possibility of your business growing, I suggest you avoid virtual home-based workers.

Another issue is the rates of pay most of these virtual home-based workers earn. These workers usually need to work 40 hours a week to feed themselves. Youcomealongandoffer,say,20hoursaweek,naturallytheytakewhattheycan.Theyworkwellforyour20hours,and(ofcourse)spendtherestofthetimelookingformore work. With your employment on their resume, they look good and usually get anotheroffer.Oftenthatofferisfor40hoursaweek,i.e.full-time.Thisiswherethetrouble starts. The worker often gets smart at this point and decides he can handle your20hoursaweekplusthenewofferof40hoursaweek,makingitasizeable60hoursaweekincome.However,2–3monthslater,itallbecomestoomuchandthe work standards fall apart. I’m constantly seeing work relationships with virtual



17

home-based workers going from great to bad due to the full-time work scenario andextremelylowerrates.

Specialized Services

No discussion on offshoring would be complete without highlighting another prospect that is growing rapidly. I call it “specialised services”. In short, it’s thetype of business services most western businesses typically outsource. At the top of the list would be accountants, followed by IT networking and marketing. The latest trend is for these services to be countrified and provided from the likes of thePhilippines.Agoodexampleisaccounting.InAustralia,Ipay$300anhourtomyexternalaccountant.InManila,exactlythesameservicecostsme$20anhour,sometimes $30 if it’s higher end CFO or cost management accounting. There’s amassivepositiveintheseservices–theyaregettingbetterandmorecountrifiedbythe day.



18

Issues and Resolutions

Language

WhenitcomestoFilipinos,oneofthefirstconcernsraisedis:“whatistheirEnglishlike?”Over100yearsago,thePhilippinesbecameacolonyoftheUnitedStatesandremainedsofor50to80years(dependsonwhenyousaytheirinfluencestopped).TheAmericanssetuptheireducationsystemandmadeitcompulsory–ofcourse,inEnglish.FilipinosspeaktheirlocaldialectandthenationallanguageTagalogathome,andtheningradeone,theylearnEnglish.AllFilipinosaremultilingual.Whatthismeansisthattheypickupandlearnspeakingskillsveryquickly.TheirEnglish,while being good, is very American. As an Australian employer, your challenge is Americanismasopposedto“English”.Letmeputitinsimplewords.Filipinoswalkona“sidewalk”anddon’tknowwhata“footpath”is.Theircarshavehoodsandtrunksinsteadofbonnetsandboots.Icango on, but I guess you are getting what I am trying to say. All Australian workplaces in the Philippines have long PowerPoint presentations designed to “Australianise”their new Filipino staff.

We also have to modify some of their common language terms as they brand their speechas“non-Australian”.ThetwobiggiesareSirandMa’am.Filipinosareraisedwith a very (compared to us) strict sense of respect. They use Sir and Ma’am allthetime.Banningwordsintheworkplaceisusual.Often,weusea“swearbox”toenforceourspeakingrules–thisway,wecanevolvefromtheseriousnessofourrules when we all get to party with the fines collected.

Furthermore, Australians speak much quicker with a tendency to run words together, besides using lots of slang, when compared to Americans. Filipinos who havenotbeenexposedtoAustralianstalkingstruggletounderstandexactlywhatwe are saying.



19

Inexperience in Australian Accounts

Here comes a warning! Around 75% of the 1.2 million Filipinos employed in theBPO industry work for American businesses. Most third-party providers have only Americansasclients.Theyhaveabsolutelyno ideathat “Australia isdifferent”.Asthe first Aussie client in an Americanised work place, I have witnessed some real horrible messes with Australian businesses.

Mike’s Tip: Only use providers who have experience with Australian Customers.

Many“industryterms”havedifferentconnotations.ThisisacommontrapwhenyoufirstgetexposedtothePhilippines.Ihonestlydidn’tthinktheyhad“holidaypay”inthePhilippines.Itwasonlyaftersomeonementioned“vacationleave”thatIrealisedthe differences that can trip us up. What you call a particular role will often have a different title in the Philippines. The problem is that, more often than not, they won’t beawareofthedifferenceandsimplysay“no,wedon’thavethosehere”.

So, that’s about the bad news. The good news is they learn very quickly.

Mike’s tip: I employ Filipinos for selling on phone. We assess their ability to understand us by speaking at full belt before they go through any other pre-employment assessment. To do this we actually phone them from Australia. Lot of them get rejected. I also employ computer coders (both low- and high-end), whom we hardly check for verbal skills. They usually are fairly poor at spoken English. We just learn to speak slower and double check that they understand what we said.

At this juncture, I should mention the “yes” frustration. Filipinos have an immenserespectforWesterners.Theyalsohavea“savingfaceculture”wherewhat“others”(everyonearoundthem)thinkofthemreallymatters.Ifyoutalkfastandtheydon’t



20

getwhatyouwantoraresaying,toavoiddisappointingyou,theywillsay“yes”.Theabsolutely worst thing that can happen to any Filipino (comparable to the demise ofaparent)isifaWesternergetsangryordisappointedwiththem.It’salotworseifthishappensinfrontoftheirpeers.Whenthishappens,theyflee–yes,literally!Ionce had four employees walk out on the spot and never came back after I made derogatory remarks about their culture in front of their work colleagues.

Mike’s tip: A skill you must acquire if you spend a lot of time with Filipinos is to ask questions that cannot be answered in yes or no. “Is the bus late” becomes “when will the bus get here”. Also, you must never raise your voice – the trick is to quietly reason. Of all my challenges when I started employing Filipinos, this gentler way of communicating was the most difficult for me to master. To the average Filipino, Australians are loud, brash, and harsh. We swear a lot (they find swearing very offensive) and talk fast using funny terms that we don’t mean.

Ontheflipside,FilipinosareaveryChristian-basedsociety.MostattendChurch2–3times a week. In fact, every major shopping centre has a large chapel. Culture-wise, they are closer to Australians than any Asian country. We share a similar “take the Mickeyoutofeachother”humour.

Security

This leads us to the last common concern: “what about security?” I believe it isabout the same as Australia. Employees are focused on doing the right thing.Activitiessuchasstealingdatabasesdonotentertheirminds–whatwouldtheydowith it? Of course, common sense should prevail. However, I still believe it’s much the same as Australia.

Bottom-line:Weareverysimilar,sowe“connect”.



21

Can I Find the Type of Skills I Need?The education system in the Philippines seems a lot more practicable than in Westerncountries.FilipinosarewellversedinMicrosoftOffice.Ihaveseen7-year-olds building PowerPoint presentations with animations. In other words, the core skills are very sound.

University(college)isthenumberonepriority(ofcourse,aftershelter,clothing,andbarelyenoughfoodtolive)ofeveryFilipinofamily.Theyhaveaverystructuredfamilyhierarchy where the eldest work and pay the schooling fees for the next siblingdown.It’sextremelyraretofindaworkerintheBPOindustrythatdoesnothaveatleastone,ifnottwo,universitydegrees.Amazingly,it’salsoraretofindthemworkingin the area that matches their education. It’s like a degree proves you are smarter yet, and you do whatever comes your way, thereby adding practical skills to your resume.

LetmeremindyouherethatthemediumofeducationisEnglishandit’sbeenthiswayforover100years.

On my business learning tour, we visit some really high-end computer coding businesses. We also see architects, engineers, draftsmen, accountants, etc. I’m acquainted with lots of medical skills and legal people. I believe the skill sets are similar to Australia. However, there’s a twist. It’s unusual to find them with Australianised skills. Not impossible, but unusual. While I talk of them being paid $120 a week (yes, lower is as common), if you want really high-end, top-notchpeople(particularlyinIT),youwillneedtopayforthem.Notably,thetopendisstillsubstantially lower than what we are used to.

Tothoseofyou(yes,Igetseveralsuchrequests)whoaskforapersonwhoknowstheAustraliantaxcode,canbuildwebsites,andanswerphonescalls,Isimplysayifyou cannot find someone like this in Australia, then why do you think you could find that person here in the Philippines?



22

Geezatthesewages,youcaneasilyslipthetasksamongthreeseparatepeopleand still be way ahead.

So, if Australianised isn’t available, what’s the point? At these wages, given their ability to learn very quickly, the way to make this work and get the better of your competitors is to train them. That is the common factor with the highly successful Australianised business operating in the Philippines.

Someodds:I’moftenaskedaboutFilipinos’writtenEnglish.Usually,thisisincontextof writing content for online sites. The concern is “can you tell it’s not written by an Australian”.YoucanfindgreatwordsmithswhoareAustralianisedandabletograspthe messages around suitable content or product knowledge. Here again, you need to look hard, perhaps even head hunt to get the very good ones. This is no different than in Australia.

Mike’s tip: Use a recruiter.

Remember,FilipinosareeducatedinEnglish,but it’sveryAmerican. I’mnot100%sure why, but could be due to their local language influences, they commonly pluralise words that we don’t. This would apply to the average worker; the specialisedcontentwritersaremostlyanexception.

Mike’s tips: A big, big key to success is to employ them by testing their core competencies and then training them according to your needs and ways of doing things. In these days of free audio visual and screen sharing apps such as Skype, remote training has become a lot easier. We all have fundamental systems and processes which are often passed along from the experienced to new worker. In my experience, it’s this type of training that still works the best. A path to failure is to reply on written-only instructions.



23

Another trick that I use is to bring them to Australia for training. There is a special training/education visa that’s fairly easy to get (use someone experienced to process this). The airfares typically equal what we save in costs a week. In Australia, we have Filipinos staying in your homes, sometimes even sharing with other senior Australian employees. The idea is to Australianise your overseas workers whilst training them on our systems and processes. We like them to stay for 4 to 6 weeks – this will depend on their personal situation in the Philippines. You will also need to give them a small weekly cash allowance. They still have their overheads at home, and cannot afford even a cup of coffee in Australia.

There are a whole bunch of other tricks you need to use when bringing them to Australiafortraining.Emailme–I’malwayswillingtosharethelatestideas.



24

Think “Branch Office”Of all the Australian business owners I see doing well, it’s those who take the view that “their Philippine operation is a branch office” are the ones who achieve themost.

Would you set up and then ignore a branch office? I think not. I remember a piece of advice given to me when I first set up a part of my business in another city: “When they say to you ‘but we are different’, get your tail in a plane and go look foryourself”.Thisadvicehasheldmeingoodsteadovertheyears.WhenIaskedanother great friend if I should franchise or borrow money to set up, he asked me how I started the original business. I said I started with one, made a few mistakes thatIlearnedfrom,thenwhenIhadenoughmoney,Igotanother–inotherwords,I bootstrapped. I built my business by funding from within, learning to crawl before I walked, and making sure I never over-ran anything. To this, he said, “well that worked,sowhynotusethesamesysteminyournewlocation?”

Anupsideofusingathird-partyprovider(suchasastaffleaser)isthattherisksareminimal. While nearly all have contract time terms, they often allow you to cancel on a couple of months’ notice.

Istronglyurgeyoutoappointanexpat(basedinAustraliaorinthePhilippines)tooversee your operations. He/she should be closely connected to the workers, and aware of their names, family situation, birth dates, etc.

To directly manage, you need a Filipino. In other words, Filipino managing Filipino. Ifyoustartsmall(say2–3seats),tryhardtofindapotential“trustedFilipino”,thendevelopthetrustandthepersonintoamanagerial(staffoverseeing)role.I’vefoundFilipino office workers are very similar to Australians. There are great workers, and there are troubled workers, with most falling in between. Good managers seem toemerge.Well,that’sbeenmyexperiences.I’msureIholdtherecordforfailures



25

when employing what I thought would be top notch managers (and paid them accordingly)–virtuallyallmygreatmanagershaveemergedasopposedtobeingselected through a recruitment process.

YourtrustedFilipino(useyourthird-partyproviderinthisroleinitially)willhelpyouwith what’s normal and what’s pushing the envelope with instances such as being lateforwork(weusezerotolerance)ortoomanyfunerals,etc..Theywillhelpyoudevelop motivators. Money rarely works as most share all their income into the family circle; personal rewards with peer recognition work far more effectively. No westerner will know or understand the thinking behind all this.

As I mentioned earlier, the Philippine Industrial Relations laws are very strict. I know how much that scares Australians. In the Philippines, there is one set of conditions for all workers and those are fairly black and white. Every worker alsohas a “contract”. In the Philippines, you can expect all your workers will read andconsider the contract prior to accepting the position. In Australia, it’s the opposite! Our workers seem to rarely read their conditions. In simple words, your third-party providerwillhaveacontract.It’salwaysafairlysimpleread–youshouldbeawareof the conditions and agree. They will always follow this to the letter.

Mike’s tip: There of a lot of similarities with American thinking. Your Filipinos will expect a clear set of KPI’s to achieve. They will feel lost without these. Set your expectations and outcomes and measure the results. This type of management works a treat.

My first staff were upfront in asking for a 20% wage hike after the first year. Thisseemedtobeastandardexpectation.Wenowhandlethisbybeingveryupfrontin our contract and induction. The staff’s pays are reviewed yearly and adjusted toinflation.Anyextraincrementcanonlycomefromperformancebonusesorjobpromotion.



26

Summary If you want to hire just one or two people, disconnected from each other, with you closely managing their every move, then with effective recruitment testing, home-based“virtuals”fromthelikesofoDeskwouldwork.

If you want to grow a team to ensure higher productivity and harness the power of tacitknowledge,allthiswhileoperatingwithlessthan25–30seats,astaffleaseristhe way to go.

Ifyouarebigenoughandcanstartwith20+seats,havetriedandtestedsystems,want arm’s length quality-assured processes run for you, then a corporate BPO could be just the right choice for you.

Afteryouhaveacoupleofyears’experienceandmorethan30seats,incorporatingyour own company becomes a viable option.

In addition, many westerners have started using specialised services, such as accountancy.Theratesarearound$20–30anhourforsuchservices.

In all, it’s YOU who should still control and manage your outcomes. A core part of this is understanding all the traps and issues. All this and much more is what I teach during a 3-day intensive business learning tour/workshop at

MikesManilaTours.com.




27

About MikeAs you know by now, I’m Mike O’Hagan. I am the founder and owner of MiniMovers, a Telstra Business of the Year Award winner. MiniMovers was started by me with a capital of $200 and a ute 27 years ago. Ibootstrapped it (funded from within) and took it toits peak of $28 million in turnover. Today, we have350 employees. I also run six other businesses infour countries. My LinkedIn profile will give you a clear picture of the trades I have been Jack of and mastered as well.

I’m always happy to connect and even happier to share.

I believe we can only learn business from each other.

DisclaimerThere has been lot of generalisation in this book. Proper advice can only come from assessing the exact real needs of each business. The ideas, solutions,recommendations and any advice contained in the eBook cannot be relied on as advicetosuityourexactsituation.

Study, learn,understand,andthendowhat ideallyshould–makeanappropriatedecision.

The $ amounts are subject to the Service Provider and Currency variations. Most wagesquotedaregeneralisedGrosspay–NOTendcost.

https://www.linkedin.com/profile/view?id=19189822&authType=name&authToken=qfE4&goback=

Why Offshore before learning all the options, issues and what’s really working?

MikeTeachesthiswithabigdoseofEntrepreneurshipgazingat new Business Ideas–onthe3dayBusinessLearningTour.

Check out MikesManilaTours.com


TheEFFICIENT · for a Philippines-based company typically grosses $45 a week. This worker will have...

Documents

Transcript of TheEFFICIENT · for a Philippines-based company typically grosses $45 a week. This worker will have...