Outsourcing vs Offshoring

The use of offshore white collar labour to achieve significant cost savings is a relatively new concept. A number of different terms have been thrown about in describing the different ways that an offshore workforce can be implemented. You may have heard terms such as outsourcing, offshoring, offshore outsourcing, remote staff or BPO, to name a few.

With all the different terminology floating around to describe this phenomenon out there it can be confusing to gain an understanding of what solution will work for you. To make it a bit easier to understand, the general concept of using an offshore labour solution can be defined as either 'offshoring' or 'outsourcing'.

Outsourcing involves the organisation using a third party provider to provide the services required without having direct managerial control over that employee, meaning that the third party has all of the control. Using an offshore solution the organisation utilised the services of an intermediary who facilitates the process whilst the organisation maintains control of the employee.

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Blog

Offshore digital marketing teams

Tuesday, Jan 27.

The Philippines has an excellent reputation for staff with high quality creative skills. In recent years this has led to an explosion in the amount of digital marketing work that is being performed for Western countries by offshore Filipino staff.

Jan27

Offshore digital marketing teams

Tuesday, Jan 27.

Offshore digital marketing teams

 

Digital marketing is a very recent and quickly evolving space.  As more and more business is transacted over the internet  the importance of managing your digital strategy is growing exponentially both in terms of both the direct marketing of your products/services and also for verification of the quality of those products/ services.  

 

Many businesses are coming to realise that it can be difficult to completely outsource the responsibility for effective performance of this function and instead are moving all or at least a substantial part of their digital marketing activities in house.  With the range of skill sets required to effectively implement a digital marketing strategy this can however be a difficult outcome to achieve cost effectively – this is where the use of offshore Filipino staff can be a great advantage.

 

The Philippines has an excellent reputation for staff with high quality creative skills. In recent years this has led to an explosion in the amount of digital marketing work that is being performed for Western countries by offshore Filipino staff.  From graphic designers to social media monitors, copy writers, web developers and digital marketing managers it is possible to build a complete offshore digital marketing team in the Philippines. 

 

When it comes to setting up an offshore digital marketing team you will however need to take your time and be careful with your recruitment.  A number of the staff you will be looking to recruit will be in high demand and in order to attract their interest you will need to make sure that both your salary package is attractive and that the offshoring provider you are partnering with has a reputation as an employer of choice.  Filipinos are extensive users of social media and will quickly find out the reputation of your offshoring provider in the market place.  The best indicator of a providers’ performance is their annual staff turnover – this is a question well worth asking through the provider selection process.

 

In addition it may be worth consider recruiting graduates and training them to meet your needs.  Some providers have partnership arrangements with well-regarded universities that will help give you access to quality graduates.  Whilst there may be a greater initial investment of time and effort the medium term payoff of proceeding this way can be both a high level of staff loyalty and also a much better value proposition – graduate salaries can be up to one tenth that of candidates with 5+ years’ experience.

 

Regardless of which way you chose to proceed with your offshore team the cost savings are worth it.  If you do an apples and apples comparison of the total costs of employing someone in Australia (including all on costs such as rent, electricity etc) against the cost of engaging the same person in the Philippines the savings are likely to be in the order of 70% or more.

 

 

 

 

 

 

 

 

 

 

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The key ingredients for successful offshoring

Tuesday, Jan 20.

Once you have made the decision to use offshore staff you need to consider it fits in with the businesses overall strategic plan and is well thought through and planned.

Jan20

The key ingredients for successful offshoring

Tuesday, Jan 20.

The key ingredients for successful offshoring

 

Planning

For any major project to work well it is very important that it fits in with the businesses overall strategic plan and is well thought through and planned.  Offshoring initiatives need to be driven top down through the business if they are to be truly embraced and the potential benefits fully realised.

 

Pilot

Those businesses considering using offshore labour for the first time should consider first running a pilot program to fully understand the considerations which will arise.  To have an effective pilot program it is important to document at the outset what success will look like, agree how long the pilot program will run for and fully review and evaluate the results of the pilot once completed.  Incorporating the learnings from the pilot program into future plans will be very beneficial. 

 

What to start with?

It is best to start offshoring with simple internally facing functions.  Ideally functions that will free up existing bottlenecks or otherwise make life easier for your current staff will help greatly with staff buy in.  Initially avoid client facing functions as you want to ensure that things are running very smoothly and that you have thought through you clients’ likely reactions before you make the decision to expose them directly to your offshore team.  Marketing and accounting support roles are easy ones to begin with, some examples of roles to consider beginning with might include data entry, bookkeeping, paralegal support, graphic design and search engine optimisation.

 

Staff Communication

Once you have made the decision to use offshore staff you need to consider how you will communicate this to your local team.  In the absence of any formal communication they will of course assume the worst and this may lead to local staffing issues.  If you don’t plan to make any local staff redundant but are merely looking to add resource and replace people as they leave through natural attrition you should let your staff know. Even if you are planning to make staff redundant letting everyone know in advance who is likely to be affected and who isn’t will help a lot with your internal change management.

 

Take your time

The most important thing of all when thinking about moving to engage staff offshore is to take your time. There will almost certainly be issues which will arise and by starting small and growing as you learn you will minimise any likely impact and allow you the time understand how to make offshoring work for your business.  In addition you should let your staff know from the outset that there will be teething issues and ask for their patience in working these through.  Expectation management is very important to ensure that they give you the time to make the offshore staff strategy work for your business. 

Treat your offshore team the same way you would treat your local team.

 

 

 

 

 

 

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How to choose an offshore staff provider (or BPO)

Friday, Jan 09.

Some offshoring providers make you comply with their processes and procedures. Others customise their solution around what you want.

Jan09

How to choose an offshore staff provider (or BPO)

Friday, Jan 09.

How to choose an offshore staff provider (or BPO)

 

If you are thinking about engaging staff offshore it pays to take some time when picking your BPO service provider.

Thing to consider include:-

 

Industry specialisation

 

If your provider knows and understands the industry you work in this will help a lot. Industry specialisation helps ensure they:

  • understand the type of work you want done 
  • have access to staff with the right qualifications and/or experience
  • have a suitable technology platform
  • can provide ongoing operational assistance, training and support in a way consistent with your industry norms and needs.

 

Location

 

The location of your service provider will significantly affect the quality of staff they can recruit for you. 

If you require staff with good qualifications and/or experience you will need a provider located in one of Manilas’ business districts. On the other hand if university qualifications are not a priority and you plan to train the staff yourself you will be access to lower cost staff outside of Manila. Having a provider in the wrong location may greatly hamper your ability to recruit the right staff.

The quality of infrastructure also varies greatly within the Philippines. You are far more likely to have reliable electricity, internet and transport within rather than outside of Manila. These may not seem like significant issues in Australia but they certainly are in Manila. Also make sure you ask your provider:

  • do they emergency back-up power?
  • are their premises subject to flooding? 
  • do they have a back-up internet service provider?
  • are they close to staff transport?

Some providers source staff who work from home. It is important to understand if this is the case as many quality and security issues come into play with this offering.

 

Australian presence

 

A provider with a local Australian presence will help greatly when you come to roll out your offshore plans.  Everything from negotiating your agreement through to training your local staff and resolving the inevitable issues which will arise is made much easier when your provider has a local presence.

 

Extra services

 

Not all providers offer the same level of service. Some do little more than provide a serviced office with recruitment support. It is important to understand the level of additional services you require. Additional services can include:-

  • Assistance with IT setup including data security plans, data location and connectivity solutions.
  • Human resource management assistance including development of position descriptions and KPIs and conducting regular performance reviews.
  • Assistance with day to day operational issues and monthly reporting.
  • Training and workforce development plans.
  • Training for your Australian staff.
  • Staff engagement and retention strategies and activities.
 

Customised?

 
Some offshoring providers make you comply with their processes and procedures. Others customise their solution around what you want. Customised solutions can include things like developing an employment agreement specific to your needs, agreeing and implementing performance metrics and customising the training and workforce development program for your staff.
 

Employee engagement and retention strategy

 
The biggest issue by far to think about when engaging your provider is staff retention. 
 
Many providers have staff attrition rates in excess of 5% per month. 
 
For an offshoring strategy to be truly effective, low staff turnover is crucial. To achieve this the BPO  must have high quality staff friendly facilities, a good reputation in the market, and a properly thought through staff engagement plan supported by an appropriate budget. The best staff are attracted by these things.
 
 

Contracts

 
Many providers look to lock their clients into long term contracts. This is not necessary and is not desirable from a client perspective
 

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