15 years of outsourcing to the Philippines: Lessons Learned

15 years of outsourcing to the Philippines: Lessons Learned

My experience of sending work to the Philippines started in 2009 when I worked for a multinational organisation implementing a global centralisation strategy, transitioning select English-speaking roles to the Philippines. My GM of Asia asked me to move a few roles from Australia to the Philippines. I was initially reluctant to do this but was asked to get on board, and I set up the small team accordingly. However, I was so impressed by the calibre of talent available in the Philippines and coupled with the lack of education about this, it presented a great opportunity.

Fast forward fifteen years, and my experience predominantly relates to helping small to medium-sized business owners build high-performing Filipino teams. It’s not the traditional outsourcing model but a new(ish) engagement model. We call it Talent as a Service, or TaaS for short. We call it this so clients understand that we provide more than staff but also support services (as a Service) to help their Filipino team shine and do their best work.

  1. The most significant barriers for SMBs wanting to send work to the Philippines are two challenges:

Australian small business owners and their management teams need to be educated about the talent available in the Philippines. Most Australians don’t holiday in the Philippines, and the limit of their experience with Filipinos is most likely a Filipino nurse or speaking to a junior call centre agent. And, if they have a poor service experience with the junior Filipino call centre agent, they put all Filipino talent in the same box. You could call it a bias. The irony is that if an Aussie spoke to a junior Australian-based call centre agent and had a poor service experience, they wouldn’t automatically assume all the talent in Australia is the same because they know better. Sure, the Philippines is a third-world country, but there is an abundance of well-educated, highly skilled, and super hard-working professionals.

Robust change management is required to enable the transformation. Too often, we see small business owners or senior executives with aspirations of building an offshore team for the right reasons, only to encounter resistance from their management team. This happens for a few reasons: 1) Fear of losing their job. Folks think if they build an offshore team, their leadership role will soon transition to the Philippines. 2) A hiring manager will want to hire an Australian because they think it will be easier to manage and cultivate their desired culture. 3) The hiring manager often doesn’t carry a P&L and, therefore, is not personally or professionally motivated to make the change. All these challenges are manageable if you take your management team on the journey. However, if you don’t sponsor the initiative and subrogate the responsibility to your management, the initiative is doomed before it begins.

  1. Many small businesses fall into the common trap of trying to use the cheapest service provider in the market.

As mentioned above, small business owners and their executives need to be educated on the talent available in the market. However, they often limit their focus on getting the talent piece right. Granted, it is super important, but you must also understand you are buying a service, not just talent. So, you need to invest the time to understand the support you and your team will need now and in the future. Please understand that some service providers are cheap DIY providers; at the other end of the spectrum, others are premium high-touch service providers. If you invest the time, you will avoid falling into the common trap of becoming intoxicated by buying the cheapest service provider. However, if you start your offshore outsourcing journey with a low-cost DIY provider and outgrow them, you cannot simply move your Filipino staff across to a better provider because of the expensive staff buy-out clause standard in outsourcing agreements, so you become stuck dealing with sub-par service. Go to the Philippines to reduce your cost of doing business but avoid becoming intoxicated with finding the cheapest provider in the market. Otherwise, you will learn the hard way.

3. Australians have much to learn from the Philippines and vice versa.

If you think you have too much “red tape” holding you back in your Australian business, you are in for a rude shock if you try to do business in a high-growth emerging market like the Philippines. The Philippines has made significant improvements to encourage foreign investment over the past fifteen years and for the better. However, complexity remains, and substantial time and money are still required to establish and sustain a business in the Philippines. By comparison, our Australian accountant incorporated our Australian entity within one week, and we only invested two business hours. Meanwhile, the Philippines took nine months and over five hundred business hours which most Aussie business owners struggle to get their head around. In contrast, Filipinos can teach Australians how to be more resilient, driven, and hard-working. The adversity a Filipino must overcome to be a successful professional is far more than Australians need to tackle. The sacrifices that Filipino families make for their children and broader family to break the poverty cycle are incredible. This includes working overseas away from their children to earn a premium and put them through college or taking on a second and third job to make ends meet. I appreciate that a lot of Australian families are doing it tough with the high cost of living pressures, but these pale in comparison to the poverty and daily struggle of the average Filipino who earns a minimum wage of $370 AUD a month.

4. The Philippines’ outsourcing industry will continue to prosper.

It was only in 2019 that Robotic Process Automation (RPA) promised the world that using software robots would free businesses from mundane and repetitive work. And for the most part, that is true for large enterprise companies. However, RPA hasn’t scaled as much as the industry would have liked and for a good reason. Often, doing the same thing but faster isn’t the best solution. Also, despite the promise of low or no code, RPA is too expensive for small businesses to implement, often costing a minimum of $20,000 (ex GST) AUD in professional services alone to automate a single process.

5. If you can solve big problems, create substantial value with your work, innovate or create intellectual property, your role will not go to the Philippines.

However, business as usual (BAU) work, a Filipino will do better than an Australian and be happy to do it. Also, the new outsourcing engagement model involves the Filipino team reporting back to Australia for work instructions. Thus, if your team gets stuck on something, they will need their Australian manager to guide them in resolving the problem. Filipinos are outstanding at many things but often need support with their decision-making because they lack exposure to the commercial context by which an Australian executive makes business decisions. In summary, if you create sufficient value for your employer and know how to address complex problems that your Filipino team cannot, please don’t worry about your leadership position going offshore anytime soon.