Offshoring in the Philippines: Lessons Learned – Business Focus Ep 3

Business Focus Ep 3:

Offshoring in the Philippines: Lessons Learned with Ross Sardi

Whether you’re experienced in offshoring staff or just starting to explore the possibilities, tune into this episode with First Focus CEO Ross Sardi to discover the highs, the lows, and the priceless lessons Ross has learned during his 8-year long offshoring journey.

Offshoring has transformed from a cost-saving tactic to a strategic solution for overcoming the global skills shortage. Businesses, facing talent scarcity, are increasingly turning to countries like the Philippines, where the workforce offers not only cost advantages but also a rich pool of skills. This shift towards offshoring reflects a broader strategy to leverage global talent, ensuring companies remain competitive.

But, it’s not an all or nothing proposition, so let’s talk about hiring strategies, role types and skill available, and the red tape. Let’s make it easy for you to a) decide if hiring offshore is right for your business, and b) if it is, how you can make it happen, and how to effectively manage the team you build.

Episode Highlights: 

• Why Consider Offshoring to the Philippines?
• The Different Models of Offshoring
• Building a Strong Offshore and Onshore Team

The Ultimate Guide to Offshoring in the Philippines

Offshoring has become a popular strategy for businesses seeking cost-effective solutions and access to a broader talent pool. One country that has emerged as a top destination for offshoring is the Philippines. In this comprehensive guide, we’ll delve into the lessons learned from offshoring to the Philippines, drawing insights from a detailed podcast episode featuring Ross Sardi, the CEO of First Focus.

Why Consider Offshoring to the Philippines?

The decision to offshore to the Philippines often stems from the need to manage costs without compromising service quality. As Ross Sardi explains, the initial motivation was to maintain competitive pricing in the managed services sector. High compliance, security, and maintenance costs made it challenging to keep prices competitive. By offshoring certain roles, businesses can achieve significant cost savings while maintaining service quality.

The Initial Steps: Understanding the Market

In 2016, First Focus began exploring offshoring options in the Philippines. Ross Sardi’s first trip involved meetings with various organisations offering offshore staffing solutions. These ranged from large-scale providers serving major US companies to smaller boutique operators. However, the initial experience was disappointing. The environments and office standards did not align with First Focus’s company culture and values. This led to an initial decision to halt the offshoring plans.

Re-evaluating the Approach: Customer-Driven Offshoring

The decision to revisit offshoring came about six months later, driven by a client’s interest in reducing service desk costs through offshoring. This provided a practical entry point to re-explore the Philippines as an offshoring destination. This time, the focus was on partnering with providers that could align with First Focus’s cultural and operational standards.

Different Models of Offshoring

Offshoring can take various forms, each with its own advantages and challenges:

• Business-Process Outsourcing (BPO):
  • Involves outsourcing specific processes like payroll or accounts payable.
  • Typically involves paying a fixed cost to a provider who manages these processes on behalf of the client.
  • The client remains distant from the day-to-day operations.
• Hiring via an Agency:
  • Agencies hire staff for clients based on specified requirements.
  • Offers flexibility and a lower commitment level, suitable for testing the waters.
  • Agencies may remain involved in managing the staff, including performance reviews.
• Direct Hiring:
  • Involves the client directly hiring staff with the assistance of local providers.
  • Staff are chosen based on the client’s culture, values, and skills requirements.
  • Provides greater control over the team but requires more involvement from the client.

Building a Strong Offshore Team

One critical factor in successful offshoring is the integration of the offshore team into the company’s culture. First Focus’s approach included:

• Hiring Experienced Managers: From the outset, an experienced local manager was hired to oversee the offshore team.
• Regular Visits: Frequent visits by management to the Philippines were crucial in building relationships and understanding the local culture.
• Cultural Immersion: Bringing offshore staff to visit the main offices in Australia helped align the teams culturally and operationally.

The Importance of Communication

Effective communication is vital for offshoring success. At First Focus, every desk was equipped with a camera to facilitate video calls, fostering a sense of presence and inclusion. This practice, initially uncommon, became integral in maintaining strong communication lines between the teams.

Scaling Up: When to Set Up Your Own Office

As the offshore team grows, there comes a point where setting up a dedicated office becomes financially viable. For First Focus, this tipping point was around 15 staff members. By 30 staff, the cost savings and operational control justified establishing their own office. Key considerations included:

• Cost Analysis: Evaluating the costs of office space, payroll, and administrative support.
• Local Regulations: Navigating the legal and regulatory landscape, such as setting up an export-oriented business entity.
• Recruitment and Payroll Management: Initially outsourcing payroll management while gradually transitioning to complete control.

Overcoming Cultural Barriers

Cultural differences can pose challenges in managing an offshore team. For First Focus, fostering an environment where staff felt comfortable speaking up and contributing ideas was crucial. This involved:

• Articulating Company Values: Clearly defining and communicating the company’s values and expectations.
• Positive Reinforcement: Encouraging and rewarding open communication and innovative thinking.
• Creating Safe Spaces: Ensuring staff felt safe to express their thoughts and ideas without fear of repercussions.

Handling Logistics: Internet and Power Stability

Infrastructure challenges such as internet connectivity and power stability can impact productivity. First Focus addressed these by:

• Providing Allowances: Offering power and internet allowances to ensure staff had reliable connections.
• Ensuring Redundancies: Implementing redundant internet connections to mitigate disruptions.

Legal and Compliance Considerations

Ensuring compliance with local labour laws and maintaining data security are paramount. For First Focus, this involved:

• Data Security: Ensuring data remained secure regardless of staff location.
• Employment Laws: Adhering to local labour laws and providing appropriate benefits, such as private health insurance and leave entitlements.

The Evolving Landscape: Impact of COVID-19

The COVID-19 pandemic accelerated the acceptance of remote work globally. This shift further validated the feasibility of offshoring, as businesses became more comfortable managing remote teams. The demand for skilled professionals in the Philippines increased, making it essential for employers to offer competitive packages and create attractive work environments.

Conclusion: The Future of Offshoring

Offshoring to the Philippines offers numerous benefits, from cost savings to access to a skilled workforce. However, success requires careful planning, cultural integration, and effective communication. By learning from the experiences of companies like First Focus, businesses can navigate the challenges and leverage the opportunities of offshoring to enhance their operations and drive growth.

About the Author:

This guide is based on insights from a podcast episode featuring Ross Sardi, CEO of First Focus, who shares his extensive experience and lessons learned from offshoring to the Philippines. For more detailed advice and personalised guidance, feel free to reach out to Ross on LinkedIn.

If you found this guide helpful, please rate us on Spotify, iTunes, or wherever you listen to your podcasts. For more in-depth discussions and expert insights, subscribe to our podcast, Business Focus.