I met up with a firm in Perth last week. They had been offshoring for two years and, until recently, were very happy with their BPO (Business Process Outsourcer/Offshorer). Their invitation to visit their office came out of the blue. I hadn't been actively approaching them, but I knew they used a competitor and, based on their LinkedIn posts, it seemed like they were satisfied. So, what led to the meeting?
It turns out that their BPO was charging a blanket fee for their staff members, which provided no transparency as to who was getting what. This is commonplace; many BPOs often charge a flat fee, for example $3,500 or $4,000 per month, per staff member. They promote this as an all-inclusive cost, claiming you don't have to worry about anything. But this becomes a problem when you wish to promote a staff member, and it turns out that of that $4,000, only $1,250 is going to your staff member while the rest is lining the pockets of the BPO.
This firm had a star performer in their team and wished to promote her. However, when they approached the BPO, it became complicated, and they almost lost the staff member over what should have been a simple, positive moment. This is when they discovered that the BPO was taking over 65% of their monthly invoice! That left only 35% to cover not only the staff member's salary but also pension, health insurance, 13th month pay, and all other entitlements. Frontline revolutionized the outsourcing and offshoring space. When our founders Mark and Jon first went to the Philippines for their own firm, they were used to seeing providers (in India and Vietnam) who only offered the traditional outsourcing model, which meant a loss of workflow control. They didn't want to give up control over their workflow and didn't have full confidence in generic providers who had little to no knowledge of the Australian accounting industry.
So, they set up their own office. In hindsight, if they were running their own firm again, they wouldn't do this. Unless you're going to have a team of 40-50+, the downsides outweigh the benefits.
When other firms approached them for help, they created a model they would have used themselves if it had been available. This model, now commonly known as Offshoring, allows firms to maintain control over the workflow. But more than that, it's a model where fees, salaries, and other costs associated with employing someone in the Philippines are transparent, and all parties' interests are aligned. This way, if a staff member gets a pay rise, the provider doesn't take a cut. Moreover, all of the costs associated with employing someone are transparently shown both upfront and on an ongoing basis.
When you're reviewing an offshore partner, it's important that they know your industry, but even more crucial is that they're a trustworthy, transparent company to work with. Don't fall into the trap: if your BPO has hidden fees or can't show you the breakdown of the costs of employing someone, walk away!
Feel free to Schedule a Discovery Call with me anytime.
Connect with me on: LinkedIn.com/in/adrianbeales
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