OTTP002 – What is Business Process Outsourcing and How Does it Actually Work?

Now if you didn’t catch the first episode of the podcast which actually was the last episode that Dan Andrews who is the old owner of the Outsource to the Philippines blog and brand record, it was actually an interview with yours truly. In that session, we spoke about why I went ahead and purchased the blog and the podcast from Dan, what my plans were forth for the future, and generally just kind of just a nice easy going chitchat kind of conversation in regards to offshore outsourcing here on the Philippines and what can be achieved and things like that. We touch on many many different subject matters but we did not go in depth on any of them. And that’s exactly what we’re now going to do with this podcast going forward. We gonna break this subject matter down one session at a time.

And today, we start with the time honored question of “What is outsourcing and how does it work?” I get so many emails, so many tweets and facebook messages from people, business owners, entrepreneurs that are thinking about either getting involved with outsourcing for the first time in some way, shape or form or wanted to take their outsourcing method that they are currently using and enjoying to the next level.

But, before we go any further what I’d really like to do here is kind of rewind the clock a little bit and look at offshore outsourcing as an industry; how it came about and what it means to small to medium size business owners and entrepreneurs all around the world. It’s not just the big corporations that are outsourcing their customer service and all that sort of stuff. The small guy, the little guy, the joe the plumber out there is certainly enjoying outsourcing as well. And thanks to books like “The Four Hour Work Week” from Tim Ferris, the idea of business process outsourcing and working with Virtual Assistants is now very much in the mainstream. A lot of people are talking about outsoursing, sometimes it has really positive press and really positive effects of outsourcing. But obviously, there is that negativity factor of taking jobs away from the domestic country whether it be US, Australia and UK whatever the case maybe.

Let’s break things down a little bit and have a look at how benefits of outsourcing actually came about and then later on the show, we will be talking a little bit more on what it can do for you as an entrepreneur or small business owner. So, what is outsourcing itself isn’t something new it’s been around for a long long time. In fact actually it started around 20 to 25 years ago with the benefits of outsourcing of IT. Believe it or not back in the olden days it was very very rare for a company particularly a small or medium size company to actually have a full time IT management or IT staff on the premises. They would usually hire an IT expert type of company to come in and fix their computers, install networks, upgrade software and all that other type of fun techi stuff that a lot of us struggled with.

But this was not the only thing that company started to outsource. They started to outsource a lot more staff such us human resources requirements, staffing, interviewing, recruitment profiling was a big one particularly in UK where I came originally.  I remember having to sit through IQ test and everything at certain centers for one company or another. On top of all that, there were also other tasks that small to medium businesses were outsourcing 15 to 20 years ago, stuff like marketing, PR, bookkeeping accounting, stuff like this.

I mean you just have to think about it from a small business standpoint. Let’s say you have developed a product that you fell has really good legs and you should get it out there in front of as many eyeball but you’re the one who created the product you are not a marketing guy and you can’t afford to hire somebody full time not at a moment anyway. So you look to a marketing company or some sort of a PR company to help get the word out there  to help liaise with print media or TV or radio or whatever the case maybe. Notice how I didn’t mention the internet because all those years ago we were lucky if we have that compuserve address. I’m gonna be digressive, but they were ridiculous. “What’s your email address Chris?,  106.8449917@compuserve.com. “ Now there’s branding for you, how we have come along in the last 15 years, but anyway I do digress.

Fact of the matter is, what is business process outsourcing is something that has been around for a long time, it ain’t gonna disappear anytime soon and I feel that somebody who’s been involved in the outsourcing for a decade now and lived in the Philippines for 11 years full time, I can just tell, I can feel it that we are still just getting going from a small to medium business owner stand point with advantages of outsourcing and what it can do for our businesses.

Let me tell you something right now I have over 300 people working for me here in the Philippines full time and I can honestly say to you with my palm on my heart that have probably trained 8 to 9 thousand Filipinos by the time that I’ve lived in the county across a plethora of platforms and rolls and honestly speaking these guys are the most hardworking, loyal, dedicated employees that you could ever hope to come across in your lifetime. They really, really do a great job in working for you and helping you run support and grow your business. That is exactly what is business process outsourcing all about. And that’s exactly why a small to medium size business owners and entrepreneurs that we should be looking to outsource as much of our business as we absolutely possibly can for a number of different reasons.

1)     We don’t like doing the work.

2)     We can’t do the work or someone else’s out there that can do the work better than us.

3)     As business owners we feel we should not be doing that work, we should be doing some other things, like smoothing clients or spending more time on the  golf, or having more time with the family in the middle of the week, or focusing on growth strategies and building our business up to the next level .

These are the things that we should and you can do when you utilize the power of the advantages of outsourcing. So that kind of covers what is outsourcing. In a nut shell people ask me what exactly is outsourcing and I’ll give you my real nut shell approach to looking it right here. Getting somebody to do something that you either don’t have the patience, the time and the energy or the skills to be able to do at a fraction of a cost. Because you can save a lot of money with outsourcing, in fact, that is exactly the primary objective of most people when they get started with offshore outsourcing, they are doing it to be able to save money.

I look at it as a completely different ball game; yes you can save money but I fell that as small to medium business owners we should be looking at first and foremost growing and building our companies and that means that we should be spending more time with clients whether it be face to face on the golf course or over the dinner table or virtually. It doesn’t really matters when we should be focusing on strategies, we should be focusing on staff training and development to make that our customers have fantastic experience when working with us. Above and beyond everything else as entrepreneurs, we should be focusing on leveraging our time to be able to get more done and become more productive. Because if we do that, success is fundamentally just a natural conclusion of the entire process.

So let’s have a look a little bit at how business process outsourcing works for the entrepreneur.  Now, it’s basically two different ways that you can outsource work. The first way is to find somebody, to team up somebody to come and work for you full time, this is not necessarily the best way for the bootstrapping entrepreneur that’s just in the middle of a start up or something similar to that or maybe just even getting involved in outsourcing for the first time completely. But it is I think the natural way that your outsourcing plan should grow over a period of time. You should be looking to hire at least one full time member of virtual staff.

There’s a couple of different ways you can do that, you can find through O desk, through guru or Elance or other types of jobsites that are out there. It is sometimes can be a little time consuming and a little frustrating, but ultimately I do know  people that have done that and obviously some of them work out better than others. But having somebody to work full time for you really does put you in a position where with that full time employee comes a certain amount of responsibility and I guess if you want to call it pressure on yourself to make the business work. Because you are not just about supporting yourself and your family but you are also supporting your employee and their family as well. Not only that, it also gets you into the average daily routine of delegating tasks, and working with somebody and generally just having someone to rely upon whether they be a general virtual assistant, or web developer, or content writer or  maybe an SEO specialist. They are basically the four main types of VAs that are out there. We’ll go in to them in a little bit more in depth in a future episode.

But fact of a matter is full time virtual staff member on your team is something that you should certainly be striving towards. However like I said not that many people can afford that or even need that in terms of work load requirement when they start out. So, the second way to do that you can outsource and generally the first that people get involved for the first time is to go ahead and outsource certain tasks or project. This is what I call a project based outsourcing, for example you need a website design or you need a facebook page put together or a logo conceptualized and designed. Perhaps you need a load of articles you need for niche site that you’re working on. Whatever the case maybe,  project based outsourcing is a great way to dip your toe in the water  to try it out and see whether it’s gonna work out for you or not because you’re just delegating a project you’re not delegating an entire work load so to speak. So with project based outsourcing you give somebody the job they do the job and you pay them a fixed amount of money that you agree upon beforehand for doing that work.

Nine out of ten, if you manage that situation well and you were clear in your instructions on how you want the task to actually put together, it can actually become a very positive experience for you because even me personally now, with all the people that I have working for me there are still certain things certain projects that I’ll outsource myself. So I do truly practice what I preach. Yes I have lots of people working for me full time. I even have 2 VAs that are not in my facility here in Cebu, they are both based down in Manila who have worked for me for a couple of years now. I have that full time set up but I also worked with  project base outsourcing staff as well because it just works it makes sense. It doesn’t make sense if I If I need bits and bobs of graphic design done throughout the course of the month but it doesn’t warrant having somebody that’s gonna cost  me $600 or $700 a month why am I gonna hire somebody? I might as well just pay the $200, $300 whatever ends up being at the end of the month managing the graphic project 3, 4, 5, 6 projects whatever the case maybe. So that’s the way that the project based outsourcing works and it’s generally the starting point for most entrepreneurs when they get going with outsourcing for the first time.

And again you can go to places like Elance, oDesk, Freelancer, these are all one of job posting sites where you can find outsourcing staff to do those one of projects for you. And as a quick disclaimer a slum of disclaimer in here I give you a couple of resources for you to check out as well in case you have not been aware of them in the past these are the companies that I personally own myself in the Philippines out of my facility here in Cebu.

The first one is Virtual Staff Finder, a professional match making service for busy entrepreneurs who want to work with home based working virtual assistant full time. You can check that out over at virtualstafffinder.com. And, if you want to try out that more project based outsourcing idea then you can go ahead and check out yourwebpa.com. Right now we do stuff like niche site creation, personal branding kits, article writing, eBook, design, SEO services and the few other bits as well. We will have links to all of these resources over at the blog below this particular post and you know I’d love to be able to hear from you in regards to what you would like to see and hear about at outsourcetothephilippines.comgoing forward.

I guess this is a great way to be able to wrap up the second session. In the next session of the podcast we’ll gonna be discussing how to be able to identify a really good solid professional outsourcing partner. Whether you’re looking to hire a team of people or just one of virtual assistant to come and help you with certain tasks either on a part time or full time basis.  I’m gonna be slamming down tons of tips and tactics for you to be  able to make sure that you get hooked up with a best possible bunch of people or person for you and your company.

So, until next time, thanks very much for tuning in and if you haven’t done so already, make sure you get across the outsourcetothephilippines.com and sign-up for that free webinar that is out there entitled “How to Work with Virtual Assistant to Help Run Support and Grow Your Business”.  It’s available in video and audio formats so that you can digest it whether you’re sitting on computer, iphone, ipad, car, working out in the gym whatever the case maybe. It’s 100% free, you do have to input your email address but I guarantee you, you won’t hate me for it, that’s for sure.

So until next time, take good care.

I will see you very soon over at outsourcetothephilippines.com, bye bye for now.