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Cracking the Offshoring Nut, Offshoring History and the Offshoring Process

In our ever connected world there are massive opportunities: buying, selling and now EMPLOYING anywhere in the world.
Now, it’s actually easy to find well educated, highly motivated administration/office workers. Who will work for $120 a week. The challenge is how do you find, engage, transfer your knowledge, and then manage them.
Those who are building an offshore team are meeting the competition challenge. If you ignore this great opportunity then you are already behind your competitior.
Employing in countries with low wages is not a new concept, it’s been happening for over 20 years. The change is that now, small, even micro businesses can use offshoring to lift their competing edge.
Twenty years ago, this was the domain of the big corporate companies.   They outsourced their structured back office processes. An industry was developed, servicing this need.   This third party provider ran very structured systems, providing the end “solution” to a set of KPI’s.
The development of cloud solutions has allowed micro and small businesses to get in on the action as well.
Initially these smaller businesses, consisting of industry clusters like Accounting and Engineering (and others) used the providers that the corporates were outsourcing to. They were used to only working with very structured processes.   In most cases it didn’t work.
If you ask the industry, they will say the smaller businesses lacked robust systems. If you ask those who tried it, they will say their concerns were ignored. That they were the small fish – in any event, it all got wobbly and “outsourcing” got a bad name.
Twelve years ago, online portals like oDesk (founded 2003) emerged. They allowed fast, low cost engagement of virtual workers who are often home-based individuals. The quality of workmanship varied. Savvy business owners developed effective “tests” to sort the poor workmanship from the good.
Today, many still use this great resource. As of December 2012, oDesk had 2.7 million freelancers and 540,000 clients worldwide (Wikipedia 2012).
But there was an issue. Some small and medium business owners wanted more. They recognised virtual home-based workers are not as effective as a team of workers. Since sharing knowledge and expertise is not possible. The business owners wanted to build whole teams on one office space, often with their own company culture.
They wanted the job positions of accounts payable & receivable, back office administration, marketing processes. Even teams of their particular industry specialty, etc – and all on one office space – sharing knowledge and experiences together. The key to productivity is in developing and sharing – tacit knowledge.
Incorporating of a business in a foreign country, renting office space, then employing staff to the local standards was too hard. So a new third party provider emerged – staff leasing. Staff leasing is the model that provides for small and medium businesses in the offshoring industry today.   There’s huge growth in this sector.
YOUR people, in YOUR space with YOUR culture.
There’s also another player. “Specialised Services”. In addition to having their own “work place and team” there is a trend and growing demand for all the services many businesses normally “outsource” to. Like accounting, perhaps IT (networks), marketing, engineers etc.
These businesses provided a back office function for a Western specialist. But they are getting smart and now targeting the client businesses direct. Where before the SME’s and business owners were paying $100’s per hour for their specialised services. Suddenly they are available at around $20 an hour. These services are now also booming.
The staff work hours in the Philippines are on the same time zone as Western Australia. The Philippines were before a colony of the USA for nearly 80 years. The Americans set up a compulsory English education system. This country has a population of 106 million, with an average age of 23.3 years and dropping.
They graduate over 500,000 students from university a year. Today, the Philippines is the third largest English speaking country in the world. They are online savvy, keen to work. And with the right workplace solutions, they are highly productive.
In conclusion, I have used the Philippines and the staff leasing model to save one of my businesses from a bankruptcy.   During this process, I made many mistakes and learned many “must do’s”. I also watched 1000’s of Western businesses fall into the same traps. I started sharing what I had learned. This has evolved into an effective business education experience.