To appreciate this discussion, you need to understand that in the Philippines, larger corporate or BPO Business Process Outsourcing employers typically pay their administration workers with a university degree $45AUD a week. That’s $1.13AUD an hour.
Away from these larger employers, wages are even lower. The scary part is that they are often better educated than their counterparts in the West. Several other countries have lower wages. With the new technology, the processes of recruitment and employment have changed. Businesses that are abreast the latest changes in the ever on-going evolution of engaging manpower are the ones that succeed in getting the best out of their people.
First came the corporates (BPO Business Process Outsourcing).
18 years ago, it didn’t take long for the big companies to take advantage of the 80% differential in wages. With structured processes, they found it easy to move call centre (BPO voice) functions. Then later, Back Office Processes (BPO – non voice) – to the East.
The compliance needs of the corporates, as well as the complex and often corrupt processes in lower-wage countries. Led to the establishment of third-party providers. These businesses, which I call “corporate BPOs,” grew to become the mega employers of today. With 50,000 workers all servicing big corporate businesses. Today, they commonly charge $15 an hour to their Western corporate clients.
Then came the freelancers.
Websites allowing business to directly employ freelance workers – usually home-based. From anywhere in the world, within minutes, using a safe payment transaction system. With automated productivity tracking – began to emerge. The likes of Odesk, Elancer, and Freelancer gained traction. Rates of $3-$5 an hour became the norm. Western businesses strained by the GFC, took advantage of the cost savings. The smart ones worked out to train them to suit. Virtual teams of 30 to 50 workers all servicing one western business began emerging. With this opportunity came more globalization of products and services. When you can hire a marketing expert in China from your Western country on a day or so’s notice for a few dollars, the world of business opportunity changes.
Some freelancer employers started to become a little concerned about fragmented teams, the safety of data, and the unreliability of freelanced home based workers. The more adventurous of these small businesses approached the corporate BPOs. Thirsty for new customers and bruised from heavy competition. Some corporate BPOs engaged these adventurous small businesses.
A problem emerged. Over the years, the corporate BPOs had become used to the set very structured processes. They assumed small businesses would have the same set and systemized processes. Small businesses will never be as systemized. What looked like an emerging trend of small businesses building teams in the East became wobbly. Offshoring began to get a bad name. Each blamed the other. The corporate BPOs cried a lack of proper processes. Meanwhile, the small businesses cried that this offshoring doesn’t work. Since workers cannot “think” for themselves.
Developing a team using staff leasing emerged.
Those who realized that the corporate process won’t work for small businesses started to develop a new option – staff leasing. With this model, a third-party provider provides office space, desks, computers, the legal entity to employ a worker whom the small business approves, the recruitment, HR, and people-to-people culture managing for the worker – all for $7-$9 an hour. The flexibility to start with one worker, learn the art of managing and training across borders, and then grow the team to any size started to catch on.
Small businesses use team-sharing and tacit knowledge to run and grow their businesses. The proximity of sales people near operations and administration workers with direct manager contact allows the small business to develop. Staff leasing, leading to team development, is THE growth sector in offshoring at present.
Watch the specialised services.
Around this time, specialised services started to improve for new clients. Accountancy, drafting, and marketing services were among the first to offer wholesale (white label) services to their Western counterparts. In recent times they have started to market directly to the Western market. Another wave of change is starting. With direct charge-out rates like $17 an hour for accounting services direct to the small business. Customers using the Western specialised services have a new challenge. This will be the NEXT BOOM.
Today, there is a massive pouring of Western businesses into the skilled East. Countries like the Philippines, with its American English compulsory education system, are booming.
Last year, the Philippines earned $13 billion USD and employed under 1 million people. Growth is running around 20% a year. With a population of 100 million and a better education system, there’s no bottom to the bucket.
It is predicted that in the next 5 years, 2 million jobs will leave Australia.
Changes in the world of this magnitude cannot be stopped. Moaning and emotive complaining helps no one. Embracing and using it to add value are a far better business strategy.
The world is truly merging into one economy. The borders are dissolving. We are buying, selling, and now employing across traditional boundaries.
When there’s a massive wave of change heading towards you. You can either stand and stare in amazement or grab your surf board. That choice is yours.
Mike’s Business Learning Tours teach all the above and a lot more. Mike shares 7 different offshoring systems to redevelop your business processes. Whether you are pre-startup, a micro, small, large or even a corporate business. What you will learn from the tours WILL change you and your business.