How To Outsource To The Philippines

Because we had everything systemized. We had an onboarding process that was able to take hungry talent and turn them into great world class web developers. And so that's what systems and processes allow you to do.

Hello, it's Dave and I've got a fantastic interview for you today. I just recently ran a Mastermind and BPO tour, which is business processing outsourcing over in the Philippines. Ten of our clients come over for that and we talked about what is possible when building teams out of the Philippines. We covered the culture and where people go right where people go wrong. And having sort of been in the space and building teams out of The Philippines for 20 years now, I've always felt that it's been one of our competitive advantages. I think large multinational companies have been doing it for years and with a lot of the changes in technology, it's just getting easier for small businesses to be able to access it. Now, unfortunately, our calendars didn't quite align for our guest today, Cody Thompson, to join the Mastermind. He runs a BPO called Workpod out of Doombigetti in the Philippines. But he was able to send Cybill from his team who joined us. And it was a great presentation. I know the group got a lot from it. I wanted to continue that conversation as we really start to explore the crossover between offshoring processes and AI again. I feel like when you combine those three together, there is an opportunity for small business owners to get a real competitive advantage. And I couldn't think of anyone better to explore that with than Cody. So welcome Cody.

Thank you, buddy. Appreciate it.

Perhaps just to start, if you can tell us a little bit about you guys and Workpod and the work that you do and whom you serve.

Yeah, so Workpod started a couple of years ago. It was sort of out of a. I guess I had spare desks in my own office. I was in the process of scaling a web development company and, and we had just finished fitting out our own facility and I had about 60 spare desks in my building. And over the years I'd had lots of people ask me, you know, how I had gone about hiring staff in the Philippines. And we'd done it a little bit differently. We hadn't used a bpo. I went over and I created my own company and I rented a building and started hiring the staff directly. And so people had, over the years been asking me how I, how I did it. And so I went back to those people and I thought to myself, if I can fill these 60 desks with some staff for friends, then I can get my building for free. And so within sort of three, four months, we filled all those desks. And I realized that there was a real need in the marketplace for the small businesses to be able to access staff in the Philippines, but hire them directly rather than having them, you know, leased or managed by somebody else. Being able to have a direct relationship with the Filipino staff member, have them on, you know, directly on their payroll where they could build their own culture and have their own relationship directly with a team member. That's really what workpod does. And so after three or four months, we filled that space and then we went and decided to do a purpose built facility for about 500 seats. And we filled that within 12 months. And I think now we're up to our fourth location. We have nearly desks for nearly 1200 people and we've placed 800 staff in the last two years for, for our clients.

Congratulations and tremendous growth. Was it obvious to you when you started working in the Philippines, like as you said, you were using it for your web design agency, like how did you come across the idea of building offshore teams? And was it immediately obvious to you that it would be a key component of growing the web business?

That's a great question. Yeah, I heard people talk about it, you know, just, you know, online gurus and things like that. Mention VAs and then early on in my journey, I'd probably been only in business for like 12 months. And when I say in business, I was a freelance graphic designer, so it was just me. But I had the, I guess the, the revelation, listening to other people talk about it, that like, hey, my initial revelation was if I can spend more time designing, I was charging like a hundred bucks an hour to do design. If I can spend more time designing, I'll make more money. So I want to get all of the stuff off my plate that's not designing, like quoting, invoicing, managing my inbox, you know, filtering my calendar. I was just trying to buy my own time back so that I could charge a hundred bucks an hour for that time with clients. So I was able to take my business from like 100k to maybe 250,000, 270,000, something like that the following year just with like a EA and like another support graphic designer, like a junior designer. So fairly early on I got a taste of like how that could help me buy back my own time. But it probably was the next year I built the team to about five or six, but I was hiring them, David, like everywhere, all over The Philippines just on upwork. And then I got to about six and I started to really see the power of this, if I could build a wider team. But then I realized I kind of made a mistake hiring everybody everywhere because now I was managing like six different people in different locations. And that's when I sort of realized like, if I'm going to do this seriously, I want to get everybody in one location so that I can hire, manage like higher managers to assist me in managing the team. And that's when I decided to go to the Philippines. I visited a whole bunch of BPOs and, and I decided that I wanted to have a direct relationship with the staff. And so I decided against using those agency models and decided to rent my, you know, create my own company, rent a building and then, yeah, the rest is history.

Is there any particular reason that the Philippines stands out for you? I know for Australian based companies it makes a lot of sense for time zone and cultural reasons. Are there. Yeah. Other things or had you also explored offshoring into other countries as well?

Yeah, I tried. So I do have some staff in Eastern Europe for the web development company that I would use. They're very strong in design and, and coding. So you'll find that a lot of good web agencies will use like Estonia and places like that. They have a lot of talent there. But the Philippines I guess was the first one I'd heard about. So that's, I guess I think that kind of led me in that direction to begin with. It was what people were talking about like locally here in Australia, that was what I saw other people using. But then obviously time zone, they're only two hours behind. English communication skills are really high. Obviously cost of living is low. So the talent's about a sixth of the price of hiring talent here in Australia. And then they're very well educated, they've got great universities. They're also somewhat connected with the Western culture because of their history with the US having military bases in the Philippines and being very involved in the country there. They watch a lot of Hollywood movies and I guess there's an. It's quite easy to integrate those, the cultures together, the Filipino culture and the Australian culture. So yeah, so I get there's some of the reasons, but I did try India, Pakistan, some places like that, but I found the cultural fit more challenging. So I didn't pursue that very much. So in the end that lightning sites. I had, you know, about 80 staff in the Philippines, five staff in Australia and like two or three staff as freelancers in Eastern Europe, that would do design and some coding work for me.

I know because we have a good global audience and depending on where people are based, another era hear great things about, particularly if you're over in the US or Canada would be somewhere like South Africa, which equally has some, some alignment. But for Australian based companies, I think the Philippines ticks a lot of boxes.

Yes.

With what? One thing I'd be interested to get your take on sometimes like there is misconceptions around offshoring and people think, ah, you know, how do I explain this to my staff and are we moving Australian jobs offshore? And Yeah, I don't know if you have any thoughts on. Yeah, like moral implications. Are there any that you see? Oh yeah. Be interested in your insights on that.

Well, I think there is some ways that you can do it unethically. For example, some of the agency models in the Philippines, they hire the staff for a very small fee, let's say 500 Australian a month for a full time staff member and then they'll bill them out to an Australian business at 2000amonth. And if there's no value exchange in that 1500 dollars then in my opinion that's like borderline slave labor. Like you're taking advantage of somebody's situation and then profiting off of it. And so to me that was some of the stuff that I saw. Now there are BPOs that, that we're going to talk about some of the models in a moment that are doing, you know, a good job. So that's not all of the agencies that are out there, but there's definitely some unethical, you know, I have a problem with that. The other thing in terms of Australian jobs is that I guess my experience has always been that the goal would be to grow both teams, a local team and a team in the Philippines. And my experience has been if you take like repeatable, process driven tasks off of like lower value tasks off of your team in Australia and you empower them by getting those, those tasks off their plate for a fraction of the price, then what that does is it allows the business to grow, it allows you to be more aggressive in your growth because it might only cost you 16 to $18,000 a year to hire a full time staff member, which is you can hire ahead of the need, you can grow the business more rapidly. And what it does is it actually creates more local jobs. Like when I was a freelance graphic designer, I had no Australian staff, it was just me. And then within a few years I had two Australian staff and that never would have happened if I wasn't able to scale the business by using the virtual staff that I'd hired in the Philippines. So my experience has always been in my own businesses, but also in the clients that we serve. If they offshore, well, it actually increases the number of jobs in Australia, not decreases them. So it's, it's, in my opinion, it's about growing both an international team and a local team at the same time and they complement each other.

Yeah, you mentioned, because I'm imagining you get quite good visibility into a range, a range of different businesses. Are there any obvious mistakes that you see people make when they're getting started building teams offshore, particularly in the Philippines?

Yeah, I think it's. It's just treating the person like they're not a person. I mean, like just the fact that they're remote.

It.

You can. People can then treat them differently. But if you treat them as just as like you would treat hiring a new person locally, in fact, you have to almost put a little bit extra effort in because you're not going to be right there sitting next to them, like, make sure the onboarding process is welcoming, that they feel like they're part of the team. They're not just a. They're not an AI bot at the end of a slack message or an email. They're a real human being that wants to have their dreams come true as well. And so if you treat them like a human being and part of your team, then you'll get great results. That's the biggest mistake, is just people not, not integrating them as part of their team, but leaving them as some sort of offsider that they just send tasks to. That would be the kind of the root, I guess, of the biggest mistakes that we see.

And I'm imagining there's a learning curve for businesses when they're getting started. Obviously some of them are getting more comfortable working virtually because we had Covid and they would be forced to have a lot of team members work from home. And I feel like to a certain extent that has opened the eyes of a lot of people as to what's possible if we know we can work from home. Well, now this opens up potentially a global talent pool. That said, though, there are still things that need to be learned when managing team members offshore and there's a lot to consider. Yeah, I don't know if there's any equally where you see people go wrong. We can touch on the, maybe the different ways that you can work offshore. Like some people can recruit going through upwork and you mentioned working sort of freelance and recruiting people all over the place. And then there's seat leasing where you recruit a seat through a facility where you're paying for the equipment and some of the infrastructure. And then there's agent leasing where it can be fully managed and there's like everything in between, a full gamut of things. But I'm, I'm wondering, yeah, your thoughts on that and how you guide people through depending on their skill level and what they're learning and how they're getting started. Offshoring.

Well, I think starting with, starting by dipping your toes in the water I think is not a bad thing. And what I mean by that is just trying out some freelancers online like on Upwork or Freelancer or Fiverr or one of these websites where you can access like lower value, not should say lower value, but lower cost talent in another country, but only on a casual basis. So that's like a good place to start. If you've never done it before, then that's a good way to dip your toes in the water because there's no sort of like there's no long term risk. It obviously is very time intensive. And that's the downside of the freelance model. Firstly, it's time intensive. You got to like troll through applicants for the roles. That takes extra hours and hours. And then the other downside is that you pay casual rates. These freelancers online, they're not paying you the same rate as you would get if you were hiring a full time staff member. Just like in Australia if you were casual worker, you charge three or four times the amount because you don't get sick leave, you don't get like ongoing security for the role. So if you find people on those sites, you're paying a casual rate. Also most of the platforms take a slice of the fee for the Filipino. So upwork takes around 20% for example. So, so that's a good place to start. But I don't think if you're building like a, if you plan on building a team that's integrated into the life of your business, as in they're taking on key tasks that in, in your delivery systems as a business, then that model is really not going to work long term. So then the next type of model that you mentioned is using, using an agency and there's different models around that. There's like cost plus, which is where the agency is upfront with you. This is what the staff member costs and so that's the cost and then plus a management fee. And this is the fee that they charge to manage the staff member on your behalf. And so that's one model, I'd say that's the, that's probably the best model for, for the client in terms of using agencies, just because it's transparent, you can see what the Filipino is being paid and then what the management fee is being charged on top. And so at least there's sort of transparency. But you'll tend to still pay three times the price of the talent. So if the talent is say $700 a month as their salary, you'll end up paying over, you know, $2,100 to typically to, you know, employ that person full time. So that's the next model. And that model works well for people that perhaps don't have the skills to manage the staff member themselves. So they maybe they don't have any experience outsourcing at all. They don't know how to pay them. They don't feel comfortable managing the performance of the team. They want someone else to help manage the performance of the team member for them. They don't want to train them, they want somebody else to train them. That's kind of, I guess, where I think that model works. Or if there's maybe large companies that are wanting to build like a large team quickly and they, they would rather. Sometimes it's for insurance reasons or like they have to have an arm's length in terms of the employment. So some businesses say, for example, in the medical space, I own another company called GP Hero, which, which works with medical clinics and medical clinics really can't employ them directly due to their accreditation and insurance requirements. So they need to use an agency model. So there's sometimes that model works the best. And then our model is kind of like sits in between those two, which is where we help our clients find the staff, we provide them with the infrastructure, but then we set the contracts up directly between the client and like our client and the Filipinos, so they employ the staff directly. But our model works for people that are wanting to build an internal team, like they're wanting to build a team that they hire directly. They want to be in control of what they're paid, but they need to be able to do the training, onboarding and managing of performance themselves, because that's not what WorkPod does. We provide a whole bunch of support resources like online courses and we have HR support, we have software that they can use to track their time. We have all of the tools, but the employer is still the one in control of the Performance of the talent. But when they hire with workpod, it's like about half the price of what they would pay if they went down, say an agency model. So there's, I guess there's three different ways. Ours is really good for people that are wanting to be very hands on, whereas the agency model might be better for people that are wanting somebody else to manage a large chunk of the responsibility of growing the team.

I definitely think the biggest opportunity with offshoring is getting essential, repeatable tasks that need to happen in your business done consistently to a great standard and going to upwork. You know, you're out tasking and you're having to brief in every new task, which again is great to get your feet wet, learn the process, get comfortable working virtually. Once you figure that out and then you realize, well, what we actually want to do is build a team that gets to know the way that you like things done and, and learns your process. That's why. And you touched on it earlier, I definitely think it's, it's one of those missing elements for a lot of small business is how they think about and handle process. Not only are the Philippines based team members, a lot of them are very process driven. You also need that when working offshore because it really sets clear expectations around what it is that you want done and to what standard. I don't know if you have any thoughts on process and where you see that fitting into working virtually, I think it's critical.

I don't think, not just virtually. I think in any business, like if you, if you have your systems locked up inside your people, then that's very dangerous. You have a huge amount of key person risk. Like if you've got like one person in your business that knows how to do ABC and they've never documented it, then there's a huge amount of risk. And it's not likely that you'll be able to be efficient, you know, and streamline how you do things. So if you want to drive higher profits, if you want to have a more streamlined operation, it also allows you to hire staff and train them up faster. You can typically hire lower cost staff as well. The better your systems are because you don't have to hire experts in, you can basically create your own experts. And that's what we found at scaling our web development business. One of the biggest ways that we did it was through an internship program. We would get guys in straight from the universities. We didn't need them to have huge amounts of experience. We knew if we got them in and they were talented and hungry that within six months they would be killing it. Because we had everything systemized, we had an onboarding process that was able to take hungry talent and turn them into great world class web developers. And so that's what systems and processes allow you to do. Whereas some of some clients come to us and they want to do the same thing that I did at lightning sites. But they'll be like, go and find someone for us with eight years experience. And I have to try to educate them around like, hey, that's not going to work. Like we're not going to just find 15 web developers that are just going to land in our lap when we do recruitment. Like, you have to think about this more strategically. You've got to build processes, you've got to build a training program. Then we find the talented, hungry people, we run them through your training program, then like you can then create your own superstars. And that's, you know that that's one of the things that process without processes, that's impossible.

Yeah, definitely sticks out in my head. Something Michael Gerber had once said to me was the idea that every business is a school and that always stuck with me. And the idea that you can take new recruits and train them up and your systems and your processes and your onboarding, that's all part of the lessons. And the aim of the game is how quickly can you make them productive in the least amount of time.

Yes.

And I think if you think in terms of that, that's a big competitive advantage. And where we think of, you know, in Australia, sometimes it's really hard to justify investing in training up your team members when it's a very high cost of labor. You're like, well, I just want you to start giving me productive output.

Yeah, yeah.

Whereas in, I think the Philippines, there is a huge opportunity here to grow team members and really sort of train them up in your way of thinking to the point where they say, ah, this is how we do things here. Which is really the magical words all business owners should be wanting to hear their team members say. But it's to get there, you, you need to teach as a school. I think if anything, if someone heard that from what we just talked about, that's a huge takeaway.

Yeah. It takes long term thinking though. That's the challenge I've always felt when I've been, because I've tried to get that point across so many times to clients, sometimes successfully, but many times not because people are often looking for the, the easiest solution like, but the Best long term solution. It's like that you would hear this all the time where people say it's faster if I do it myself. And it's like, yeah, it's faster the first time. And what about the second time and the third time and the fourth time you have to do that task. It's that same attitude that can come across into the whole organization where it's like, it's not faster for me to train the staff, it's faster for me to go and recruit someone with 10 years experience. But it's like, yeah, but then they come with baggage. They also come with, they also come with culture and stuff that is not going to fit in your business. Whereas if you can, you know, my opinion's always been to hire the talent fairly raw and just, it's really just does the person have great values? Are they smart? Do they have the cultural fit? And then if they do, it's like you said, running them through the school, you know, to, to produce the, the talent that you want. And they stick around in the business a lot longer that they're cheaper to employ, they fit culturally better, they're better culture builders themselves. When you grow them and you grow leadership internally. So there's so many benefits, but it's not easier, it takes longer, but the rewards are much higher.

Yeah, there's definitely a compounding effect that happens there. And sometimes you don't notice the winds and the growth early on, but then if you get it right, it does a hockey stick. And that's because all of those winds start to build on itself. And I see like a few of these things. We talked about that intersection of offshoring process and AI and getting all of this right and then stacking these wins on top of each other. I'd be interested in your thoughts on where you're seeing the industry change and how AI is impacting and empowering team members as well.

Yeah, I mean this, with the release of the custom GPTs, the ability to basically build and train your own AI agents, if you will. I see it as an amazing opportunity to empower AI right now is yes, it's replacing certain, I guess, roles in organizations, but there's still requirement for smart human beings to implement. Like a lot of the AI tools are not going to implement themselves in your business. They need a savvy person to be the implementer. And so that's where I see AI can be very useful, like in every role in our organization. How can we utilize AI to do our roles more efficiently? And so when it comes to offshoring, what it allows you to do is, in my opinion, you should automate first. If the, if the task or process can be automated, it should be automated. And then if it can be, if it can't be automated, can it be supplemented with AI? And then if so, can we get an offshore person to do the management of the task and the implementation assisted with AI? And then you just keep going down the line until your most strategic thinking has to be done by your most strategic and smart people in the organization. So you, you're kind of just trying to find the most efficient, effective way. And AI is going to be so important in that now because a lot of the tasks that traditionally would have taken a long time to do supplemented with AI tools, you can achieve those tasks a lot faster. Like even from a graphic design standpoint, a simple thing like cutting the background out of an image. That used to I, when I started in graphic design, I'd have to zoom in and literally clip around the, the figures. Now I can click a button and this boom removes the background. So that's what AI is allowing us to do, but on a much larger scale. You know, I gotta edit an audio podcast. I want to get all the ums and ahs out. Used to have to go through, trim out all the ums and ahs. Now you press a button, boom. All the ums and ahs just disappear. So those types of tools are just making everything that we do the ability to do it much faster. So yeah, like you said, if you got processes, people and AI working together, you can find ways to implement the AI to make the processes faster, more efficient. It's very exciting time to be building companies.

Yeah. I feel like doesn't, as we talked about, probably doesn't replace the need for great staff. It just means that those great staff can work more efficiently and work on higher value tasks. And I remember having that moment when I first started using ChatGPT. And you, you realize that you still need someone who can spot what great quality output looks like so that you can go back to chat GPT and ask the questions to refine to get the appropriate output. It doesn't make, you know, low quality team members superhuman because they still don't know what great output looks like. So you still want to be training up and growing great team members. And these tools just make them get better output faster.

Yeah, because you got to know how to prompt the tools to get the best results. The cool thing about the custom GPTs is you can build the prompting into them so that, again, it's all about process. If you build the prompting into them, then instead of having to type the prompts from scratch every time, now you can ask it a simple question, but it's got a background of all of these trained prompts. So that allows you, again, just to do everything faster and faster. So it's exciting because the technology is going to continue to get better and better, but you're going to need smart people who know how to use it. And so that's a big thing that we're working, you know, we're doing at Workpod is just trying to make sure that the people that we're hiring in the Philippines, that they've got access to training on AI tools, because, you know, Australian businesses or you know, us, uk, wherever listeners are based, there's. There's going to need to be people who know how to implement those tools into the. Into their businesses.

I think you're right. It's an exciting time. I do feel like it's the first time in history that you're able to have all three. Like it's faster, cheaper, better. It used to only be that you could pick two of those, but now with AI, it is possible when you combine great AI with great process and great people to get faster, cheaper, better. So, yeah, thank you so much for your insights today. I'll make sure to put a link over to Work Pod. That's probably. Is that the best place to point people should they learn more about what you guys are up to?

Yeah, just workpod wrkpod.com We've got heaps of resources there as well. If people are looking to get more educated in the offshoring space, there's heaps of resources, videos and checklists and stuff on the site that they can access.

Yeah, perfect. All right, thanks for your time, Cody.

Thanks, buddy.