The only constant thing is change

A few weeks ago I wrote about disruptive innovations and how they can fundamentally damage your existing business models.

“A disruptive innovation is an innovation that fundamentally changes how your industry delivers value to its customers.  It is usually pioneered by someone from outside your industry, someone with something you didn’t see coming.  Eventually it disrupts the existing market, displacing existing business models.” 

A couple of points I made in that blog post are relevant to want what I want to touch on today. 

The first is that you can’t stand still.  Changes in technology can be rapid, breathtakingly so, and before you know it you are in real trouble.  Just ask anyone selling books or music.

And the second is there is another side to this.  There are many opportunities being created through new technologies.  They include basic back office administration, marketing though to technical skills (e.g. IT, design and draughting)

They are opportunities for improvement and allow you to deliver better value to your customers, and put cash in your bank account, without destroying your business model. 

This disruption is also based on technology and it is gathering pace. 

I’m referring to off-shoring, that is, simply employing people offshore to do back-office work that you may have cut back on in your business because you could no longer afford it.

As one expert (Scott Linden Jones) suggests that for every position placed somewhere like the Philippines, a business saves between $40,000 and $80,000 per year. 

This is not to suggest that you should be getting rid of your local staff, but think about this; have you cut back on jobs because you can no longer afford them but would still like to provide the service?  That can be done. 

Here are some reasons to consider employing staff offshore.

1.    The potential for cost savings.  Many admin positions can be sourced overseas by competent people at about quarter of the cost you’re paying at the moment.

Now if you could reduce your overhead costs one of the real benefits is that you reduce your breakeven point.  And when you reduce your breakeven point you make more money earlier than you would have otherwise, and to make more money overall.  That’s gotta be worth thinking about.

2.    Improved customer service.  Because you may have been cutting back on staff because of the cost you may well now have less staff than you really need to provide good customer service. I’m not just talking about the telcos call centres.  I’m talking about people who can handle queries, respond to problems, provide information, action warranty claims, and so on.

3.    As a business owner you have responsibility to your family, to provide them with the comfort they deserve and you with the free time to be with them.  You can’t do that when you’re continually is scrabbling for cash and spending more time in the business than you really should.

What are the possible objections?

The first one is poor quality.  Low-cost doesn’t mean necessarily poor quality.  Nor does it mean poor English.  Both the Philippines and India have English as an official language and basis of education.  Now just like any other staff selection process you need to be very careful and assess the people you propose to hire. 

How do you do it?

Well, there are a number of ways.  In his book “The Efficient $100 A Week Worker” Mike O’Hagan suggests four ways in the Philippines market, incorporate, use a third-party provider, lease staff or hire a freelancer.  In the context of the Philippines market he does not recommend the first.

I use freelancers.  The two main providers are Freelance, and Elance-oDesk.  They connect you with mostly home-based “virtual” individuals (occasionally very small teams), with skills ranging from basic to the top end of town.  They are not all in low-wage countries; many western workers have chosen to work.  In projects I have put up on Elance I have had bids from Bangladesh to Canada.

Does it work

As mentioned I have used Elance for a number of projects over the last few years; from developing complex Excel spreadsheets beyond my competence, designing book covers, researching opportunities, putting offers on my website, and so on.

One colleague I know and respect, uses a Philippines-based assistant.  She has an MBA does his research, a lot of his administration, runs his Facebook page, emails prospective clients and partners and so on.  Another colleague has his accounts done in Singapore and his website designers are based in Hong Kong.

Scott Linden Jones suggests your offshore team can create management accounting and other reports, liaise directly with clients you want, prepare compliance documentation, chase up client documentation, Chase debtors, manage your payroll and provide administration.

Mike O’Hagan quotes is Australian accountant cost him $300 an hour and exactly the same service in Manila costing $20 an hour.  So get web designers, copywriters, draughtsmen and engineers.  All the skills that you could expect to find in Australia are usually available offshore.

I believe this disruption is worth exploring, the cost savings are significant, but it must be undertaken with the same depth of research as you would do with any new project. 

Here are two websites of people who may be able to assist you, and I should add I’ve met neither and have no connection with them, but I thought you may be interested.

Mike O’Hagen http://www.mikesmanilatours.com/  Why Offshore before learning all the options,  issues and what’s really working?
Scott Linden Jones   http://www.easyoffshore.com.au

I would be interested in hearing how you go. 

If you would like to take advantage of my new offer, a “fast track to cash” free strategic consult, please click here http://www.profitsleakdetective.com/fast-track-to-cash-consult

© Copyright 2015 Adam Gordon, The Profits Leak Detective  (except for the bits by Scott Linden Jone and Mike O’Hagen.)

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