TRANSCRIPT
(0:02) This morning’s webinar is how to master strategic outsourcing in 2025. Learn how (0:09) successful businesses are achieving more in eight hours than your competitors do in a week. (0:15) A couple of housekeeping rules if you don’t mind.
If you can mute your microphone that’d be great. (0:20) Any technical issues let me know. You can refrain from recording screenshots of privacy that’d be (0:26) great because we’ll send you a recording afterwards.
It’ll be also as a follow-up resource on our (0:30) website. Any questions please. Actually you can ask during the presentation because I know there’s (0:37) a lot of quality, a lot of content there or you can wait to the end.
So what is outsourcing? (0:44) More importantly what’s effective outsourcing? Well for business, outsourcing is the practice (0:49) of contracting a specialised external provider to perform services, specific services, aiming to (0:57) enhance a company’s competitiveness on a sustainable basis. So I want to ask as a rhetorical (1:03) question, do you outsource on a personal level? If you use a lawyer, childcare to look after your (1:11) kids while you’re doing a full-time role, an accountant to do your tax, electrician or even (1:18) a plumber to come out on the weekend, you’ve outsourced in some respect. In fact this is (1:23) professional outsourcing.
So the question remains, do you outsource for your business and why don’t you (1:29) outsource for your business? A lot of people outsource, you may or may not be aware of them (1:35) and there’s multiple reasons. I’ll make this point clear one of many times. There isn’t one (1:42) main reason, there is often a combination of reasons.
The primary reasons a lot of people (1:47) outsource is cost savings. Now you’re saving obviously on wages, you’re saving on equipment (1:53) and potentially facility fees. The next one is your focus on core competencies, meaning if you’re (2:00) able to have someone look after the more menial tasks or less urgent tasks in your business, maybe (2:05) in the back office, you can then focus on sales, you can focus on networking, focus on building (2:11) your business.
Access to expertise and qualified personnel that you may not normally be able to (2:17) source or forward and this is very pertinent in Australia where we’ve had some skill shortages. (2:23) Flexibility, ability for your business to grow within a short period of time (2:30) with the number of people and projects. Increased productivity and efficiency, meaning your company (2:38) is able to grow and become more productive and efficient with outsourcing over time and access (2:45) to global talent.
This is a very important issue and it’s something that is starting to grow or (2:51) become more prominent in the workplace. So what are the traditional barriers around outsource? I (2:57) just want you to take a moment to think about why you don’t outsource assuming you do. (3:02) There are a number of traditional barriers against outsourcing.
(3:06) One, you feel you’re the best at what you do. Second is trust. Third is IP data security (3:15) and concerns and fourth, you’d never consider outsourcing.
So I want you to consider this (3:23) Hayes recruitment report that came out recently around the impact of skill shortages in Australia. (3:31) As you can see a huge focus on why companies are having concerns around (3:39) skill shortages. 62% said productivity would be down, 63% their work lates for existing (3:47) employees would increase.
There is a massive focus on people looking at outsourcing because of skill (3:53) shortages. So I ask you, do you think outsourcing is the answer for you to go ahead and find a (4:01) solution for these skill shortages? The answer is no. Why do companies outsource? (4:09) Overall, many people outsource because it reduces costs.
In other cases, business strategy and (4:18) operating models shift to gain new access to capabilities, relocating CapEx to OpEx, (4:24) internal leadership changes and increased competition. My point here is skill shortages (4:29) are a good reason to look at outsourcing, but most companies outsource for a range of reasons. (4:35) I want you to take that on board.
It’s not just one reason, it’s often a combination. (4:40) So before you go ahead and think about an outsourcing solution for yourself, think about (4:47) a strategy. How would you best approach a company? How would you best incorporate an outsourcing (4:53) strategy into your business? It’s very important that you’re aware that it’s not certainly just (4:57) about getting a couple of quotes and hoping for the best.
You need to design a strategy and I’ve (5:02) got a bit of a formula for you. Let’s start with the forms of outsourcing. So there are three main (5:10) forms of outsourcing and I’ll give you examples within these models.
First one is onshore outsourcing (5:17) and that’s essentially where you’re outsourcing services to providers within the same country or (5:23) region. An example is contractors in Australia. The advantage is obviously is you’re using (5:29) someone local and potentially someone you trusted.
Problem is it can be cost comparative or sometimes (5:35) a little bit more expensive and the talent pool, it can be limited. I’m sure a lot of your (5:42) attendees today have had some problems getting specific officials in estimating or (5:50) surveying or even in business development representative. There are challenges in (5:57) Australia for certain offices.
So another option is nearshore outsourcing and that’s (6:04) where you’re outsourcing services to neighboring or nearby countries with similar time zones, (6:09) cultural compatibility and outstanding talent pools. A great example is Philippines. Flatplanet (6:15) as a company sources a lot of staff from Philippines.
The time zones, they can work to your time zone (6:20) or they have a similar time zone and a cultural compatibility for countries like Philippines and (6:26) Indonesia and a few other surrounding countries. It’s fantastic and again there’s that word (6:31) talent pool. The global talent pool you’re accessing is a lot more prolific than what you (6:36) may find in Australia.
This is probably the most prominent form of outsourcing especially for those (6:41) in the trades industry and some of the small to medium businesses. Then you have global outsourcing, (6:47) massive for the big players or as they call the global 2000 companies and that’s where you’re (6:53) outsourcing services globally regardless of time zone or proximity. You may not need (7:00) an account manager to speak to you, you may just need the work done.
So this is (7:05) surprisingly done by a lot of accountants who outsource the bookkeeping to countries in India (7:11) and or IT services. You have a proximity issue there and it’d be hard to understand the (7:20) transparency of what’s happening but if some of these large organizations can set up systems (7:25) overseas and certainly make it work for them. So now you’ve decided the form of outsourcing that’s (7:31) going to best suit you or may not suit you, just keep in mind there is what’s called rightshoring (7:37) and that’s where you use a combination of any of all three.
So I mentioned this word global talent (7:43) and I know and I talked about the skill shortages in Australia. (7:49) What we don’t realize is the amount of a lot of people don’t realize the amount of talent that’s (7:54) overseas and how well advanced some of these countries are in providing this talent. So I’ve (7:59) got a number of countries there, India is outstandingly the biggest provider of outsource (8:04) staff, they work a lot especially in the financial and IT sectors.
Philippines is as I mentioned (8:11) is one we work with, have a huge global talent pool and very well educated, great cultural (8:17) compatibility, a lot of them can speak English quite well. 9% of their GDP in Philippines (8:24) is based on outsourcing, that’s how advanced their market is. Southeast Asian China, very well advanced (8:30) as is Eastern European and Latin America.
So what do these countries all have in common (8:36) besides the fact that they have a huge talent pool to pull upon, is the fact that the wage (8:42) cost is significantly less. That’s important, the cost savings is important but productivity is the (8:50) challenge and it’s overcoming that productivity that and be assured that productivity is going (8:55) to work for you and the communication that’s going to obviously make you a lot happier to (9:01) outsource. So you’ve looked at the forms of outsourcing, you’re confident you’re happy to (9:07) outsource potentially globally and you could be potentially outsourcing on a three-stage (9:14) basis.
You could be outsourcing someone working from home, outsourcing someone working in a hybrid (9:18) situation or outsourcing someone working in an office somewhere. So what are the types of (9:24) outsourcing? You’ve got professional outsourcing, I mentioned that before and that’s where your (9:29) outsourcing tasks require specialized expertise and knowledge such as legal, accounting and (9:34) consulting services. Again very popular with SMEs in Australia, two or more SMEs, 37% of SMEs use two (9:42) or more of these outsourcing services and it’s been one that’s been ongoing in Australia for (9:49) some time.
Software development outsourcing, this has grown immensely in the last 10 years. (9:55) That’s where you’re outsourcing the creation, maintenance and improvement of software applications (9:59) to external providers. Some of you may use a third-party company to do a third-party (10:07) software application to do say estimations or put together bid management, you put together tenders (10:15) etc.
All that is managed by a third party and that’s software development. You may have a customer (10:20) facing service in Australia but that’s managed through an outsource software development program. (10:27) Next is business process outsourcing.
This is very popular with some of our retail clients and (10:34) essentially it’s where you outsource routine business processes like customer service, HR, (10:40) finance operations to third-party service providers. Generally happens with the bigger end of town. (10:46) Have you heard of the companies doing what they say is moving their team offshore? We saw it happen (10:53) with the telcos and obviously there was some kickback and that’s where they moved their (10:58) customer service to India but the compatibility probably wasn’t there where they would like it.
(11:05) But you can do this successfully. I know that we’ve done a success with payroll departments (11:10) and customer service departments. It takes some time and dedication to get it right and you do need (11:15) perhaps a presence in the country where it’s being performed or you need someone to manage that (11:21) on your behalf.
So it’s not as easy as you would think. It’s perhaps a little bit more (11:26) involvement from a company level or from an employer level so to speak but is a very effective (11:32) way of doing outsourcing. Next is knowledge process outsourcing and that’s where you’re outsourcing (11:38) high-level knowledge-based services such as research and analysis, data management.
Often (11:45) involve specialized skills. Give you an example, AI enabled professionals or power BI analysts. (11:53) Something that’s very hard to find in Australia but they are paid very well and sometimes acquiring (12:01) let alone holding these staff is the bigger challenge.
So you’re able to access that global (12:07) talent pool to find providers of knowledge process outsourcing. Next one and very (12:15) important one is outsource talent solutions and that’s where you’re outsourcing the management and (12:19) execution of specific projects to external teams or contractors and this could be short-term (12:25) providers. So you may be looking at someone who can do website management and graphic design.
We (12:31) have a team that does that on an hourly basis or a package basis or it could mean looking for someone (12:38) skilled and this is a new outsource talent solution. There’s something that’s rapidly (12:41) growing in Australia and that’s where you’re looking for someone multi-skilled based potentially (12:46) overseas who can do a range of roles and have some experience in your industry. Now we’ve placed (12:52) people like that before for a variety of industries right from bookkeeping to payroll to (13:00) HR, a number of different roles but one that’s come up specifically for us in it (13:04) and has obviously led to us being a lot more specialized in the marketplaces working with (13:09) this gentleman and this is Ricky Ricard from a company called Pro Rec Plumbing.
Now I bring him (13:15) up specifically because he engaged us some time ago and said that he needed someone to do (13:23) admin work. So we sourced, we did a job profile and we sourced what he was after and what we found it (13:31) wasn’t just someone to do admin and this is where I’m talking about outsource talent solution. You (13:35) need someone with industry experience to work across a range of fields.
So we’re able to (13:42) place someone who can do admin, emails, scheduling, speaking to contractors. Now to find someone like (13:48) that you have to look outside the square, not just pick up someone’s CV and hope that they’re going (13:54) to fit and that takes a bit of talent and there are outsourcing companies that can do it. What (13:59) we’re able to do for Ricky is put someone in place for him.
Two weeks afterwards he ended up getting (14:07) called to go on the block. Him and his friend Hayden went on the block and I don’t know how it (14:12) ended up but that person that we placed was able to then adequately and more than adequately (14:17) manage his services while he’s away. When he returned the business was as good as it was.
(14:24) The important point here is he saved 60% on administrative fees. That’s great but I go back (14:30) to that point about productivity. The person was able to, our candidate was able to manage his (14:36) business and keep it productive wise away.
So this is important, don’t just go for administrative (14:41) costs or lower costs, look for someone who’s going to add productivity to your business. (14:46) So Ricky since at ProReg plumbing’s been obviously ecstatic with what’s happened and it enables him, (14:52) going back again to that original point, enables him to focus on his core competencies (14:56) and that is going out and winning new business. Next is manufacturing outsourcing and that’s (15:03) when you’re outsourcing the production of goods and or services as white labelled solutions.
(15:10) So a good example of that is Dell Computers. They have a supply chain of providers that put all (15:16) different, assemble all different parts of their computers together and so by the time it gets to (15:20) the warehouse it’s ready for delivery to the clients. They have followed the process carefully (15:26) to make sure the quality assurance levels are where it needs to be but it’s a great example (15:30) how they’re able to reduce the cost and ensure that the product is going to be delivered on time (15:36) to where it needs to be.
So this is quite, well it happens a lot in Australia and (15:41) especially a lot of products that you see now called the Woolworths are white labelled products. (15:47) So you’ve decided on the form of outsourcing, the type of outsourcing and if you have any (15:54) questions you can ask other people in the industry who they’ve used as far as the forms and types (15:59) and you said okay I’ve engaged an outsourcing company, how do I know they’re going to meet (16:04) my criteria as a business? I want my business to function well. Do you just hope that they’re going (16:11) to do a good job? We have designed a checklist based on strategy pillars.
If the company you’ve (16:19) engaged checks off all these concerns then you’re well underway to incorporating (16:25) the right strategy to find the right outsourcing company. Ensure business continuity, ensure they’re (16:34) not going to slow your business down. Are you going to take two weeks off and slow your business (16:37) down because you need to deal with the integration of this? A good outsourcing company will be able (16:44) to overcome these challenges in the transition period.
Communication, ensure, this is a very (16:51) important point, you don’t want to be getting up at 2am speaking to your account manager. Make sure (16:56) if you can, ideally have an Australian account manager, someone you can speak to on behalf of whom (17:02) the account, the outsourcing company and their staff. Now they can very well be based anywhere (17:08) in the world but if you’re an Australian account manager you’ve got every chance of overcoming (17:13) that trust factor and even the concerns about can they do the job and that regular communication (17:21) will put your mind at ease and you’ll know if something comes up and you need to change or (17:26) pivot towards other projects that you’ve got someone to speak to.
Financial, and I’ve talked (17:33) about this before, don’t just look for the lowest cost. Productivity is just as important, long-term (17:39) affordability is even better, sustainability is important. When you go out and get quotes (17:45) make sure that this is going to put underlying value to your business from a financial basis.
(17:51) Management, please try and limit the amount of people who are dealing with the outsourcing (17:56) company to one or two stakeholders. If you have three or four in there it’s just going to confuse (18:01) it and it is going to affect the business continuity factor. Cultural compatibility, (18:08) I’m not talking about do they understand, not necessarily talking about do they understand (18:11) your language or your vernacular, I’m talking about do your teams work together.
This is a (18:15) problem in the higher end of town but it’s really important. Some people obviously get a (18:21) bit concerned with a bit of blue language from time to time, some people don’t like using phones or (18:26) only prefer to go online. Make sure your teams and communication channels work together on a (18:32) cultural basis.
Legal and regulatory, this is a very important one. Data security and privacy (18:41) protection is a midpoint at the moment. How do you overcome that? Look at the agreement.
How does (18:47) the outsourcing company cover your IP, your data protection, your data security? This is really (18:55) important. You can talk to the BDM or the account manager to ensure that that’s going to be (19:01) overcome or all the checks and balances are there or in place. It is important to read the agreement (19:08) as I mentioned and ask them how they’ve covered that.
Ask them to give examples how they’ve (19:14) covered that. There’s a number of ways of doing it, some have accreditation. Meeting (19:20) modern slavery standards is just as important.
Some companies are accredited against modern (19:28) slavery or more modern slavery standards but simply ask the company how do they meet modern (19:34) standards. They should have a small part on their website that talks about it or you can (19:39) generally ask them how well do you look after your staff? Do you pay them the right rates? (19:45) Bender reputation experience, real easy one. Ask for references, ask for testimonials, ask if they’ve (19:51) worked in your industry before.
A lot of outsourcing companies have what’s known as verticals where they (19:57) work within one sector of the market. You have outsourcing companies working in accountancy, (20:04) marketing and potentially trades. We as a company, as a point of difference, we work across a number (20:12) of industries but some work within certain industries.
Don’t be afraid to ask for a little (20:17) bit about their experience and references. Last but not least, alignment to business objectives. (20:25) You’ve set KPIs, you’ve set instructions, you’re happy that they’re doing the job.
This is a really (20:30) important point. Do they understand your objectives? Do they understand the long-term (20:34) goals for your business? The reason I say that is the long-term goals are able to, they’re able to (20:41) articulate what you’re trying to achieve. Some countries have troubles thinking outside the (20:46) square and will only stick to the instructions in front of them.
So make sure you ask, you let (20:51) them know what your long-term objectives are, your key outcomes and enable the outsourcing business (20:57) to work best with your objectives. So that’s basically the end of the discussion. Now, (21:06) what I want to do is give you some recommendations.
So with your go-to-market tomorrow (21:10) and you want to get some quotes, here’s a slightly smaller checklist than the strategy pillars (21:17) I gave you. Number one, evaluate the most suitable outsourcing model for your organisation. Ask around (21:24) what’s best for you, ask for the pitfalls, do a little bit of research and I’ll take some time (21:29) but at least you’ll know which one’s going to best suit you.
Select a proven outsourcing partner (21:34) with a strong track record. So this means try and look for a company, an outsourcing company that’s (21:42) been in business 10 years or more. They’ve gone, they’re quite resilient, they’ve gone through the (21:46) pitfalls of the financial crisis, not the financial crisis but COVID, they’ve been able to maintain (21:52) long relationships with their staff, they’ll have a lot of internal knowledge to be able to deal (21:56) with you and also ask for a bit of industry experience.
There are a few rogue operators, (22:02) it’s very easy to start up a start outsourcing company in some countries, don’t just look for (22:07) the lowest cost. Next, start with a pilot or small-scale projects, pilot program or small-scale (22:13) projects. The reason for this is that sometimes some businesses do have a trust factor or worry (22:21) that the outsourcing company may not be able to do the job as well as they do.
(22:26) If you start with a small project, you can always manage that and then scale up as you need. (22:30) In some cases, if you’re for instance talking about a surveyor, you can give them a test before (22:37) you hire them or before they’re hired on behalf of the outsourcing company. So don’t be afraid to (22:43) ask more.
Request multiple proposals by all means from outsourcing companies, don’t go for the (22:50) lowest cost. I mentioned that before, focus on value. Productivity is just as important, (22:55) if not more important than value for money.
Ensure easy communication with a local point (23:01) of contact. I made that point before, stick with an Australian point of contact. If you’ve got one, (23:07) that’d be great.
If you don’t, are you happy with the communication, the line of communication you (23:12) have? If something happens to your business, you need to pivot, you need to change, you need to (23:15) upscale, you need to downscale, you want that line of communication. There’s no point being addressed (23:22) and won over by someone who’s going to promise you the world and then never hear from again. (23:27) Be assured that you’ve got a great account manager that’s all, well, relatively always available.
(23:34) Ensure transparency in the workplace and workforce management. A last but one of the most (23:39) important points. We have a lot of customers who appreciate using us and other outsourcing (23:45) companies, no doubt, because they know they have full sight over what their staff or the staff (23:50) who work on their behalf are doing.
They know that the workforce is managed adequately, (23:55) they know their staff are happy. If your staff that are working on your behalf (24:01) are happy and they’re happy in their workplace environment, then they’re going to give you (24:06) long-term productivity. In some countries, it’s not unusual to hear about people that stay (24:12) six or seven weeks or have some issues because they’re working from home, etc, etc.
So make (24:19) sure you have full transparency over their workplace, the workforce management, meeting (24:23) moderate slavery standards, etc, and then you’ll be comfortable with the outcome. (24:31) And that’s it. We’re just down to questions, if there are any questions.
(24:50) Don’t see anything come up yet. Nicky, is there any questions come up at this stage? (25:05) Tom? Yes, please. (25:08) I’m trying to ask a question here and it says chat disabled.
Is that a setting? (25:17) That’s unusual. We’ll look at that now, Chris. No questions have come through at this stage (25:49) and the administrators have just sent that to me.
Look, (25:53) thank you so much for your time. Please reach out to me if you have any questions.
