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The Truth About Offshoring and Outsourcing: Opportunities, Threats and Getting It Right

By Brad Eisenhuth | Eisenhuth, Networking |

Jamie McBrien is arguably Australia’s leading expert on offshoring and outsourcing, with over 20 years’ experience consulting on the financing organisation of outsourcing projects. In the past four years, he’s worked with no fewer than 17 ASX200 businesses, as well as numerous other organisations on transformation, re-design and outsourcing/offshoring projects.

Jamie runs optiBPO, a company that helps companies in Australia, New Zealand and Europe set up dedicated outsourcing operations in the Philippines. With offices in Sydney and London, optiBPO provides onshore support for companies plan, build and manage dedicated outsourced teams.

He recently spoke candidly to The Outperformer about how to successfully execute outsourcing and offshoring strategies and explored some of the risks and challenges associated with managing these projects.

Here are some of the most important take aways from the interview.

 

What Are The Key Benefits of Outsourcing Offshore?

Many people think that taking the decision to outsource offshore is only about the cost savings, but Jamie stresses that there are other contributing factors as well.

“Knowledge is now global,” he says, “and for many of our clients, it’s all about trying to find that knowledge. Companies are looking for the best and brightest people – wherever they may be. The evolution of technology means it’s now possible to do many high-data activities from anywhere in the world.”

“It’s sometimes difficult, as a fast-growing company looking to build teams quickly, to do that here in Australia, so our clients ask us what can be done to support their growth strategy. “

Jamie does concede, however, that cost is one of the other key drivers behind many companies’ decision to outsource offshore.

“When you hire a finance person in Australia, you can expect to pay them in the region of $150 000 a year, and there is an expectation that they have a certain capability set,” he says. “You can often only afford to hire one such person. When you’re hiring offshore at a lower cost base, it means you can look at employing several people with different expertise bases. This is what many of our clients now want – to build up a range of people with a broad range of capabilities.”

Jamie cites some of the cost impediments we have in Australia as one of the reasons why it’s not cost-effective to do this onshore.

“The average graduate salary is $61 000 a year, which is fairly high,” he says, “but this is not about removing Australian graduates from the equation, nor is it about taking jobs away from Australians. It’s about having some of the transactional activities - and even some of the high-value activities - delivered in a different location.”

The resulting benefit to those in jobs onshore is that often, their roles will then step up to higher levels.

 

What Happens When Things Go Wrong?

“Offshoring fails when people think that all they have to do to save money is throw an activity over the fence,” says Jamie “It ends up becoming a management nightmare. Companies get over excited about the benefits, but don’t really think about what is needed in order to be ready to outsource offshore.”

This is exactly where Jamie and his team can step in and help mitigate the risks. He specialises in not only helping to build the outsource team in the Philippines, but also in helping the company through the transition period and providing ongoing management support.

“It’s not just ‘set and forget,’” says Jamie, “and it’s not about replicating what you’ve already got in Australia. It’s about building a team that is an extension of your local team, not a separate part.”.

 

How Can I Prepare For Offshore Outsourcing?

A lot of the things needed to get a business ready for offshore outsourcing are actually also the things needed to run a business well onshore. But Jamie says a staggering 90 percent of companies wanting to expand offshore haven’t got the basics right at home. 

“You need really well defined standard operating procedures, accessible systems, and well-defined roles and responsibilities,” he says. 

He does concede that managing an offshore team requires a different approach to managing a local team. “You have to be more active in your engagement with your offshore team,” he says. “They’re not just going to pop past your desk to ask a question.’

 

Why The Philippines?

“Most people don’t realise this, but the Philippines is the third largest English speaking country in the world,” says Jamie “Thanks to the significant influence of the US in that country, there’s a high level of cultural alignment. They also have an education system that produces 300 000 University graduates every year, 30 percent of which enter the offshoring industry, so it’s a massive part of their economy.”

 

Stand Up And Put Your Hand Up

Being part of the project team involved in setting up an offshore project can give you invaluable experience and boost your skill set.

“If you’re a finance expert, you’re the best person to see how the processes should run,” says Jamie. “Outsourcing offshore is a cost initiative, but it’s not all about the cost. It’s important to make the investment up front and get the project set up correctly. It’s a great opportunity for a finance professional to say ‘I’d like to take the lead on this.’

“Being a barrier to the process is counter-productive. Getting in there and learning the process will help you in the future, and give you a skill set that’s going to be a great value add in the long term. “

 Jamie’s entire interview is available on our webinar page, which can be accessed by clicking below.

 

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