Fred Chua – Inception of Magellan Solutions

Derek: Hi and welcome to another episode of the Outsource Accelerator podcast, My name is Derek Gallimore and this is episode number 149. So today we talk to Fred Chua of the Magellan Solutions, we previously were introduced to Fred back in episode 146 if you want to know more his history in outsourcing. But today we deep dive into Magellan Solutions, it is a full-service BPO and we explore how full serviced BPOs really priced, really structure and really work alongside their clients who become close partners as a result of the fuller service offering. So really interesting conversation, I certainly enjoyed it and learned a lot and I’m sure you can too. So if you wanna get in touch with Fred or know any more about this episode then go to our show notes at outsourceaccelerator.com/149. Enjoy.

Derek: Hi and welcome back everybody again I’m super excited to be joined by Fred Chua of Magellan Solutions. Hi Fred how are you?

Fred: Hi I’m fine, thank you. Thank you for inviting me as well for this episode as a guest.

Derek: Absolute pleasure. Today I wanna deep dive into Magellan Solutions, so you are a call center and BPO you’ve been going now nearly over 10 years.

Fred: Turning 13 now I guess.

Derek: It’s incredible and but also with your own personal experience you have seen outsourcing from the beginning so your certainly a good person to deep dive into the functionalities of outsourcing and how it can benefit SMEs out there in the west. Thanks so much for joining. I supposed initially do you wanna just kinda introduce or outline your journey and how you got in here.

Fred: Sure. So I guess to be more specific as I mention the company started back in 2003-2004 so I actually came from the call center industry as well as a call center agent working in a big call center operation. And decided you know what there’s a gap in supporting SME segment because of it’s a huge sector. I wanted to set up a call center that’s specific for SME sector. So when started off we didn’t have any clients in the US and we were thinking probably the best course of action would be to set up a joint partnership with a US-based call center or something like marketing and sales and of course on our side we handle the operations, day to day operations, the Philippine setup. So that’s sort of like our initial arrangement but one thing led to other it didn’t pan out correctly based on our original arrangement was. So it ended up just being a typical outsourcing company. So we started off house setup we even had a pool back then, very enjoyable, a recreational area I guess. But that’s our starting point. Our first ever client was actually directory assistance, a 411 service.

Derek: There’s a big corporate client to get on your feet.

Fred: Not so big. We did like for example like here one of the biggest companies that used to do 411 services what is in ‘Info In Excess’. So which is a huge company like 90% back then I’m not sure about now, it’s KGB now but I’m not sure about what their line of business is.

Derek: You started Magellan Solutions in response to what you saw a gap in the market where basically there were big players catering to big players but there wasn’t really anyone catering to SMEs?

Fred: Yes, not so much. There definitely are pockets of companies that caters to SME segment but bottom line right now is that the way things happen is that as BPO or call center grows they tend to also try to get the bigger accounts. This, of course, I get the logic it’s a no-brainer. It’s easier to manage one client that has a hundred seats as opposed to 10 clients having 10 seats each. Different headaches, you have 10 times more headaches compared to just having one client. I get the logic of that part but nobody really is focused on the SME segment. It’s always as a company grows, as a BPO call center grows they tend to focus themselves more on focusing on the fortune 1000, fortune 500 and all this other stuff. That’s the normal progression of a company so no company has really focused themselves on the SME segment. The way we’re looking at it is that, ok fine. Of course, if we get a big player we’re not gonna turn them down were definitely gonna support them but even as we grow, our organization we still wanna focus on the SME segment. So we’re still gonna get the five-seats, the ten-seat operations. We’re still gonna be able to manage it based on our support structure and our process in our systems. Because everything that we do right now is really geared towards supporting SMEs properly.

Derek: Let’s includes your services, this is not an infomercial but it’s people out there listening can get a sense of how you can add value to a process and where you can find the sweet spot and the easy wins are for SMEs engaging in outsourcing for the first time. As a question I supposed, do you deal with a lot of your clients who are entering into outsourcing for the first time? and what are some of the things you observed in that process?

Fred:  Yes, there are SMEs that have tried out different companies as well and of course the reason they were searching for a new player they weren’t happy with what they experience with the other BPO companies. Which is the way BPO typically work is that you want five people then I’ll hire you five people but who manages the five people is the major issue. Who setups the structure, the systems, the operational accountability, the management of KPIs and metrics, those are the key value proposition that we’re focused on delivering. That’s one of the things that’s a gap with managing SME account is that you just look at it in terms of, I want five people, I’ll hire five people for you. But that’s only half of the job, you get the right people but you have to be able to manage them to do a good job for the client. And that’s what we’re focused on its really end to end spectrum of providing quality assurance, continuous improvement and that’s sort of like our value proposition.

Derek: Because there’s maybe a differentiator there and there’s a number of different models of outsourcing, but two of the common ones are like seat leasing or staff leasing arrangement versus the full-service BPO or business process outsourcing. You guys are the latter like you effectively implement the business process and in that people are buying into your experience, your expertise in those processes. Can you talk a little bit about that maybe in the staff leasing arrangement it’s where you do hire five staff but then they have no strategy or structure?

Fred: Don’t get me wrong, the seat leasing or staff leasing model in the sense is actually a good model as well. But it really just depends on what type service you’re actually outsourcing. If you’re talking about the virtual assistant type of task or very very simple, very straightforward, data processing work or whatever that doesn’t really entail a whole lot of oversight management then a managed seat leasing arrangement works, staff leasing works without much oversight. But if you’re talking about customer service, sales, more complex data processing tasks, you have to have the right process in system because first you have to look at the continuous improvement side, because when you start a program during the pilot or incubation phase there’s bound to be a learning curve of all the people. Without you supporting that properly, of course, it’s difficult for a client based in the US or the Philippines to support these agents because they’re remote, everything’s gonna be through Skype, everything’s is gonna be through a conference call or video call. So it’s a bit more difficult to manage that on a day to day basis probably once in a while you set up a call but it’s not once in a while that you need to manage them it has to be like day in, day out, you have to provide oversight and that’s where the full end to end support mechanism works. You have your own team leaders, quality assurance, trainer, implementations team that actually ensures that everything is ran properly and that’s very critical. It boils down to what your needs are. If it’s a very simple task, fine we go for that staff leasing which might be a bit more cost effective but then again if you want the program to succeed you have look at it on an end to end spectrum let’s say, who’s managing it, who’s managing the KPI, who’s monitoring, who’s sending the reports, is somebody tracking progression.

Derek: As a guide, what are some of the easy wins, some of the best processes that you could suggest SMEs start with and then give us guidance as to how you price these things and structure them.

Fred: As a guide, the critical part is really the benchmark as well, when you’re talking to somebody, does that person that you’re talking to really try to understand the process? I think that’s the critical factor. Sometimes it tends to be like, I’m outsourcing to the Philippines because I know you’re cheaper. But that’s only the superficial level of it. You have to understand, yes we’re cheaper but it’s not just the cost, you have to look at value factor so I think the critical things that the client should look at before outsourcing is that the BPO company that they’re talking to really trying to understand they’re business or just trying to say, ok I want ten people from you, this is my price take it or leave it type of thing. So that’s very superficial, you know for a fact that the processes are super broad there’s no, everybody has their own specific requirements and for you to be able to do a good job for your client you have to understand that specific requirement so that you can help the client base on whatever his pitfalls are. So you have to understand that and if you’re speaking to a company and they don’t seem to really probe deep, expect that to happen when you’re already outsourcing. It’s gonna be still superficial and gonna be, tell me what to do and I’ll do it instead of tell me what to do and we will provide you our recommendations based on best practices, this is what to do. It’s more consultative in nature as opposed to specific instructions that if you don’t give me instructions I’m not gonna move.

Derek: And it’s truly a partnership isn’t it? Because unlike any other kind of contractual arrangement within the business, you really are working side by side with people because you’re working side by side with the clients and the partners and so is the result it needs to be organic and it needs to morph. Are you seeing as a bit of a kind of point of friction, is do people look at the bottom line and say well this guy said, does it often again it is the superficial thing but do people can be caught up on that and not realized actually the entire iceberg under the water is about the delivering and benchmarking and the quality of the service.

Fred: Yes, there are companies that would just say, I don’t care about anything that you’re talking about just give me the price I want the bottom line there are companies like that. And unfortunately, if it’s good for them then, by all means, it’s good for them but they may be short sighted with that perspective. We’ve experienced a lot of companies that just wanted to look at the lowest cost bidder and they went with other companies and eventually, they said, you know what Fred I wanna go with you, you know from our last discussion you weren’t the cheapest but essentially you provided this, this and that. So we wanted to make sure it works because you know, we outsourced another company, they equally provided the things that I needed. So, yes there are cases like that. Again for some companies, it works, good for them. But for, I believe based on it just depends on the complexity of the process. If it’s a super no-brainer then possible but then again you still have provided a lot of oversight too even if it’s a very simple task especially if you are managing like twenty people, thirty people it becomes a lot more difficult.

Derek: And what is the guide to your pricing structure then because the seat leasing or staff leasing is very obvious, it’s very transparent but you don’t get that value-add layer on top. What is the guide to your pricing structures?

Fred: We don’t have a standard pricing structure in all honesty. That’s a reason why when we do things it’s full end to end scoping. Once we understand the entire business model of what the client want to outsource to us. Not on the superficial level not just saying, I wanna outsource customer service. It’s not as simple as that. What’s the customer service then? You have to look at what are the expectations, you have higher expectations, if it’s higher expectation naturally you have to put in higher caliber, more experienced agents. If the expectation are very straightforward very easy then we can tend to put in newbie agents as well. There’s a bit more subjectivity but of course naturally the pricing model varies based on, like in our case, we tend to adjust based all of these factors. Could be fixed, monthly or hourly or some of the transaction based calls some of them call based models and of course for outbounds sometimes, maybe also performance based. It’s really broad as far the arrangements are concerned.

Derek: It is very broad and it is the truest kind BPO isn’t it, in that you’re paying or the clients are paying for either an output, or a transaction, or a performance as opposed to the other side of spectrum where they are paying for the hours or the seat or the person and that is the primary delineator I suppose in that you have to explore the model and then there’s also a shared risk there isn’t it because if you’re getting paid per output then obviously you are sharing the obligation to get an output, to get that quality, to get whatever those agreed benchmark.

Fred: Actually it’s kind of like opposite when you are looking at performance based or output based type of arrangement generally speaking the risk befalls the call center or the BPO company naturally because of course, they need to provide the full support mechanism or stuff like that but the end of the day if they don’t deliver, which is I get it in terms partnership stuff it has to be delivered, but certain aspects need to incubate properly as well so there are certain campaigns that the learning curve might take like a couple of months, if you’re looking at a performance based type of arrangement wherein you’re just gonna pay, let say it’s a telemarketing campaign outbound process you just look at short term and say, I don’t wanna take the risk and I’m gonna pay only per sale then it’s a short sighted version of things and you’re not looking at the long term and say I wanna make sure that I establish an outbound sales that would deliver constant lead generation appointments at telemarketing numbers to the business. And if you’re looking at that way long-term spectrum then it makes sense to say, you know what let’s look at the fix arrangement or a hybrid model as a kind of like a better solution. Of course the critical factor there is that you have to look at the end objective of the BPO call center because are their calls saying, I want your money and that’s it kind of thing. You know you’re duped into outsourcing to me but that’s why I said it’s very critical for the SME company to understand, is the BPO company really trying to understand my requirements as an SME company. Because if it is very superficial then there might be a superficial assessment later on down the road that are you gonna support me extensively or not.

Derek: And again this is why clients, while they’re looking at this full-service model, they really need to have confidence in you as the professional behind this whole thing because they’re buying into your sophistication in setting up these processes, your experience in the sector, your experience with these roles. It really is quite a sophisticated operation, isn’t it? It’s not just landlording or putting bums on seats. You’re actually building processes for companies.

Fred: Sure, like for example in our case we’re not a specialist in this specific industry, we don’t focus on for example, customer service, we’re kind of like a generalist, and as a generalist you have to become good on a broad spectrum so our core competencies is process improvement and streamlining systems and kpi’s and metrics and make sure we meet the target we look up all these step ladder targets, we don’t look up, ok if the end target is this when we start the program don’t expect it it’s gonna be on that level because of course there’s gonna be a learning curve, so we’re gonna look at set target on the first week, there’s the target on the second week, there’s a target as long as there’s a positive progression of performance then we’re all set that’s the most critical factor that we monitor extensively.

Derek:  Yeah that’s an incredible insight. Thank you so much, Fred, and if people, of course, wanna reach to you or Magellan Solutions how can they do that?

Fred: You can visit our website it’s www.magellan-solutions.com, from the US you can call us at 1800-371-6224 and then from there tell us what you need and we could assist you from there.

Derek: Fantastic and of course all that is in the show notes but thanks so much for joining us, Fred.

Fred: Thank you, thank you, Derek.

Derek: That was Fred Chua of Magellan Solution if you want to get in touch with Fred or Magellan or want to know any more about this podcast episode then go to our show notes at outsourceaccelerator.com/149 and as always if you want to drop us an email or ask us any questions then do so at [email protected]. See you next time.