Sohan David – Inception of TBS Global, an Australian Owned Outsourcing Company

Derek:  Hi and welcome to another episode of the Outsource Accelerator Podcast.  My name is Derek Gallimore and this is episode number 76.  Today, I’m joined by Sohan David who is a Sri Lankan born but Australian raised business guy, fantastic generalist business experience and insight.

He owns and founded an outsourcing firm called TBS Global, which is based here in the Philippines but also has two other international locations.  So, this isn’t just one big infomercial, but basically, I am tapping into someone’s vast business and outsourcing experience to give you a little bit of insight into outsourcing but also business mastery.  I’m sure you will enjoy this.

If you want to get in touch with Sohan or want any of the show notes, go to our show notes at outsourceaccelerator.com/76.  It’s 76 is because this is episode number 76, so enjoy.

Derek: Welcome back everyone.  Today, I am joined by Sohan David who is the Director of Operations and Strategy at TBS Global, which is an Australian-owned BPO and they have operation centers, numerous operation centers now around Asia, Africa, and APAC including, obviously, the Philippines very proudly.  Hi, Sohan.  Good to have you with us.

Sohan:  Derek, hi.  Hi everyone.

Derek:  I’m super interested in just sort of hearing your background.  You’re obviously a bright guy and sort of a pretty rounded business experience.  How did you get to run a multi-country outsourcing and also outsourcing in the Philippines?

Sohan:  I appreciate the comment, but look, I think part of it is strategic most of it is, I guess, is accidental.  My background is in finance and about 13years ago, I felt that there is a need for a back office operation function within the financial sector.  This is what I was working for within finance in Sydney.  The concept started as a pure backup office financial service provider, but I think we’re very early to the market at that stage.

Derek:  Was this your business in Sydney?

Sohan:  It was.

Derek:  Okay and you were looking for, to scratch your own itch, a cheaper sort of solution so you’re staffing the

Sohan:  Right and so we kind of put a few heads together and came up with this concept.  But what we found was the other sectors like the telecommunication sector would have deregulated very quickly in that period and there was a massive need for outsourcing and the term BPO didn’t really exist back then.

Derek:  This is back in 2004, is that right?

Sohan:  This is 2004 so they were both in Australia outsourcing was a bit of a bad word back then simply, you know, of job losses and what-have-you.  But the market matured very quickly and we managed to fill that gap in call center services as well as back-office operations back then.

Derek:  Because you, I mean it was very early days.  I mean, outsourcing is really only been happening you know without, with great gusto since about 2002 in the Philippines, isn’t it?  I suppose it’s also only enabled because of the internet and the capacity of the internet and the cost of Internet, yeah?  I mean before that, it just wasn’t really quite viable.

Sohan:  Very much so and in a firm if I’m completely honest, when we’ve considered offshoring, taking our business model from being an Australian outsource company to an offshore site, Philippines wasn’t really the top destination in our minds.  My background, I was born in Sri Lanka and I migrated to Australia when I was about 10 years old, and the subcontinent was known for outsourcing.  We actually looked at India.  We actually looked at Sri Lanka as well and we weren’t really happy with the two sectors.  One, in India, we felt that the market was oversaturated.  Sri Lanka back then just didn’t have the infrastructure.

It was on our way back home to Sydney, we happened to stop off in Manila and it didn’t take us too long to figure out that it was the right place.  You’re 100% right that the internet, the infrastructure in all made it a very easy turnkey solution to consider Philippines as a destination for us.  I think having an army of outsourcing and call center and BPO professionals available to us, well, that was just the cherry on the top.

Derek:  It takes, it’s almost the perfect storm of ingredients isn’t it?  You need to come to a developing country but you don’t want to be in West Africa where, granted the salaries would be pretty cheap but you’re literally starting from scratch, aren’t you?  There’s no infrastructure whereas you can come to a place like Philippines and India and they have all of the outsourcing expertise so it’s super simple just to plug into their existing infrastructure.

Sohan:  Well you’re right and I think there are some of our clients in the Western world probably don’t understand how much Philippines has developed as an operating nation.  But there are other destinations with opportunities, but, yeah, it is a long haul.  It is quite a hard push especially when it comes to things like internet and telephony connectivity.

Derek:  Because I sort of preached that when people buy outsourcing services, certainly with you, I mean, there’s 13 years direct experience, there but they’re actually buying into – what is it?  No, it’s oh yeah, 13 years direct experience – but there’s kind of, the Philippines has 20, 25 years of executive experience at outsourcing.  When you outsource to the Philippines you’re, in a way, kind of sitting on the shoulder of giants in that regard, aren’t you, in that you’re almost coming to the Swiss banking of outsourcing by tapping into the Philippine experience.

Sohan:  You are 100% right in that what we found especially setting up shop in the Philippines helped us reach other markets quite quickly, the US and the UK being a couple of examples.  The reason we could do that is purely because we had a wealth of resources that we could tap into who have worked in the US market for 20 years and in the UK market for 12 years, and represented giants in the industry.  We’re finding the same thing with the Australian market. We can now go to market and find resources who worked in Australian banks and financial institutes for six years, and now looking for the next change.

Derek:  Yeah that’s super valuable, isn’t it?

Sohan:  Absolutely.

Derek:  Again, that comes with the maturity of the outsourcing sector.  You can now find sitting in Manila, Australian-trained accountants or American-trained accountants or UK-trained accountant.  There’s very localized specific knowledge here now, isn’t there, which is increasingly valuable.

Sohan:  Very much so.  I think gone are the days where we could just think of Philippines as the call center customer service destination.  The professional services that are coming out of Philippines now and they are the second to none.

Derek:  Very often, I have discussions comparing Indian outsourcing to Philippines and blah, blah, blah, but it’s interesting getting your perspective on the client side.  How does an Australian client or service, Australian business compared to US business, compared to UK business?  I have personal first-hand knowledge of Australia and the country is a very closed country so the domestic salaries are super, super high, which is obviously a good reason to then outsource, but also that the country is a little bit slightly xenophobic and protectionist about their jobs.  Also, I find that they’re very proactive and probably very strong early adopters of outsourcing.   I mean, they are my observations, but how do you compare sort of Australian to UK to US potential clients?

Sohan:  Sure.  It’s a good question and it definitely depends within the certain sectors and industries, but in general, I think your observation of Australian clients is very accurate.  It’s I think because Australia is so far away from everyone else, we’ve become a nation that depends on each other and gets the job done.  Outsourcing is a new concept for us, but it’s something that, especially over the last three years, we’ve actually grown to understand.  I think it’s quite an interesting time within the Australian market.  I think it’s primarily the fact that we can identify a greater function.

I think there was a general fear within the Australian market that if job goes offshore, that means people lose their jobs here.  I think what companies have now identified is that if jobs go offshore we actually can allocate different tasks for their team locally, and that actually generates a number of efficiencies across their business.  Australians picked up that point very quickly.  The US clients have always been open to outsourcing from our perspective and Philippines again has been a primary destination for them simply because of that historic alliance between the US and Philippines.

Derek:  They’ve got very close ties.

Sohan:  Very close, yeah, but I think we’re definitely finding that we are bridging the gap.  The fact that Australia and Philippines have a three-hour time difference is a massive advantage.  It’s 7.5-hour flight for a client to get in and get out.  All of this things definitely does add value to the destination.

Derek:  Absolutely and do you have any experience in the UK because I find just sort of looking at it distantly anecdotally, they are not so into outsourcing.  I don’t think they’re just so generally aware of the concept of outsourcing, and then if they do, they’re probably more sort of closely and culturally aligned to kind of India because of the kind of historic immigration and things like that?

Sohan:  Very much and that’s definitely something that we have found.  We do have a couple of clients from the UK, but as a whole, what we have found is that there is that correlation and connection to India being part of the Commonwealth, I would assume.  I’m also, I guess being in that close-knit European community, some of the outsourcing actually happens out of some of, it’s more the Baltic state.

Derek:  Yeah, it’s in Europe.

Sohan:  It’s in Europe, but we feel that that will change with the current European climate changes.  I think there will be more opportunities for Philippine organizations and the rest of the outsourcing world to provide services for the UK and Europe in general.

Derek:  It’s interesting because businesses don’t kind of, I mean, certainly me sitting in Manila, you don’t see a lot of UK business people

Sohan:  Right, yes.

Derek:  Interesting.  I mean, I had a conversation with a prospective outsourcer or someone that’s interested in outsourcing.  They wanted 150 seats to cover their Christmas time, whatever, kind of rush period.  Interestingly, they are, their company, their entire company is an outsourced customer service company.  They were an outsourcer, but all of their staffing was sitting in the UK and it was interesting to talk to these people because their knowledge and insight into what I call outsourcing but said Philippine offshore outsourcing, they had zero insight.  They had zero knowledge of the opportunity, the prices, and incredible, huh?  You’re still having kind of onshore outsourcing that has absolute, ignorance is a tough word, but just not a lot of knowledge of the opportunities in offshore outsourcing.

Sohan:   I think you are 100% right, but not just the UK.  I find that the number of clients I speak to here in Australia and the US or wherever it is, when we mentioned price, there’s a double take.  It’s almost like, “I don’t want to ask if you got it right just in case I got it wrong.”  The client definitely is surprised by how much saving can come into play.  Our pricing range, we could start from anywhere between US $8.50 upwards depending on the type of services the client requires.  When you think about an hourly rate that is a third of what it would cost a client in the US or Australia, it’s a phenomenal mind shift.

Derek:  Yes huge and that’s face value whereas the $8 or whatever your cost in here includes the officing, the kind of HR support, all of the needs.

Sohan:  Exactly.

Derek:  Phenomenal isn’t it?  Whereas in Australia or the US, $8 or whatever the base rate is plus you have to house them in an office plus you have to pay the government levies.

Sohan:  Exactly that and we talked to some of our more sophisticated clients about that that it’s an operational expense rather than a capital expenditure and it’s a no-brainer.  But we also understand that some of the challenges lies within the perceived lack of control.  We definitely take our clients through that journey and explain to them that from a TBS perspective, from our company, we stand as an extension of our client’s business rather than an extended third party solution provider.

Derek:  Absolutely and again, in their price, their hourly price that they pay you, you’re getting a full time staff member or whatever, but they’re also getting a slice of your experience and your expertise, aren’t they?  I mean, there’s huge value add in these outsourcing propositions.

Sohan:  Very much so and I think that’s very much the case with every BPO and outsourcing provider that I know in the sense that the added value that’s given in terms of transition management as well as business operation management analytics, those are unquantifiable values that the BPO adds to the business.

Derek:  I mean we, Outsource Accelerator, offers a consultation program and not a big part of it but a part of it is that we preach that a lot of the training has to go towards the business owner or whoever’s going to manage the outsourcing staff because it takes a certain mind shift and there’s different ways of managing a remote team and a Filipino team and things like that, but I think often, when you take on new clients, there’s a period where there’s considerable handholding required there just so that they are able to get the best out of their teams.

Sohan:  Very much so and we manage that expectation very clearly with the client prior to the onboarding stage because it’s the old 80/20 rule.  We want to spend 80% of their time at the beginning of this relationship and take them on that journey which gives them confidence of who we are, who our people are, and what type of exposure they have.  The idea is then when the business-as-usual stage rolls on, it’s just a matter of monitoring, providing training, but what we really love is for our clients to come in and see the center, whenever they’re around.  That’s the real tick for us.

Derek:  What proportion of your clients or smaller clients with, I don’t know, 1, 2, 3 seats come over to the Philippines?  Because I know I had 2 or 3 seats and it was about a year or 18 months before I even came to the country.  It’s amazing when you come to the country and actually see it firsthand.  It just completely changes your perspective, but what proportion of your clients come here?

Sohan:  Let me talk about the smaller clients, it is very low.  We encourage our clients to come in.  We had one of our clients who’s been with us for five years with two resources.  They finally got around to coming in to seeing us and it really opened his eyes to who we are and what his team is all about.  He went back home.  He came back to Sydney, called me the next day and he said, “Look, let’s add three more people to this team.”

I think that was a great story for us as well.  Even for myself.  My head office is here in Sydney and I come down every so often.  I’ll make seven or eight trips, but when I come down and see the team in action, it just takes you to that next level.  We really encourage our clients and some of our large clients if they have a permanent seat with us so they can come in and go as they wish.  We really encourage that level of interaction as well.

Derek:  It’s quite addictive, isn’t it?  You see one person gingerly start with a part-time bookkeeper and then within a year, they’ve got like ten seats and they’re getting the entire company managed from Philippines.

Sohan:  That’s right and that’s exciting for us as a company.  I guess our story, we had a company who approached us about five years ago and they told us they need seven staff members, which was a nice number five years ago for us.  They said, “Look we can’t give you permanent hours because it varies on a day-to-day basis,” and you can imagine the challenge we had in recruiting, but we accommodated for that.  Today, we have about 45 resources for that company.

It’s just knowing how to meet our customers’ requirements because the business environment has changed these days.  For a company our size, we don’t have the luxury of saying, “Well, we’re going to start with 20 seats.”  What encourages us is being able to start with two and really work with that company to get them to grow to five, 10, 15, and so forth.

Derek:  It is a win-win isn’t it?  You’re both aligned in terms of outcomes, aren’t you?

Sohan:  Very much.

Derek:   I really think that, well, I know the growth in outsourcing is in the SME markets and we’re actually just finishing off a whitepaper which I’ll share in the show notes and with you, but there’s 35 million SME companies, small-medium enterprises in the Western high-cost English-speaking world.  They employ 102 million people and have $12 trillion turn over a year.  If just 1% of those companies employed an outsourcing, it will have a huge impact on outsourcing the Philippines, but also obviously those businesses, there’s a huge potential growth.

Sohan:  A huge potential, absolutely.  I think one of the challenges is the attention that’s required for an SME.  It’s not the same as an enterprise client so I think that’s the biggest challenge for a BPO to be able to adjust to the needs of an SME.

Derek:  Interesting.  Okay, so we’re going to have you back next time and we’re going to really deep dive into TBS Global and figure out exactly how you do it.  So, I look forward to speaking to you soon.  How can people get in touch with you?

Sohan:  Okay.  Well, email is probably the best.  Feel free to drop me an email.  Our email is [email protected].

Derek:  Fantastic.  We’ll have all of those contact details in the show notes.  Thank you so much, Sohan.

Hope you enjoyed that.  That was Sohan David of TBS Global.  If you want to get in touch with Sohan or get any of the show notes or the transcript, then go to our website which is outsourceaccelerator.com/76.  If you want to get in touch with us, if you want to ask us anything, then please just email us at [email protected].  See you next time.