Sohan David – Why Decide to Establish an Outsourcing Company in the Philippines

Derek: Hi and welcome to another episode of the Outsource Accelerator podcast.  This is episode number 85 with Sohan David of TBS Global.  We have spoken to Sohan previously in episode 76 and 79, so if you want to see his backstory, if you want to hear about TBS global then go and listen to those episodes.

Today we talk more broadly with Sohan.  I wanted as you to talk more about the Philippines but inevitably but inevitably we sort to dive into business and outsourcing but I really enjoyed my conversation with Sohan and I’m sure that you will gain a lot from it from both an outsourcing perspective and also business a little bit of everything so a great episode and I appreciate Sohan joining us if you want any of the show notes and to get in touch with Sohan then go to outsourceaccelerator.com/85 and I hope you enjoy.

Derek: Hi and welcome back today again I’m joined by Sohan David. Hi Sohan.

Sohan: Hi Derek. Hi listeners.  

Derek: Sohan is the founder and Director of TBS global which is a globalize outsourcing solution provider we have had a chat two episodes prior go back and listen to those and the whole back story but today we going to look slightly different angle and Sohan as I’m sure you’ll agree is a fountain of knowledge in terms of outsourcing and business so hugely available.  Sohan, first of all, do you just mind giving us an introduction to yourself and how you found yourself outsourcing.

Sohan: No not at all.  So my background is in Finance and I was born in Sri lanka and I grew up in Sydney, Australia and about 13 years ago we needed to look at some outsourcing requirements within the financial sector and started the company purely as an Australian based outsourcing company and about 6 years or 7 years ago then

Derek:  Reserving your own needs of your company.

Sohan:  Right, but definitely open to 3rd party clients as well around this time we also found out that the telecommunication market deregulated and there is was massive need for customer service and back office operations within this sector and a number of other sectors so we did expand at the model to the Philippines we considered a couple of other locations but felt that the Philippines had everything that we were looking for and we set up operations in the Philippines.

Sohan:  So we found that…

Derek: So you set it up in 2004, is that right?

Sohan: That’s correct.

Derek: Fantastic and it’s interesting you have an Asian background from Sri Lanka but I suppose Australia is relatively isolated in terms of its geography but also it’s fairly insular in terms of a lot of things but it is actually quite proactive in terms of outsourcing so a bit of a mix back there bit.  Why did you choose the Philippines over other parts of Asia and then also significantly now you have different outsourcings offices in 3 countries is it? You chose the Philippines for them why did you choose to diversify that?

Sohan: Certainly, so the reason we selected the Philippines we travel to the sub continent, we looked at India and Sri lanka initially and we felt that there were while it there was a great outsourcing destination there were key factors that were important to us that wasn’t met in those sectors when we looked at the Philippines it was one of those things where what if we are very disappointed and happened to be committed to traveling to the Philippines but within a few hours I think we just knew that we found the right place the infrastructure the people were just absolutely great and we could see ourselves expanding in the Philippines. The plan always was to have a global footprint and we looked at South Africa as well as Fiji but our main hub remains in the Philippines simply because of all the other methods as I said earlier the infrastructure and the wealth of  resources with outsourcing knowledge, we still don’t feel that we can match that quality in South Africa or Fiji and from a followed the sun concept in this locations are important to us especially from a business continuity point of view but the Philippines will always be the flagship.

Derek: Right so what is your reason behind having outsourcing offices in 3 different countries is it the follow the sun which refers to obviously people having different shifts in different timezones? Is it a redundancy thing or is it diversification or risk and opportunity? What are your main motivators and considerations there?

Sohan: It’s actually all of those factors in terms of the follow the sun concept the first place to see the sunrise is Fiji and while the Philippines is a 24 by 7 operation for us, having South Africa finish of the day basically gives us complete coverage especially from a business continuity and a redundancy perspective so what we look at is having a solution replicated within those other 2 sectors as well.  Secondly, it’s also climb driven, so we have a number of clients in the Australian financial center who like the thought of having a secondary center somewhere closer to home so Fiji didn’t become the natural destination there, a wealth of resources and financial expertise in that area.  South Africa was brought very much as strategic location, we had a large German client based and a number of UK clients and having a solution for them that’s closer to home from a time perspective is very important so South Africa definitely deserves that purpose as well.

Derek: It’s interesting that you have seen time differences this significant because the Philippines you know from what I know it’s a 24/7 operation and people because outsourcing is pretty much started with the US which is completely the other end of the time spectrum for the Philippines and everyone used to work night shifts did you not feel that someone on night shifts is as aligned as someone who’s actually  within the same timezone?

Sohan: Very much and we’re happy to have the Philippines as a 24-hour operation we felt that with all the clients we were dealing with it was important to give them a secondary option and having said that, the other 2 locations South Africa and Fiji definitely stands out as a client-driven location for us. For us it’s ticking the box saying yes we do have a flag in this relocations but they serve quite specific functions for some of our key clients.  The larger benefit across all that is that we’re not primarily dependent on 1 location, we have the business continuity strategy across 2 different, not just within the country but within 2 separate location.

Derek: This speaks to the sophistication of outsourcing doesn’t it and again I sorta preach  people might pay you $15 an hour to execute an activity but there’s always considerations of redundancy and failsafes and things like this, the outsourcing sector is pretty sophisticated in terms of ensuring uptime, ensuring that their system always go regardless of anything  regardless of a typhoon or an earthquake you know so SMEs can tap into this sophistication

Sohan:  Absolutely.

Derek:  The SME’s sitting in Sydney or New York, they wouldn’t have any of this for their own domestic intrinsic staffing yet for the hourly rate, they buy into all of this all these considerations that you talk about.

Sohan:  You’re 100% right, and I think having to survive 2 typhoons, 2 major typhoons in Manila, it just surprised me that business continued, I mean the internet didn’t go down, the phone lines were stable the only hindrance was our staff had struggle coming into work but you’re 100% right I mean I’ve worked for a number of larger corporations and I can guarantee you that this level of contingency planning does not take place in organisations let alone SME so what you’re buying for that hourly rate is so much more than just an english speaking resource.

Derek:  And I supposed, so case in point is not a very nice example but the World Trade Center in New York you ever see some of the most sophisticated and wealthy companies in there but I think some of the smaller companies, they didn’t have a lot of redundancy, they didn’t have a lot of backups you know and it’s incredible where is if you have a bit of outsource staffing everything is going to be in the crowd by nature, there would be an immediate redundancy there over there probably a terrible example to use.

Sohan: No, but you are right.  This is unfortunate event but I think in the environment that we live in these days business needs to plan for this type of situations whether we like it or not.  We have a real time rollback system.  I’ve worked in finance, that was a hard concept to bring in you know but there’s our clients any of my clients whether they’re a 2 seater, a 20 seater, or a 40 seater can login in at any given time and see their team in operations, that say, that reduces the gap between where you are and where your team is and information whether it’s a call or it’s a report or data that’s being inputted is securely stored you know you got a peace of mind.

Derek: I’m just looking at Accenture at the moment actually they are 1 of the biggest outsourcing outfits and they have about 450 thousand staff of which about 130 thousand are in India about 50 thousand in the Philippines, 50 thousand in the US simply staggering numbers. The sophistication that those players have is phenomenal everything is 100% uptime.  There’s huge redundancy built in, they have huge centers spread across all nations in case they need fail-safes and backups, outsourcing now you know considering it is only kinda 25-year-old baby is an incredibly sophisticated operation isn’t it?

Sohan: It is and I think you know if your listeners have never walked to a BPO or a call center in the Philippines.  I encourage you to do that,  I encourage you to come and visit the Philippines because i think if you haven’t done that you’ll be open to a very new experience.  It’s not, I don’t think your impression of what would be, it’s what it actually is but you know you walked into one of this buildings and ask yourself where are you? because the sophistication is amazing and you know organizations like Accenture who’s led the way and we’re very delighted to say that there are this large organization like Accenture who we worked with and it’s a humbling experience because these giants would refer opportunities to us because they have come and they have looked at our procedures and our technology and said look you guys get us approval because what you lack in the size of our organization you make up for the infrastructure training people so that’s a massive point of recognition for us.

Derek: That’s fantastic, that’s a good feeder to have from Accenture.

Sohan: Very much so.

Derek: Interesting.  I suppose not wanting to compare your favorite children or but how do you compare the different offices in terms personnel, in terms of performance and skill set how does it roughly compare? Isn’t that a not fair question?

Sohan: It’s probably not a fair question but I’m quite happy to answer it. It’s manila and I think maybe for live reason it’s the sentimental value of just turning up to the city and building something from scratch I guess we didn’t 6-7 years ago we didn’t really have the connections we did and I think that been a lot of companies coming to the Philippines and not succeeded so being able to do that and see the organization grow, I think the rewards that I get from working with the team the individuals, it’s unmeasurable having a management team who you can just totally depend on both professionally and personally and just knowing that they’re passionate about your business as much as you are, you know just being able to go and fly to manila and hit the ground running work with the team, the challenges that you overcome and what the team what has done to do it personally, I think we still have number of strategies still that we want to implement in the Philippines but if comes to your favorite child sorry to hurt Fiji and South Africa but Manila is my number 1 child.

Derek: And i won’t hold that against you, It’s interesting though that one of the sort of things I preach about outsourcing is you should consider outsourcing because then you have 7 billion potential job candidates for your role I supposed to traditional view of who can I hire in my home town with the geographical restriction and you know once you start looking abroad and it’s funny it’s abit like there are specialties of region I mean the Philippines is likely renowned for voice and customer services of their bubbly personality and yours a bit more kind of a tech and now I think Eastern Europe is getting a very good reputation for a lot of programming and things like that.  Can you see in the future that there will be very, once I think the world is basically one market but there will be different hotspots for certain roles and activities?

Sohan: I think so. I think there’s definitely skill areas but I’m also seeing a separate trend or patches of a separate trend which is the merging of skills.  We have a client who needed architects we got a team of architects in Manila for a firm in Brisbane.  Now, 5 years ago if you told me that was the case, I wouldn’t have been confident I think what we are finding is that the locations like Philippines or India, those skillsets are broadening and there are other patches you know locations just like parts of Asia, parts of Africa who actually knows killing up in some of those key areas gaining as well as customer service.  There are solutions coming out of very surprising locations but I think it’s great from outsourcing industry perspective.  It’s exciting.

Derek: The world is really flattening out and leveling isn’t it and I sort of suggest it’s becoming more meritocracy because literally anyone in the world can pitch for a job and they will be paid based on output as supposed to where they are born where they are sitting what University they went to you know it’s kinda of truer freer market isn’t it?

Sohan: Absolutely and it’s exciting time.

Derek: Yeah it is, it is absolutely.  I supposed this brings questions on you.  What would you say to someone that is a little bit apprehensive about outsourcing them their an SME with 5 or 10 staff, it’s all little bit scary.  How do you dip your toe in?

Sohan: I think testing the market is ideal.  It’s a scary thing to say will it take your whole team and relocate them, relocate the service to a place that you haven’t heard or for not familiar with. My advice is you know let’s try, let’s take 1 part or part of your business and test that.  We’ve helped a company who needed 8 people to be relocated or functions of 8 people to be offshored and they are very apprehensive so what we did for a period is actually have a 1 to 1 resource matching period

Derek: And you run 2 units, side by side

Sohan: Right, and then you slowly reduce your dependency on your primary location once you have that confidence. There are number of strategies I think taking the part out or you know subdividing a function or a department, that’s a great way to do it matching resources 1 to 1 and then reducing them into a half strategy is another brilliant way to do that, so I think the key is to actually be very open with your perspective outsourcing partner and I say that to the full definition of the word you have to consider your outsourcing provider as your partner otherwise I don’t think it’s going to work and outline your concerns and look out how they can provide a solution for you.

Derek:  Fantastic.  We had an episode with you previously and you were saying your rates are very around about 8 to 14 US dollars per hour is that correct?

Sohan: That’s correct, so if we were talking about the standard customer service back office we could start at about $8 per hour per resource, by the way, this resource is extremely qualified, one other thing I love about the Philippines is that 1 place that you could actually find professional outsource and calls into people.that’s their job, that’s their career.  In some cases, they are doubled degreed.

Derek: That’s the benefit of coming to a country that’s been doing it 25 years because you’re buying into the history aren’t you as a country that just picked it up a couple of months ago.

Sohan: Very much so exactly, and so those rates that we outlined before it’s fully inclusive rates not just for the resource it’s for the infrastructure it’s for the whole planning and integrative.      

Derek: Can you give us a sense for the $14 let’s even say a $20 role, $20 an hour. Let’s go with the $14 an hour that people pay you for all of the services included what would an equivalent role be in the US what would their annual salary be would you think is that sort of a mid-range developer or –

Sohan: You’d probably look at about $85,000 US  

Derek: Right which is about $40 an hour  

Sohan: Right and you know we’ve just done this exercises in Australia for the $14 mark ,we were able to find a resource if you had to fill that role here in Australia that would have cost our client in Australia anywhere between a 120-140 thousand Australian dollars a year.

Derek: You’re talking about $14 vs what is that $70?

Sohan:  That’s right.

Derek:  Did you include all of the office cost for the Australian counterpart and the taxation and things?

Sohan: That’s just the salary excluding superannuation which is another 9% on top.

Derek: So I mean a $140,000 salary if you have to provide office space and superannuation and government taxes you’re probably looking kind of $200,000 a year which is a $100 an hour so you know the saving are kinda outrageous in a way and certainly justification for people they don’t have to do it but any business owner really needs to at least fully consider outsourcing, don’t they?

Sohan: I think so. I think you know my view is that if a business doesn’t consider this outsourcing in their business cycle either they are the luckiest business or their not looking at the business correctly.

Derek: I say you can save 70% you know these are sort of a catch lines but it’s not about that, it’s about innovation growth and it’s about the strategic competitive advantages that you can get but also the scary thing is that if you are not on this bandwagon then probably your competitors will be getting on the bandwagon.   

Sohan: Very much, and we’ve seen that happen in a number of times in the market where the clients just delayed on that and the competitive got in got in ahead I think for us the best case study that we can present to our clients is our journey.  If we didn’t offshore we would have closed up.

Derek: Fantastic. I have thoroughly enjoyed our chats with you, Sohan David, thank you so much and of course this is what people buy into when they secure outsourcing services if you are interested in outsourcing services I do suggest that you contact Sohan or similar other BPO’s out there, if they want to get in touch with you, of course, Sohan what’s best?

Sohan: Drop me an email [email protected]   

Derek: Fantastic and all of your contact details will be in the show notes and it’s been an absolute pleasure thank you Sohan  

Sohan: Likewise, thank you much for your time.        

Derek: Okay, so that’s Sohan David of TBS Global.  If you want to get in touch with him or any of the show notes, then go to outsourceaccelerator.com/85 and if you want to hear the prior episode with Sohan David, that is episode 76 and 79 and of course, finally, as always, if you want to ask us anything, then just drop us an email  at [email protected].  See you next time.