My journey into outsourcing

A few years ago my CEO came to me and said: figure out how to hire your team out of the Philippines. I had zero experience and was new to building teams. But I love to learn and new challenges are just a way to prove how great you are. As a new employee, I was thrilled to have the chance.

So we went to the Manila CraigsList, came up with some generic interview questions, and started reviewing candidates. As a lean startup, the idea of such cheap labor available 24/7 for customer support was too good to pass up. So we learned, we hired a team, found a great leader who took over this part of the process and hosted our new team out of her office.

It worked so well for customer support that we started looking primarily to hire in the Philippines for any and all non-engineering jobs outside of our corporate department leaders. I transitioned all of the fraud prevention, our personal retail brand management, vendor management, even my right hand to the Philippines team.

Of course, there was a ton of trial and error, but we learned and improved with each week. Our onboarding got faster, training became easier, and quality became consistent.

We scaled the team up to almost 40 people over two years and ran all of our business operations out of the Philippines with the exception of top-level leadership in SF. It was the best learning experience in lean operations.

From our end, this strategy was fire. It inspired me to want to consult with everyone I can to help startups think this way and build their initial teams in this lean manner.

But there’s the other side of the equation…the outsourced workers. While we were heavily capitalizing on employees that cost $2 per hour, what were they getting?

As the Head of Ops, I was the voice for these people. But I wasn’t serving their best interests. It took me a while to realize that. My eyes opened when my petition to get raises for the long-term outsourced employees was denied.

A $0.25 raise was denied for employees that had worked with us 1+ years diligently, rarely taking (unpaid) time off, working overtime during holidays with no overtime pay. That was when I seriously started to question the relationship we had in our fancy SF startup office to these people that make less per day than a typical bottle of wine costs. If we’re paying for catered lunches every single day of the week, a fully stocked bar, and all those other tech perks, why is a raise that would cost at most an extra $40 per month per person even under question?

Things got worse. I was asked to cut a significant portion of the team despite presenting data that it would dramatically hurt the team performance and negatively impact the customer experience. With this seemingly random batch of layoffs, a culture of fear was created. The outsourced team no longer maintained its quality. There was a growing divide from our SF team and our Philippines team.

A collection of events started to occur that distinctly highlighted how our office felt about this subset of our team. It became obvious that our leadership viewed outsourced employees as utterly dispensable. Faceless robots. And this caused the outsourced team to act as such – no passion in their work or personal investment in the company. All those years of building this team with a focus on team mentality and positive energy started to collapse. So I wanted to learn more… was this just my company or was this an industry problem?

 

Investigating the outsourcing industry

I spoke with companies hiring massive outsourced teams. I interviewed BPO (business process operations) workers out of Manilla and hired them to research the local BPO firms. The research was consistent: this detached attitude within the outsourcing industry is prevalent everywhere.

The baseline? Outsourced workers are treated like faceless robots and most of the clients are extremely large US public companies. The most common traits across outsourced teams were:

  • Few employee rights: Employees rarely received raises, or paid holiday, or sick days.
  • Never spoke to someone from their client’s internal team
  • There was no focus on building a team through motivation and inspiration
  • There were no growth opportunities or career advancements
  • They were given zero mentoring from leadership
  • Any failure would result in immediate termination

The entire industry lacked this sense of comradery that we all read about in management books. Yet these are the ground-level people actually interacting with all of your customers! How can you trust people you have never spoken with to properly represent your brand?

This all boils down to the fact that the current scope of outsourcing is f’d up ethically and nonsensical from a long-term business sense. It caters only to the corporations hiring in short-term benefits and entirely manipulates the outsourced workers.

My argument is that it doesn’t even make sense – treating these people poorly actually hurts corporations in the long run. A happy, engaged, growing employee is able to accomplish far more at a much higher quality than those that do not feel like they make an impact or are valued. Let them grow with your company, learn new skills, and climb up the ladder. Not treating these people as people is bad and it’s also stupid to not utilize employees to their full potential.

 

So what does this matter? Well, it means that outsourcing is a raw resource that we can capitalize on through investment.

It’s still extremely cost-effective, but no one is taking the time to grow and mentor outsourced agents. Let’s look at an example of how we could better utilize the experience of an outsourced customer support agent.

Hire an agent at $2 per hour for customer support. They spend a year learning the ins and outs, talking 1:1 with customers, learning what they care about. Train them to listen and observe. 

Then start providing some excel & analysis training. Provide a raise of $0.25-$0.50. Train your agents to compile data from their interactions, and how to analyze that data to draw learnings. Put them in charge of a weekly summary that reports the top customer concerns and how it compares historically.

Then make them a manager and give another raise. This person will know the ground level, which gives them the power to build new processes and train new agents in a way that someone without this experience simply cannot.

With this, you’ve taken an entry-level customer support agent and turned them into a high functioning & high value-added employee that costs maybe $3/hr compared to $80k customer support manager in SF.

 

It’s not easy to build up skill sets, but it is worth the investment.

We should be taking these entry-level outsourced positions and growing their skill set, building a career. That’s what we do with the workforce in the US.

The cost differential should tell you to hire outsourced teams, not to treat them differently.

Imagine how much more effective your organization could run if you could have a giant team of mid-level employees that are experts on an aspect of your company, but still cost <$10 per hour. You should be able to conquer the world with this strategy, yet no one takes the time.

 

Transform your outsourced team culture

Treat outsourced workers with respect. Provide basic employee rights. Create growth opportunities. Invest in them as people. Build a motivated, inspired workforce that has a passion for your company and its mission.

Why? The cost remains the same yet the production increases dramatically. 

You create a relationship based on trust that inspires loyalty. The work produced can rival anyone hired out of the states, but costs at least 80-90% less.

 

Understand the value of training someone with no experience

There is a huge value to personally training your employees from the ground up. They don’t have preconceived notions of how to do things and are able to collaborate with you to find the best path. This inspires creative, customized solutions that utilize each agent to the best of their ability. You end up with an outside of the box organization, built bottom-up. 

So here’s what I believe…

The outsourcing industry in its current state is unethical and under-utilized. We need to treat people better, which will also provide a return of better work at lower costs. It’s a win/win.

That’s why I started OpsTales. I want to change this industry one agent and one company at a time. We personally connect with all of our employees, providing growth opportunities and mentorship. We are trying to create an outsourced team that can accomplish amazing feats. We want to help startups stay lean via outsourcing and we want to manage the outsourced agents, hosting them in our office so that we can manage the ethics. Our people are family, not faceless robots. We are partners, not a vendor. We are here to make an impact.