Offshore talent providers want their profit. Don’t let this be at your expense.
We list ten reasons why selecting the lowest cost outsourcing partner is the wrong way to go about adding offshore accounting and IT talent to your business. We share how to ensure you don’t get trapped by low-cost temptation that ends in disappointing outcomes.
Make no bones about it, outsourcing is primarily about salary cost savings that can amount to around 70% of your salary bill vs. local hires. In this environment of ‘how much can we save’ it’s all too easy to be drawn towards providers that offer seemingly amazing instant savings. Unfortunately, this is where trouble usually starts. Low ballers still need to make a profit. To achieve this, they employ a range of cost escalation and quality degradation tactics that can leave their clients wishing they’d paid the fair going rate at outset.
- Hidden costs
- Staff churn
- Inexperienced staff and coached candidates
- Poor experiences for your clients
- Reputation damage, reduced sales.
- Poor IT – slow, lack of adequate security
- Lack of support when things go wrong.
- Poor working conditions
- Negative impact on local team(s)
- Increased management overheads
No. 1 Hidden costs
Every business leader seeks predictable costs. But low ballers work in the same way as budget airlines. Where budget airlines charge for baggage, seat reservations and printed boarding cards we’ve seen budget providers of offshore resources throw in extras that can include:
- IT costs and video conference costs
- Meeting room costs
- Recruitment fees
- Service charges for HR and IT support
- Unexpected mark-ups on salaries
What seems like a bargain at outset can rapidly turn into monthly discussion about fees. More expensive than planned, more management time than anticipated; reduced ability to plan. Result? Not the low hassle solution that business leaders seek from outsourcing and offshore partners.
Pay a bit more? Get the peace of mind that comes from one guaranteed monthly fee that’s set at outset, no extras on top.
‘’Peace of mind. A one stop shop from job spec to ad, interview, employment, admin, tech, payroll.’’ -Simon J, Director, SDJA (Yempo client)
No. 2 Staff churn
Elevated levels of local staff churn is a key reason why business leaders decide to explore adding offshore accounting and IT services to their teams. Low staff retention impacts client relationships, soaks management time (recruitment, training and reduces business efficiency.
Super low-cost outsourcers can’t afford to pay staff well. Result? Low levels of staff retention that impact on their clients.
The cheapest providers are also far less likely to provide dedicated staff, instead moving talent between clients, often without warning.
Pay a bit more? Get dedicated staff that stick around.
‘’As a small business we can’t afford high churn rates. People like working for Yempo, so when they join, they stay.’’ -Chris G, Director, Compliance Data Labs (Yempo client)
No. 3 Inexperienced staff and coached candidates
Cheap bills mean lower wages for offshore talent. Super low-cost outsourcing providers cannot attract the experienced IT and accountancy talent that most clients desire. Many try to fill the gap between a client’s job specification and candidates experience by coaching candidates pre interviews. Result? Clients have the choice of investing in training (reduced efficiency) or accepting low levels of performance.
‘’They don’t coach the candidates (as others do), so we know skills are genuine.’’ -Warwick M, Director, Compliance Datalabs (Yempo client)
Pay a bit more? Get the talent you want and need.
No. 4 Poor experiences for your clients
Client service excellence is key to running successful accounting and IT businesses. The reduced experience levels of talent from super low-cost providers creates a quality divide between local and offshore teams.
Pay a bit more? The best outsourcing providers in the Philippines provide talent where there is no discernable difference between offshore and local execution quality. Clients are confident that their ‘phones can be answered by any team members.
‘’Incoming calls to our Perth number are answered by anyone in our team – Australia and Philippines – and customers can’t tell the difference.’’ -Andrea H, CFO, PowerTech (Yempo client)
Read Yempo client success stories: https://www.yempo-solutions.com/outsourcing-philippines-case-studies/
No. 5 Reputation damage and reduced sales
Over 80% of B2B business is traceable back to some form of recommendation or referral
(Source: https://hbr.org/2016/11/84-of-b2b-sales-start-with-a-referral-not-a-salesperson)
The lower quality, less experienced staff that super low-cost outsourcers provide can quickly impact on reputation and future revenue streams as clients become frustrated by reduced service levels. Year one savings can translate into a year two new business challenge.
Pay a bit more? Clients can benefit from lower fee levels AND excellent service levels. Reputations are enhanced, new business from recommendations and referrals is increased.
‘’A lower cost base that allows us to offer services to clients at reasonable prices: clients feel like they get value for money plus very high-quality staff with excellent attention to detail.’’ -Jacki M, Founder, We Are Lumen.
No. 6 Poor IT – slow, lack of adequate security
Effective multi-country working depends upon excellent IT. Super low-cost outsourcing providers are far more likely to provide older and slow IT equipment, have less reliable networks that hammer efficiency; many cut corners with cyber security. They have a record of not sticking to IT promises made during negotiations.
Pay a bit more? You get to specify the IT kit that your offshore team members use and can ensure it’s fit for purpose.
‘’Others give developers poor, slow, equipment despite promises made. This slows productivity. Yempo made getting the right tech easy.’’ -Chris G, Director, Compliance Datalabs (Yempo client)
No. 7 Lack of support when things go wrong
Any offshore accounting or offshore IT partner is only as good as the support they give clients when things go wrong. Super low-cost providers cannot afford to have the necessary quality, non-chargeable, team of HR, legal and IT experts ready and able to resolve issues. Result? Frustration and dissatisfaction for their clients.
Pay a bit more? Get a smoothly oiled machine that’s ready to step in and fix issues at a moment’s notice.
‘’Yempo really does give you your own quality employees. You select and work with them while Michelle and team manage everything else – HR, contracts, IT, recruitment.’’ -Peter H, Director, Respiri (Yempo client)
No. 8 Poor working conditions
Super low-cost providers cannot provide quality office space for team members. They don’t provide vital work from home basics like decent seats, headsets etc. This makes it far harder for their clients to put their offshore talent directly in front of their end clients. It makes for a less enjoyable work experience for members of your team.
Pay a bit more? Know that your offshore team members enjoy working conditions that are like those enjoyed by your local team(s). Be confident that your clients can interact with offshore team members without issue.
‘’Yempo treats people as people – bonuses, healthcare, social events – they really do care.’’ -Russell K, Head of People and Culture, 1-Stop (Yempo client)
No. 9 Negative impact on local teams
Any differences between how local and offshore staff are treated will be immediately obvious to your local team members. Noticeable gaps can change company culture and how local teams feel about management attitudes towards employees. Given that super low-cost offshore talent providers must cut corners to make a profit gaps will likely be obvious.
Pay a bit more? Build one, motivated, team by ensuring that there is no meaningful gap between the working experiences of local and offshore team members.
‘’Yempo gives us peace of mind, comfort that our team in the Philippines is treated well, and similarly to our Australia-based teams.’’ -Andrea H, CFO, PowerTech (Yempo client)
No. 10 Increased management overheads
Everything we’ve listed adds up to hassle for management, distraction from getting on with growing a business. It’s the unavoidable consequence of going super cheap. Low cost is attractive on day one, ultra unattractive on day one hundred. It’s your choice.
Pay a bit more? Focus upon growth. Benefit from lower costs. Make more profit. Enjoy less HR and recruitment hassle.
‘’No headaches. HR issues like absence, holidays, sickness, pay & benefits are all taken care of. Adding offshore talent to your team with Yempo lets you just focus on doing business.’’ – Shareef H, Regional Engineering Manager, Aluma (Yempo client)
Thank you for visiting our blog! We hope you found our content informative and engaging. Stay connected with us for more insightful blogs, updates, and tips on outsourcing IT & outsourcing Finance in the Philippines, or shoot us an email at [email protected]. We are happy to answer your questions!
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