Tom Grealy – Philippines as a Global Centre of Excellence for Outsourcing

Derek:                  Hi, and welcome to another episode of The Outsource Accelerator Podcast. This is episode number 173, and my name is Derek Gallimore. So today I am interviewing Tom Grealy. He is an Australian guy. He’s an outsourcing consultant of Grealy Consultants, but significantly he worked for a massive telecommunications company from Australia and built an office of 15,000 people here in Manila, Philippines. So, he’s got incredible enterprise and corporate experience, but also fantastic outsourcing experience with a whole spectrum of businesses. And also outsourcing across the world from every different geography. So, it’s a really good conversation and talk today. And I certainly enjoyed it and learned a lot. I’m sure you will too. If you want some or any information or the show notes, then go to outsourceaccelerator.com/173. Enjoy!

Derek:                  Hi and welcome back, and really today I am excited to be joined by Tom Grealy. Hi, Tom. How are you?

Tom:                     Fine, Derek. How are you? Glad to be here.

Derek:                  Yeah, I’m great, and thanks for joining us. Tom, you have an esteemed background in outsourcing. You’re obviously Australian background. You moved to the Philippines and you’ve remained here to this day. And you’re also involved with ANZCHAM, which is the Australian-New Zealand Chamber of Commerce. I’m really excited to have you on the podcast, and certainly thanks for your time.

Tom:                     Great, glad to be here.

Derek:                  I suppose you’re far better at introducing yourself than I am. So, do you want to just give people a brief background of how you found yourself here in Manila?

Tom:                     Yes, sure. I was working for Australia’s largest telecommunications company, Telstra. I was running one of the big sales and service group, so consumer and small business customers. And I was asked to take over a, what we call a back of house group. So, there was about 350 people who were doing re-work if you like, customer orders that needed to be entered manually, etcetera. And at that time when I visited them, I thought we could do better than that. I didn’t really have a strategy, and so I heard about the Philippines. And I went to the Philippines, and it was a bit of an eye-opener for me because we thought we knew how to run contact centres and big workforces well. And then came to the Philippines and actually saw global best practice, and thought, “Wow, this is a wake-up call.” So, I was the first one in Telstra to move customer-facing work offshore, and we outsourced it to an American BPO. And that opened up the floodgates. I think there were several business units in Telstra that had contact centre work, and everyone started moving things. And it actually became a bit of a mess, but we’ll come back to that. Well, that spurred me to suggest that we set up a country office actually, so we needed to get our arms around this growing workforce. So, it went from 350 people to 15,000 people in about five years. And we really needed to get our arms around it and do better for our customers. So, I suggested we set up a country office, and in 2009 I moved here. And we set about improving service for our customers. And in the end, we were taking about 70- 80% of all customer interactions in the Philippines. At the time, that was around 40 million customer interactions a year. And that included voice, email, chat, etcetera, even white mail. So, it was quite a large operation. And then I left Telstra in 2014, set up my own management consulting company in this broad outsourcing, offshoring, contact centre, customer operations, back office field, that is generally known as the business process industry. And I’m based in the Philippines and my company is based out of Hong Kong.

Derek:                  Fantastic. Well done, and there’s so much I want to ask you on that. I suppose initially, just getting some of the facts down on paper, there’s incredible growth there going from 350 to 15,000 people in five years. Again, I think numbers are more normalized here to talk in the thousands. Whereas if you’re talking to people in the West, people are just staggered by that scale, isn’t it?

Tom:                     Yeah, I mean there’s different segments to the market, isn’t there. You get big corporate, and they talk in the tens of thousands. And then you get small and medium sized enterprises who might be talking about two, three, five, 50, 150, 300 people depending on the size of their business. And the issues though are that clients have in this space are surprisingly similar even though the scale is vastly different. Obviously, when you got a big workforce, you need to have real operational discipline. And that’s one of the things I liked about the Philippines is that as a client, Telstra, I knew my business. But what I had to admit was that did I really understand global best practice when it came to running contact centres and back-office, which the answer was, no. Many minds are better than one, and so what we tried to do was tap into organizations that knew how to do things better than we could because we thought our customers deserved better. Quite honestly, I was prepared to go anywhere in the world to get what was best for my customers.

Derek:                  When did you first come to the Philippines and discovered the opportunities here. You said 2009, you created the country office here, but when did you first start that journey?

Tom:                     Yeah. It would have been sort of 2005, 2006. And then we went live in 2007. So, had a number of visits here, just getting familiar. And one of the issues for me was also, it’s almost like an ethical issue for me, if I was going to close down work sites in Australia, I really had to get personally comfortable that this was the right thing to do for the company and our customers. This is a big decision, affecting people’s lives. But the capability here was just so glaringly better than what we were doing. And one of the things that really attracted me was that because…you know you had BPO’s here that were contact centres operators and back of house operators who had state-of-the-art technologies. It was actually going to allow us to leapfrog a generation of IT investment to get our workforce and therefore our customers access to superior tools and technologies which we were struggling to justify buying as a sort of standalone organization in Australia. It was very attractive proposition, beyond the labour arbitrage, the cost savings. We really could see a roadmap where we could build something better for our customers.

Derek:                  Yeah. When you got on the plane and to first look at this in 2005, and Telstra obviously has got a lot of funding, you work in a sophisticated area, environment. Australia is a very progressive society in terms of commerce, and you’re coming to a developing country. And a lot of people kind of associate call centres with a bit of a sweatshop environment. And then you were kind of blown away that actually the people in the Philippines are displaying global best practice. They had processes in place that you said you could basically leapfrog an entire generation. Was that whole thing kind of staggeringly surprising for you?

Tom:                     Yeah, it was. And one of the things…honestly, when I came to the Philippines I expected to see what’s fearful. I was going to see sweatshops. In fact, what I quickly discovered was the industry here was state-of-the-art. It’s a sunrise industry, so it’s fast-growing. It pays well above the national average for employees. Employees get superior facilities, health care, training them. The BPO industry invests 10 times more in training Filipino employees than any other industry in the Philippines. The health care is better. Everything about the industry is better. So, I actually felt very quickly, very comfortable that we were helping the emergence of a new middle class, if you like. And it was a positive disruption, because the industry only exists because big Western companies like Telstra, INZ, QB, AT&T and other companies are comfortable that the employers follow ethical, operate with respect to individual diversity. So, what you actually find in the industry is there’s things that Australia can learn. For example, it surprised me to learn that when you look at gender equity in senior executive roles, the Philippines is number seven or nine in the world, Australia is number 45.

Derek:                  Right.

Tom:                     So, there was a little bit of humility that you had to bring to the table, and very high proportions of LGTB employees. And with organizations that had very progressive policies around accessing talent, whoever that talent might look like, whether it’s a man or woman, different gender orientations. So, it was a bit of an eye-opener to me, and I got comfortable with that very quickly. It was the right thing to do for our customers as well. And obviously there were cost savings, so that was beneficial for the company as well.

Derek:                  Yeah, it’s incredible isn’t it. And just coming back to that scale thing, to take 350 people up to 15,000 people in five years, there’s actually incredible considerations in that alone, isn’t there? Just to have those recruitment drives to ensure you’re maintaining your culture and quality and alignment to your company values. And again, I had said a query whether a company in Australia could even really handle that growth trajectory, whereas here it’s essentially quite normal I would think, isn’t it?

Tom:                     Yeah, the talent pool here is enormous and deep and over the years, it’s gotten more sophisticated. Moving 15,000 roles in five, six, seven years was too much too soon, because we didn’t actually fully understand how to do it well. And in Australia, contact centre groups didn’t work that closely together anyway. So, it kind of exposed our fault lines if you like. And that’s what most clients experience when you outsource, whether you outsource in Australia or the UK or the West, or you offshore the work. And when you offshore it, you might give it to a third-party outsource, or you might do it yourself. It typically exposes process and capability gaps, and that we experienced. So, we had to make the case to reinvest some of the savings into fixing, not only just fixing those things, but coming up with a more sophisticated and better customer service operating model, which we did. But Derek, you touched on something that is quite interesting, which is most people come to the Philippines thinking they’re going to save money, and they do. The reality though, is what keeps companies here is that they realize there’s this capability that you can tap into combined with a work ethos that is full of people who are ambitious and energetic. So, you see people typically in the early days, companies would move back office work, non-customer facing work, data entry work, and then move into voice work. And now what you see is those companies have moved full finance functions. They’ve moved a vast array of HR functions. They’re even moving corporate head office functions. So, one of Australia’s biggest companies has their corporate processing team has a big team here, statisticians and mathematicians and actuaries and other things. There are other companies here employing doctors and nurses to provide support to clinical services in Australia. And these are quite sophisticated operations, so it really has evolved. It’s not a… this is a global centre of excellence for these types of services. So as a client, you’re limited by your imagination.

Derek:                  Yeah, it’s fascinating isn’t it? And it’s interesting to hear that when Telstra came over here, you found that you had to up your game a little bit and refine your processes. And I very commonly say that to SME’s that are coming over here. They kind of come in with a bit of ego and bravado thinking they’re coming from the West to the developing country. And very quickly, they find that actually the Philippines is the specialist in processes and process mapping and process optimization. And it actually forces these companies to mature in their processes, in their sophistication, because they realized that actually they can’t do things on the fly anymore, they’ve got to write things down, they’ve got to map things out. And it’s really quite a sort of a surprise for a lot of people, isn’t it?

Tom:                     Yeah, that’s right. It’s very common in the back-office space with accounting work, in particular finance work, also HR work and even IT, that corporate in particular use the offshoring and consolidating of work in global work delivery centres, often out of the Philippines, maybe they’ve got one in India, depending on their footprint, they may have one in Eastern Europe, and they use that as part of an internal transformation program. Particularly companies that have grown through acquisition or have a lot of legacy systems. They want to create standard ways of working, one way of working. And what they do is they offshore work, create these global delivery centres and then standardize the work process, which delivers higher quality, less defect, less rework and lower costs and all those things. The other thing you triggered for me, the capabilities here, and you often hear about the capability here and the legendary Filipino service culture, but that doesn’t happen by itself. You still need to exercise high levels of due diligence and leadership. And you need to, as you said, be open to the fact that you are going to have to adjust the way you operate because you’re now dealing across multiple geographies, multiple culture, etcetera. And you need to, as a client, you need to adapt.

Derek:                  Yeah, absolutely. And it could swing either way. I think a lot of people think it’s a bit of a sweatshop here, or people think they can outsource everything, which includes outsourcing all their operational difficulties, solve all their problems for them. Outsourcing has huge potential, but it’s no magic bullet, isn’t it?  You still need to deal with your day-to-day business kind of functions and complexities.

Tom:                     That’s right. In fact, it will expose your shortcomings in your processes and your faults. So, you need to go in with your eyes open. And so, you often hear clients discussing, “do I shift the mess for less, or do I transform it first”. And it’s an interesting discussion there. Because my view is if you’re going to transform it, you would have done it already. That’s number one, and number two is by shifting the mess for less, what you actually do is to open the opportunity to take some of the labour arbitrage savings you’re going to get and reinvest it. The third element in all of that is quite often a mistake that some companies that are offshoring for the first time do is the people who are running existing processes in Australia or the UK or the US, are the same people now overseeing the transition offshore and even the work functions offshore. And yet they lack experience and capability to do transitions and to work across an offshore environment. That’s where clients often fall down, in addition to moving too fast, is that lack of transition planning and really understanding, having clarity around your risks, documenting it with your partner, if you’re using an outsource partner, is having mitigation strategies for those risks. And then bringing in extra help to go, “Okay, well how do we manage this? How do we know we’ve done our due diligence correctly?” Then the teething pains that I’m sure you’ve seen as well across many, many clients.

Derek:                  Yeah, absolutely. We’re a consultancy, or advisory as you are. And again, there may be a little bit of ego in a lot of business owners that they do business, so they see no issues in terms of the transferral of the functions that they’re outsourcing. And actually, they maybe assume things are a direct translation form one role to another role in the Philippines. But actually, there’s kind of a need of a translation there, because it’s cultural differences, it’s process differences, there’s structural differences that you can actually easily overlook. That’s why I actually think that services and advisory such as yours is so valuable, isn’t it?

Tom:                     Yeah, and what really matters if you’re operating in Sydney and you’re going to put some work in London or Los Angeles, you’re going to have the same issues. And when you meet people who are blaming the Philippines or India, you really kind of go, “I know you didn’t come to work to do a bad job, but you really didn’t do your due diligence when you were planning.” Because if you open up another office anywhere, and you move functions, three things become evident very quickly. First of all, you’ve got a whole bunch of new employees. And how are they meant to miraculously divine how you want your work performed. Unless, number two, you have documented processes. It’s very rare for small and medium enterprises to have that level of documentation. And which leads to issue number three, which is quite often a lot of the process knowledge, the know-how is in employees’ heads. So, it’s Betty or Jeff down in Accounts, or Tony in Sales who just knows how to get things done. And that never kind of gets translated. And they’re the kind of risks that you just need to have a plan to manage it. It doesn’t mean you have to go crazy, documenting every single thing, but you have to have transition support. You have to have other steps and strategies. We just acknowledge that you’re carrying risk, and the worst thing you can do is actually purge your own business while not planning for this.

Derek:                  Yeah, absolutely. Well, Tom, thank you so much for your time. I would actually love to get you back, and we could discuss Grealy Consulting more and how you help businesses do exactly that. In the meantime, if people want to get in touch with you or learn more about you, how can they do that?

Tom:                     Yeah, just contact me via my email at [email protected].

Derek:                  Fantastic, thanks Tom. And of course, that’s in the show notes. Thanks for your time.

Tom:                     Thanks, Derek.

Derek:                  That was Tom Grealy of Grealy Consultants. If you want to get in touch with Tom or know any more about this episode, go to outsourceaccelerator.com/173. And of course, if you want to ask us anything, then just drop some email to [email protected]. See you next time.