Mike O’Hagan – What is the Future of Outsourcing?

Derek: Hi and welcome to another episode of the Outsource Accelerator podcast.  This is episode 104 so we’ve truly broken the back of the 100 episodes now. Today I’m joined by Mike O’Hagan, he has actually been with us three times previously and testing my memory that is episode number 72 and 84 and 96, where we talked about Mike’s specific experiences his business journey which is a very long and distinguished one. We came to outsourcing in the Philippines and tips and tricks that he’s had so now we talk more broadly about the future of outsourcing where it’s going to go his thoughts and we just kind of chew the fact on what we both find as a very interesting topic so I’m sure you’ll enjoy this and learn lot from this. If you wanna get in touch it Mike then please do you can get his contact details on the show notes alongside of the transcripts and everything else so that is at outsourceaccelerator.com/104.

Derek: Welcome back in today with Michael O’Hagan again, Hi Mike.

Mike: Great to be back.

Derek: Today, Mike is just an absolute guru when it comes to outsourcing, he’s been outsourcing to the Philippines with one of his major companies now since 2010 I think and he’s been living over here or certainly based over here for a good number of years now and so we want to get to know a little bit about the industry and look at the outsourcing growth and potential and future in outsourced future of outsourcing and things like that so Mike what is your view on outsourcing has been going 20 years now where is it going to be in the next 10 to 20?

Mike: Outsourcing processes is probably going to taper off and not too distant future with automation coming through and I always going to be a completely different kettle of fish in there but in the meantime we are running a businesses today and we should deal with them today and deal with proper today and get involve as fast as we can and things everything is happening faster, it’s speeding up. I think we should a have a little talk about the big changes in the world and how scary it is and how people get worried about it, I a number of years ago did a course in MIT in boston USA and entrepreneurship and we studied the motor car back in 1908 there was a major huge shift in the world and we’ll just use  Ford as easy one to use, but Henry Ford did develop this thing called mass manufacturing and he produced the thing called a motor car and there’s no doubt that the motor car industry in a 15 year period decimated completely the industry of the day which was the horse and cart industry and at the time everybody was upset concerned worried and virtually every country in the world, the politicians past legislation to protect or design to protect the jobs in the horse and cart industry and what we know now looking at it and we’ve seen this with the other huge ships with the Chinese ship 30 years ago with manufacturing and few other things on the backside of the shift the other side always looks ugly all they could see was the horse and cart industry was going to get decimated all the jobs are going to go etc,. The reality was that the motor car industry employed a lot more people that the horse and cart industry ever did employ them on lot better working conditions if you know anything about Ford you’ll know that he introduced above ward pays cause on productivity based pays if you work harder produced more motorcade he’d give you more money they were pushing the wages up as well and of course your entrepreneur stepped in and we needed better roads and we needed service stations we needed all the other stuff that the motor car industry produced so the end of the day this whole shifts towards motor cars was a huge benefit to the world and a huge benefit for all the workers in the world they all did well out of it but yes, there’s no doubt that let’s not use job losses let’s say job change and all those jobs are in the horse and cart industry disappeared and those workers went across re skilled themselves through one way or whatever end become productive than the motor car industry.  Well those type of changes are constantly happening and they’re happening again now with offshoring and outsourcing and it’s scary and people are worried about and they’re worried about globalization but what we do know is that the end of the day it all balances off and it does well the economy in Australia is doing very well at the moment I believe it’s doing well because entrepreneur like myself and yourself and a whole lot of others are developing world wide businesses using the internet using globalization technics and that money is is ultimately flowing back into Australia not the way the government used to be able to see in exports but could still be flowing in and it is pushing up the lifestyle of the people in the country so I think it’s great for the country it’s doing well i think it’s the future I also know that you can’t fight it.

Derek:   Well that’s right isn’t it there’s an absolute inevitability about this and lot of governments have try have to put in protectionist and sanctions and you know and try and stop the tide don’t they but you really cannot stop evolution and the inevitable progression of humanity and I think this is one of the major ones and you know you mentioned the motor cars there was the industrial  revolution, there was the advent of the electricity, all of these things are massive catalyst to huge change within society but I think the internet is one of the biggest ever because it’s really literally breaking down boarder, it’s making geographical distance is irrelevant and as you said it’s making business people in Australia which was previously a very isolated remote country in the middle of nowhere they are now able to source their staff from anywhere in the world notably a low cost based by the Philippines and then they are able so to sell their products to anywhere in the world the internet making an incredible world.

Mike: You can be a micro owner sitting in Timbuktu in Australia running a world wide organization with massive amounts of money flowing back in so easy today it’s not funny and that’s an advantage and that’s the advantage that we’ll take that advantage what you’re seeing I think is a couple of things, I think you’re seeing I think 10 years from now we’re not going to talk about smart phones and ipads and all that stuff I think we are going to talk about the time when the boarders of the world literally disolved and the world kind of became one.  I think we’re going to talk about the time when large business, corporate business was on the outer, and small business grows up and grows over on top of it.  The corporate offshored outsourcing 20 years ago, 25 years ago that has a massive economic advantage over small business, for many years that is now rapidly disappearing and there affected and they can’t turn quick enough and today you gonna turn quickly and small micros, SMEs businesses, medium size enterprises can turn quickly make decisions like what I did in my mini Move business when I got to destroy and indeed that 9 other business have started to last few years that have now run are all very quick descision businesses, most of them they got fairly short life spent 3,4,5 years because I know that technology gonna overtake them, I’m aware of that, I’m an entrepreneur, I can see that awesome.  I think that’s the world we lived in and once you get that world and get into it, I think it’s good for everyone.

Derek:  Everything is fast now, there’s a faster ramped up, there’s a faster maturation curve and possibly also the faster the most businesses, but then again you just moved on it’s a qute amazing. I agree as well that as the interface becomes more and more normalized because we obviously see email for number of years now and even the outsourcing industry was born basically when telephony was cheap enough to have a telesales office in a different country then, of course, came the internet then came greater bandwidth and then more technology that you can put on that platform and I think answered the cost normalized that you, at the moment we sort of arrange skype conversations and we now have stack of emails but when it just naturally everyone is communicating with some sort of a computer interface, then there is no reason why anyone will hire someone in their home town, why not use the entire 7 billion people within the globe as your potential candidate.

Mike:  With the entrepreneur that lead the way if you look at the Australian economy in the last few years, we ‘re running on the back of mining boom, that mining boom wasn’t government instigated, that was instigated by entrepreneurs.  And the numbers of others were major on an entrepreneur that building industries because they can see something coming as an advantage them and they built that industry and then when the change came Australia rode high at the back of that Australia is country.  Every country in the world doesn’t matter what taught all countries now, doesn’t matter where you are, you can ride on the back of this fewer adopted and go with it, so it’s really about little businesses growing staff and if you got some wonderful skillsets, you can now share them with the world anyway, you can sell them everywhere if you want an entrepreneur employee, you can employ employee everywhere that’s the reality of the life that we’re in.  Unfortunately, some people upset they don’t understand it, and I get that, I do get that, rapid changes scary and old society has always has been but we can just look at history and see what happens before and I’m sure it’s gonna happen again, what’s on the other side of this I’m sure is gonna be better world for us to all lived in coz if there’s one thing that has constantly happen with these whole free in a pro system as standards of living is constantly improved.  No doubt that my stand on living like much kids having a better life than I did at their age and I’m certainly living a better life like than my parents in a way ahead my grandparents were that was their life was pretty fundamental compared to what mine is.

Derek:  I think people naturally are very scared of change, aren’t they and they resist evolution and but you are absolutely right, like the world is improving and we are getting more free time and there’s talk of a living wage and there’s talk of people not needing to work 48 hours a week in the coming decades, so it’s really incredible progression isn’t it.  Now, we touched on the original outsourcing was the domain of big conglomerates and now has moving into the entrepreneurs and the SMEs that I find fantastic but what I’m trying to do is bridge the knowledge gap and encourage more and more or basically every business owner to outsource or at least consider it and are you continually amazed then you actually gave me an anecdote we won’t name names but there was a huge business based in Brisbane with a big telesales office and significant business hugely successful and the boss still wasn’t really aware of outsourcing.

Mike:  Yes, it was a call center, the call center has 300 people in the call center and he was completely opposed to outsourcing or offshoring.  He came up I run business learning tools under the name of that business towards and he came up on tour and have a look around and something went dig in and got it, that come up and that built here and now they are that part of a worldwide organization there was a small Australian part of it but now, providing those services back in to others what he’s building his phenomenally bigger on what he had in Australia, and it’s just a change, he just suddenly got it and it’s amazing how  you can be without seeing and understanding what this is about, having your own ideas, and then just sitting there as because you said if he stays where he was, he was heading to failure that’s no doubt about that at all.  And this is just a great opportunity, there are some wonderful opportunities here and with all change for entrepreneurs that needs to change.  News agencies were a license to print money a few years ago, now of course Amazon it’s taken care of that issue.  Amazon is now working through scaring a few other large department stores as well, I see some of the little niche specialist stores that all doing well, but the large department stores which they have used by date in that was closing off and it’s changing and moving on as well. These are all international competitors coming into your market, ever of course is upset the taxi industry, these are all things, those things will continue to happen, was they are challenged, had an increasing pay.

Derek:  Anything increasing the pay.

Mike:  Their wallet is a challenge, it’s also an opportunity because we should be the ones doing to the others, that’s what should be doing, why would these large businesses be Americanized, why can’t they be Australianized, there’s no reason.  We just need to think outside the box.  I’m sure we’ve got this mass to do it.  In the most country, there’s plenty of people will do it.  You just go get yourself away from a tunnel vision you’ve got around the business models.  I think employment is going to change, I think it’s gonna get a lot improved.  I think what’s wrong with the west at the moment is were working extraordinarily long hours and too many hours and I think we need to address that, I think that would happen, I think you’ll find it 20 hr working a week and maybe 30 hours a week are becoming a normal very very quickly.  

Derek:  It’s about more intelligent delegation really isn’t it? There are 7 billion people in the world and most of the 5 billion are under the red line actually there is the opportunity to give people an opportunity in the world and maybe we worked 20 hours a week and have a good life but we’ve kinda spreading the economics and of a commerce and giving people salaries.

Mike:  There’s absolutely no doubt the connectivity of the internet is going to dramatically change the poverty equation without a doubt.  The ability for these people to connect to the internet and learn and educate themselves is happening right now and that’s going to be a very short-term quick thing and ones our a better educated that are going to be connected to the jobs connected to the market and their gonna become the entrepreneur and the workers of the future and I’m seeing it here in the Philippines you know I lived here in the Philippines now for 4 years now, and I’m almost full back full-time basis and as you realized in the Philippines there is a lot of poverty but I’m also seeing a lot of these workers getting the idea, scratching to  get in the computer connected to the internet, they’re all connected to Facebook here that’s the way it is, connected to the internet and theirs educating themselves learning very quickly, I can just see it changing dramatically.

Derek:  To you and I, outsourcing is just so painfully obvious and it so simple and yet I supposed both of our functions you with your tours and me with the outsource accelerator.  It’s about telling people it’s out there, and getting people comfortable, getting people familiar and just getting few another take the first step. What I find as well is a bit like someone their hobby is basketball and if you try to sell them a set of golf clubs, their just not gonna be interest, so you have to show them golf, you have to show them the benefits and then, they can buy the golf clubs and they will love them but it’s amazing that outsourcing is just not on a radar of so many people.

Mike:   There’s a lot of misconception out there, it’s not about low hanging, low productivity, low skilled  work just doing structured processes, that was like 20 years ago, nowadays we’re hiring people I can think we’re educating them where training them correctly into a workplaces, that become unusual part of their workplace, we see these branch officers, not as a remote office.

Derek:  And they are your staff, they’re not just people behind the screen, they are your team.

Mike:  Yup, we’re talking about building teams here now not outsourcing to a third party to run a process but building teams and common office space with all different skills that you have in your team all working together, all the experience and downfalls and up and the winds with every business celebrating those and focus on your business, and growing your business and goals, hundreds of business owners are doing this are absolutely doing well, the fear that comes up here and trying half heartedly and doesn’t try the people, don’t treat them properly, don’t connect with them, they fall over and I see the other ones, we can see those who are winning and those who are losing and if we do it right, it’s certainly up them normally thing that changing all market for sure.

Derek:  Amazing.  Thank you, Mike.

Mike:   Thank you very much.

Derek: Okay, that was Mike O’Hagan and if you want to get in touch with Mike, please do.  You can find his contact details along with the transcript and show notes at outsourceaccelerator.com/104 and if you want to get in touch with us, if you want to ask us anything then please do, just email us at [email protected].  See you next time.