Nick Sinclair – Flipping Business from Down Under to the Swiss Banking of Outsourcing – Philippines

Hi and welcome to Outsource Accelerator podcast. This is episode number 106 and my name is Derek Gallimore. Today we joined by Nick Sinclair of The Outsourced Accountant. So Nick started his life in a different kind of business. He found outsourcing, came to the Philippines, build a big back office and then pivoted into BPO offering specializing in the accounting niche. So it was a quiet journey. Today, We talked about Nick’s journey and more broadly about outsourcing and the fantastic business opportunities for business, generally and outsourcing but also in the outsourcing sector as well. So i learnt a lot from this interview and I’m sure you will too. If you want to get in touch with Nick or know anything else go around show notes at outsourceaccelerator.com/106 and enjoy.

Derek: Hi Nick. How are you?

Nick: Good mate, thanks for having me.

Derek: Pleasure. We dive straight into it. It’s great to have you on the show because you are another Australian. We actually didn’t have quite a lot on the show and I think there’s quite a fan base in Australia of the concept of outsourcing. I’ve just like to hear your backstory because you’re you know not only an outsourcing figure but you’re an accomplished businessman in your own right in all the sectors. So i wanna hear about that and then wanna hear about how you flip it into outsourcing and outsourcing in the Philippines.

Nick: Wonderful. Thanks for having me on the show. It’s good to see you. Certainly, infiltrating in the Philippines at the moment anyway.

Derek: Seems to be the case, yeah?

Nick: I think I mean particular around the area where others trying businesses but I think it just shows the strength in their outsourcing and what’s happening in the Philippines. I give you a bit of background about myself 10 years, right now financial planning, I’m planning mortgage breaking and property buys the active business back in Australia. So we were predominantly spread across the gulf of Brisbane, 38 staff in Australia. My eyes really got open up to outsourcing when I was invited as a part of border trade with an organization called Entrepreneur organization which obviously both been members of. And part of that was the global trade held in Manila, So made my way in Manila, one of our members from Brisbane was actually had an office with his staffs, So he invited us to come and have look at his operation, a guy called Mike O’Hagan which you obviously know well as.

Derek: Yeah, he’s a mutual and He’s actually been on this podcast as well, So we are assuming the same motives.

Nick: Yeah, So he was obviously one of the pioneers of England. Getting a lot of Australian businesses originally over there to have a look at outsourcing dip. These are in the early days when he just started his operation over there. I went into his office and there is 20 or 30 staff there, And it just absolutely blew my mind with the work they were doing in. Thing you know, which is administration heavy so we were running 4 or 5 support staff for every income producing staff the way we had in Australian office. It is hard to make money when compliant throw changes kept changing, government obviously always changing text  regimes. And we just made it more, more administration staff. So went over and saw Mike’s office and saw that they are generating 3-4,000 leads a day in their business. And just the different type of skills and workers getting down. It really opens up my eyes to what is possible. That was really the start of it. Our journey with looking, and flipping our back office for our business into the Philippines to try and really fine tune and automate a lot of our process inside our work is given that we are in Financial services a lot of it just administration end process are inside of work. So that really started me in the journey of offshoring where we took on staff in the Philippines, we took on 9 people and then it just continue to grow and evolve from that sort of point where we ended up deciding to incorporate and set up a loan business in the Philippines we put on 30 staff for our own back office and then it just continues to grow from there.

Derek: This is such a common story really isn’t it you know you, people, come over here and start outsourcing and their eyes are just open to the huge potential of outsourcing and then very commonly people end up doing a pivot you know not in the typical requirement to the pivot to actually save a business but just because your eyes are open to so many more opportunities and I preach to people that outsourcing is probably one of the most transformative plugins into your business that you can possibly do, at what point did you realize that actually this is an absolute game changer was it when you visited the place or when you got your first cup of employees?

Nick: Yeah I think it wasn’t necessary the first trip, it opened my eyes up when I went looked in Mike’s operation on border trade for rest of time I was in that I came back about a month later and I brought my General Manager back and actually did one of Mike’s tour and that was probably where it opened my eyes up and I think that’s also one of the danger because you come over here on and you go on visit 20 or 30 BPO’s, your eyes are really opened up and all you see is so many opportunities and I think that’s the biggest danger because you can get really distracted from what your main core business is and when you’re going around looking at these different providers and different niche, it makes it look so easy so it’s easy to fall in to the trap that you just think that it’s going to be simple, it’s going to be straight forward you just put some people on they do the work as they would in Australia and life’s good but it’s obviously a lot more complex than that but I think coming over here was a big eye opener because you just could see the endless opportunity of what work could be getting done over here and that was probably the biggest part for us and then the journey of starting staff and going through all the learning and happen when you get the first team up and running

Derek: Yeah and so outsourcing there’s quite an awareness of outsourcing in Australia and you know I think it’s because Australia kind of base rate salaries are so so high in the world and there’s restriction on workforce migration so I think kind of as a release valve a lot of Australians have found outsourcing but before you came over were you aware of outsourcing, were you kind of aware it was there were you?

Nick: It’s an interesting comment because the easy answer was no, I was not even aware of it, I had no idea about it,  I never really thought about it.  In the accounting space, there’s project outsourcing they can turn tax returns to get done but that was pretty much the outsourcing that really been evolving, that’s not a problem solving, so it was a real eye-opener for me when we did come over here.

Derek:  Fascinating. And it’s ironic because you kind of been the accounting space and accounting is probably one of the longest standing outsourced functions in the world you know for I wouldn’t have a clue but I’m guessing for many decades or centuries even companies would have outsourced their accounting to and accounting specialist and all their bookkeeping, so it’s probably one of the most progressive in terms of outsourcing but people still only have the mindset of outsource to an accountant sitting in your hometown as imposed to let’s take it somewhere else.

Nick: Yeah and I think in large part of that is and this I suppose where we’ve seen rapid growth over the last few years without business and just the outsourcing industries that part of now was only in big corporations that could it and a lot of that had to do with the technology and systems being used but with the obviously with technology particularly in the accounting space over the last 5 to 7 years, it’s a lot easy now getting data across to another location because it’s all cloud based so I think it really enables its technology in the development of the technology particularly in the areas where I’ve always operated in that accounting planning space it really enables smaller practices now to be able to outsource cost effectively cause it’s only been the big boys that have been able to.

Derek: Yeah I agree and we used to commonly preaches this that it started 25 years ago and it was only accessible to the big boys as you say and it’s because of the cheaping of infrastructure, the cloud as you say the kind of bandwidth technology but also I think BPOs have responded to that and BPOs are becoming more flexible you know they’re catering to smaller clients and it’s just basically open the flood gates to SMEs where previously wasn’t really kind on the agenda and it’s interesting because we’ve done a viability study and we looked at the number of potential clients for outsourcing and in the 9 or 10 high cost English speaking countries in the world there’s about 35 million SMEs out there that employ about a hundred million people in the high-cost English speaking world and with about a 12 trillion combined revenue and I would guess that probably under 1% of them under half a % are actually doing any outsourcing whatsoever so there’s a huge potential in the outsourcing sector.

Nick:  There is, I mean we see that in our own market there’s over 13,000 accounting firm in Australia, there’s over a hundred thousand in the US, there’s over 25,000 in Canada there’s over 20,000 in the UK and you look at the number of accounting firms that need to outsource to be competitive and range other reasons significant market there’s a massive opportunity for SMEs for outsourcing providers it’s just a huge market and just really needs education.

Derek: And it takes complete mindset shift we were talking earlier that in the Philippines if you have a company of a thousand people then you’re really just getting started where is in high-cost west you know kind of people try and make do with 5 or 10 staff and your already pretty successful kind of company the kind of context of human resource and employment in the Philippines is just so vastly different isn’t it?

Nick: I mean it’s a really interesting thing and for me it’s a real humbling experience because when you go back to Australia or the US or the market where we operate we talk about our business and where 600 odd people and 5 years strategies to get to 10,000 people which is quite achievable they look at me and go how are you going to maintain customer service or we just going to be another number in as a client number, how are you going to maintain that, well no it’s actually not difficult to get those sort of numbers and we would still be a small operator in the Philippines and it’s hard for clients to gauge that because all they see is you know lots of offices, lots of people, you know lots of management they’re like all happen to continue to be personalized and continue to give us that wow experience if it’s 10,000 people because for them running a practice 10 people are hard you know they could have been imagined running a business as 600 and learn 10,000 people.

Derek: Yeah and I think this is the kind of broader issue with the west it seems immature markets, every margin has been squeezed out of every sector so that everyone has to do make do with kind of minimal staffing and so you know if it was in Australia and you had 10,000 staff you would probably have 3 administrative people over seeing that where is in you know because that just been no margins to support it where’s in the Philippines I don’t know what the kind of ratio would be but you might dedicate 1 or 2 thousand staff to oversee the 10,000 staffs so that you have a scalable ratio so that you still you know maintaining quality and maintaining that personal feeling and it just seems that there’s kind of extra margins in the Philippines which then, of course, the benefit is that the west can tap into that via these outsourcing outlets.

Nick: Yeah I think the other part of it is due to cost restrictions, businesses in the west can’t be run like proper businesses so they genuinely would have the reception is also doing the marketing you know one of the owners would also be responsible for HR but when you look at it in the Philippines you would have teams doing that you would have the marketing team and a graphic artist, a video production you know podcast expert you have all of these different roles you just can’t afford that in the west so a lot of small businesses are being run exactly like that as small business where you’re wearing multiple hats and I think one of the benefits that being able to tap into the outsourcing market is that you can start to really create teams so that you actually running a proper business and you may only be 10 people but then you have a team of 10 or 15 overseas and you’re really getting run like a proper business.

Derek: that’s incredible so let’s dive into the outsource count I actually want to get you back so that we could really dive deep into you know your interest so just brief you so you came over here with your professional services firm and then you made a pivot and what have you moved into and why?

Nick: I always running a full-service financial planning accounting, mortgage breaking and probably agent business.  We decided to flip the business and put 30 supports staff over in the Philippines to run our back office and try and transform the business and during that process one of my friends crew is also the Board Member, he was the President of our board for EA, Rob Nixon, he is a massive advocate in the accounting space, he was one of the thought leaders in the industry and he asked me to come on a speaking tour that they were doing across 13 cities across Australia and New Zealand so 1500 accountants.  He was, in essence, using these scare tactic you could say to really open accountant eyes around you know things like these are happening accounting firms and transforming if you don’t you’ll die so I went on a tour with him and after the first city, New Castle in Australia. I had 5 accounting firm come up to me and say look Nick really love what you’re doing he said a bit arrogant out there cause I was young, I was at a team of 30 overseas and 38 in Australia.  They don’t want to compete with me I’ll just take their clients so I was a bit naive you could say it the time as well cause I was a bit younger and come up at the end of it and say look we don’t want to replicate what you’ve done because obviously, it’s not an easy process, we don’t want to have to go through that pain, want to be able to put some people.  Do you have a spare desk that we could come to a range where we pay you some money for those fair desk that you have in your office and I did have spare seats I had about 30 or 40 seats at that stage and I said yeah the offering was cold  the outsourced accountant, came up with the name almost on the spot and after that tour of 3 weeks, I’ve sold 90 seats, sold 90 staff you could say so.  A business is created overnight by default.

Derek: And again you know 90 billable staff in the west is you know you’re up there in terms of 1 of the biggest businesses in the Gold Coast almost wouldn’t you where is in the Philippines I mean it’s a hell of a start but you still you’re just getting started yeah?

Nick: People will recruit more than that a month so we were still nothing in the Philippines for us it means we’ve covered out our office cost so we’re making money on leasing these seats but it became a business overnight. 12 months later we’ve gone from 90 staff to 210 staff so my pivot quickly came in after about 10 months of running 2 businesses that we were both growing really fast I had to make a decision around which business do I put my focus on and I mentioned to you earlier before recording that being in a professional services business I had 60 plus staff for the planning practice,  I was the sole owner and at the end of the day professional services clients want to talk to the person behinds it, so I was constantly working ridiculous hours 7 days a week on weekends on clients giving me an options, saying I just bought this house, how are we gonna finance it, even though we told him that they couldn’t afford it.  Just the volume of work, running our business across 2 countries with a back up to serve in the Philippines.  Your team growing at a rapid rate so  the decision really came, I had to choose one and it chose the one that absolutely sucks the life out of me and took all of my time

Derek: Because by nature that one wasn’t I mean it wasn’t scalable was it? just because of the nature of the service.

—Nick: No, it’s professional services, so you can put on more advisors at the end of the day clients still want to have involvement with the owner or the principal of the phone so it was really scalable.  This other business is growing, I didn’t have a huge amount of involvement at that stage of day to day.  I was really letting our leaders and team run what we created, but it was exciting, we were growing our numbers month on month, revenue was increasing, the contribution we were making to the community and to the people over there was just exciting so I chose to merge and exit my accounting and financial planning at that stage, to solely focus on running the Outsourced Accounting so that was a big pivot for me because my whole life had been built around my financial planning factors and I thought honestly that I would have that through to when I retired it was my passion, it was my dream, it was everything I ever imagined I wanted to be, but then this other business came along that was a real business, it could be run like a business, could be scalable, could have a bigger contribution to the community we operate across the world and it was a global business so, I quickly dump my old passion and moved in to my new one.

Derek: It’s funny we as an entrepreneur, we sort of cling on to our businesses like a baby really and it can some be too irrational extent you know so you have no regrets looking back?

Nick:  No, not at all, to be honest, I would have a lot more quality time with my kids if I did because I don’t work, I’d certainly work hard now but I don’t work as many crazy hours that I was in the past and just a contribution, this new business is so much more fulfilling just more from people and the community we operate globally and the contribution we are putting back in to the community is just a lot more fulfilling and you can see you work really paying off.

Derek:  Amazing. Thank you so much for this insight we’re going to get you back soon to really dive deep into The Outsourced Accountant, in the meantime if anyone wants to get in touch with you how can they reach out?

Nick: easiest way is just go to our website the outsourcedaccountant.com all of our contact details are on there otherwise you can email me at [email protected]

Derek: Fantastic and of course all those will be in the show notes thanks so much Nick.

Nick:  No worries, thank you.

Derek: Okay that was Nick Sinclair of the Outsourced Accountant if you want to get in touch with Nick or know any more about this episode, then go to outsourceaccelerator.com/106 and of course if you want to ask us anything then email at [email protected]. See you next time.