January 29, 2018
Paul Magiatis – Scaling Up through Outsourcing
January 29, 2018
In this podcast, Derek is joined by Paul Magiatis of East West Enterprises, an outsourcing firm that he set up in response to his business needs. Listen to this podcast as Paul talks more broadly about his outsourcing establishment and provides his backstory.
- Paul worked several small business property businesses which is how the outsourcing started, process driven jobs were outsourced for his property investment business.
- At the moment, Paul has 95% of his staff in Cebu City.
- According to Paul, you can be a very small fish in Australia and look like a very large fish in a very large pond very quickly by scaling up your staffing overseas.
- His current business is unique as they have a lot of part-time employees who are working on an hourly rate. It’s a subscription, like a phone plan; that person is sitting there for you for X-amount of hours a day.
- Paul talks broadly about what they do and what they offer to their clients.
- He also shares the pricing structure of their business.
- You can make a mistake when you’re dealing in pesos but you can’t really make that mistake when you’re dealing in dollars.
- Incredible office facilities and fantastic job offering, so, it’s very much win-win for the Philippines.
TranscriptRead Full Transcript
Derek: Hi and welcome to another episode of the Outsource Accelerator podcast. This is episode 110 and my name is Derek Gallimore today I am joined by Paul Magiatis of East West Enterprises this an outsourcing firm that Paul setup in response to his personal needs in business Paul we have heard before is a serial business and entrepreneur and he’s setup this outsourcing service provider to manage his own company’s back end. He then extended the services to help other similar entrepreneurs with their basic administration task and VA tasks and the like but it is a super interesting conversation we do talk far more broadly than his outsourcing establishment and of course he provides all of his back stories so I’ll let you get that straight from him we did speak to Paul previously in episode 105 so if you want to get his full backstory go and have a listen to that episode in the meantime if you want any of the show notes or get in touch with Paul then go to our show notes which is at outsourceaccelerator.com/110. Enjoy.
Derek: Hi welcome back everybody so today we are joined again by Paul Magiatis and Paul is a serial entrepreneur has a long background in business and also property which has lot of commonalities with me actually and then in 2007 he came over out of a personal need and developed a outsourcing and virtual assistant back end infrastructure, he now office that to the public i will, of course, let Paul introduce himself and introduce his firm but I am enjoying this talk with Paul because I really just want to deep dive into the offering of this company and to show you out there the expertise and skills that come with these service offerings. So hi Paul, thanks for joining us again.
Paul: Derek, how are you?
Derek: Very good, and if you don’t mind can you just give an outline of your background and how you came to run an outsourcing shop?
Paul: Certainly, Derek, I worked several small business property business which I discussed with you awhile back which is how the outsourcing started process driven jobs were outsourced for my property investment business, I have a property management business again heavy on compliance, we own half of a financial services business mortgage broking business if you like so that’s very heavy on compliance and paperwork and administration we also involved in online health and wellness shops again all back end data entry and calls center work and then 2007, 2008 we started East West Enterprises to facilitate and to minimize a costs of trying to run those businesses in Australia and that saved most of those businesses at the time because it’s just no way a few of those would have survived have not looked at that bottom line I had to just readjust and re engineer them into virtual businesses if you like so there’s a virtual model that we use for all those businesses now.
Derek: Right and then so you created this model where affect for you took the I suppose less core activities and took them offshore, have you found that now you have taken more and more activities offshore so that your almost at a point where the pyramid’s inverting and the majority of staff in the Philippines and you know only the essential task are being carried out in the high-cost Australia?
Paul: Absolutely yeah at moment we’ve got would say 95% of our staff, our offices lot office space sits in Cebu city so you’re quite right and we started with we formed East West we obviously did it to start out own businesses so we needed a lot of variety if you like of talent we only needed in small chunks of time and there’s wasn’t very many people that offered that in the Philippines at the time so, for instance, would be i’d need someone to do my social media for 5 different companies so that’s not a full-time job that’s couple of posts probably for 4 hours a day for a media manager so we thought, let’s put on a media manage we’re incorporated we have HR here so we got a Media Manager on then we’d just resell those 4 hours to someone else who has the same need. The records there to be kept for the property and the rental businesses a lot of contracts that need to be completed and filled in so pre-filing documents is a large part of what we do again that’s all proceduralized, we need another person to do that for like an hour a day so that’s a difficult one to fill so again we’d hire someone full time with that skill set and then we’ll sell the difference to another business that requires that skill set so a little bit different to your typical business processing unit where’s the 1 skill and they offer it to an industry, we more find skill sets and incubate them resell the difference and recruit in teams so someone comes to me from a legal practice and they need and we do a lot of these a lot of transcription work we’ll hire in a paralegal or law student to that and she may handle the 1 or 2 lawyers so we’re more boutique and more executive assistant based that business processing really cause we build teams for other businesses incubate them in time those businesses if they choose to they may wanna go out on their own and take their staff with them we’re ok with that we’ll just incubate that team for them until they’re ready to go and that happens in the Philippines people won’t tell but they want to build their own team, we know this so rather than fighting it we tell people that we’re happy to incubate a team and start you off get it to the point where it’s critical mass and then at that point if you choose to build your own business over their value your own BPO we’re happy to consult and help you do that. That’s a bit of a different model that we have to your typical BPO.
Derek: And it’s an exciting prospect isn’t it because you know effectively built this of the back of needing to build out your own infrastructure so people are able to tap into what is very much a tried tested but also trusted infrastructure because it’s actually you know, it’s running your enterprises so but also from your point of view and this is what I say with a lot of entrepreneurs coming over to the Philippines they catch the outsourcing bug because there is so much because of the cost differential, there’s so much more cushioning so you can hire a Social Media Manager and have this person sitting you know redundant for 4 hours a day till you find someone to take up those ours you can hire extra staffing to do other roles because the cost is not so great so the risk of entering these new markets and these new roles is far less considerable do you see I mean if you would bring on someone at a $120,000 Australia a year you would really have to think twice about entering into that sector or taking on that role yeah where’s in the Philippines you can just add staff and figure out what to do with them afterwards.
Paul: Correct and you can be a very small fish in Australia and look like a very large fish in a very large pond very quickly by scaling up your staffing overseas. You can be a 1 man show today or plumbing of 10 staff tomorrow now I can from a sales point of view if you are running a plumbing contract in business and you went in to get a large contract or a large job and when you have to tick the box how many people do you employ, all of a sudden you rely to SME with the bigger chance of getting that job so not only does it save you cost, not only this the risk manage because of the lower cost and higher value of the business but it also makes you look large you look like corporate very quickly because it’s you can make a mistake when you’re dealing in pesos but you can’t really make that mistake when you’re dealing in dollars because it will send you broke so I think it’s even more important to take away, if you take away the money side of it just the scale ability you need someone to do a job you can’t afford it it’s not gonna happen you’ll do it yourself but if you can outsource it and employed 2 people and just have them sitting there for when you do get the work on you can take on more work very quickly and your cost base is still 50% of what it is here but you ready all the work rather than waiting for the come then find someone you better best of having people ready to do the job so you can just concentrate on business development and that’s all I do I just continuously do business development for each business and keep try and work into the business and we always have a minimum of 20% idle time sitting in our admin pool to take up in the extra work that comes in so that we don’t have to be struggling to get it done so we’ve always put 20% idle time which people find interesting in probably not less effective you wouldn’t do it here cause it would you too much but you quite right because of the low cost you can have people waiting for the job to come in.
Derek: Yeah you can afford the opportunistic pro activity can’t you because and also you know I mean we one about sort of bigger slogans is that you can save 70% on staffing cost but actually it’s about the drive of growth and innovation that you can afford in your business and you know if you are considering expanding in Australia in high-cost Australia and to do that you need to hire a $150,000 employee, you will think twice about that where’s you can take on people at incremental cost of 3,4,500 USD per month the risk isn’t so great and actually venture in and test new areas so it means that you’re able to have idle time, it means that you’re able to have people waiting to balance on opportunities when they come but also it means I sort of if you take to the furthest extreme you can literally have army’s of people working under you that can conquer your markets or build new markets and invite new products where all of your competitors you know they’re kind of having to stay put because they can’t afford the increment or increase in staffing.
Paul: Absolutely, yes you can look like a very very large army of people very quickly and take work away from other people that are lying stagnant they can’t deliver.
Derek: So let’s just zoom in a little bit on your services provision and how do you present people and where do you fit in a very broad and deep outsourcing market.
Paul: Our spot is pretty unique little spot we got a lot of part time so 2,4 and 6 hour box of time we’re working on hourly rate rather than having to manage operations, it’s just 1 rate X amount of our subscription based every month paid in advance, it’s a subscription and it’s like a Phone plan that person is sitting there for you for X-amount of hours a day, we do full-time staff without most of our staff are time leased part time to the SMEs so the SMEs that are 3 to 10 employees, 1-5 million $ kind of turnover that want to put some more on their bottom line that have all these back office admin they just make them better more efficient and they can create a better service than their competitors that’s our space so a lot of our girls will have 2 clients at 4 hours each and they’ll stretch that in that 8 hour period so they will take both clients calls and emails and correspondence in that 8 hour block to cover their workload so it’s the part for a lot BPOs actually refer people to us when they get to ask about part time or if they need 4 or 5 different skill sets and you just can’t find that with 1 VA and we would just put them admin pool and alot 2 hours of creative and hours of kind of more legal base transcription work and hours worth of someone who let me see what do we do over there does data entry, complex data entry into specific system of this specific CRM infusionsoft, callers some of the ladies have worked on that extensively so we give those to our so you can effectively have 3 or 4 people on your team for 2 or 3 hours each to a 2 or 3 different functions and complete that small business that had about and get a lot of work done.
Derek: And what are the minimum hours that people that you would least people out for us it kind of 2 hour a month or do you expect a certain amount of hours per day?
Paul: Our minimum is an hour a day so you need to commit to an hour a day and that’s our minimum subscription that’s a bit higher than having 2 hours a day so we don’t do projects, we just do subscription based an hour a day, if you don’t have at least an hour a day with administration for someone, you’re just not big enough so then we refer on to other BPOs that do project work or home based people that can just knock out some task and build you, that’s not really our space.
Derek: And because of course, you need some consistency for the staff member that you’re providing because actually they then get know the client they get to know the type of work so actually it’s a win-win for both side because if you just sort of revisit a client or a task to do 3 times a month then you lose efficiency and consistency don’t you?
Paul: Majority, best of the clients that’s just a job of our clients become pretty reliance on their VA’s. Our team leaders, of course, make sure that everyone is looked after and everything is monitored and reported but they’ve become very reliant and in the small business your team is pretty important, it’s pretty important you get on well but it’s also comforting to know that tomorrow if you need to grow from doing 1 hour to 2 hours we can just let someone else into that extra hour spots so here you need an hour worth of data entry then all of a sudden you want someone to empty your Xero accounts then hey we’ll employ someone else for an hour a day for you in that pool and then all of a sudden you’re starting to look like a real business, you’re growing you got your life back you’re getting all these tasks done we then have to have full time employees any wage have lots of part time employees which is where we’ve actually specialized and the most popular block is a 4 hour block whilst people we deal to a 4 hour block of time and some of them are 3 or 4 VA’s at 4 hour blocks doing 4 different things so for them works really really well so technically some of them got 4 full-time employees over 8 people if you like doing 8 different tasks which is good risk management also for small business so they don’t have all their eggs in 1 basket people are sick traffic in the Philippines sometimes means you just can’t to work which you would know Derek just doesn’t happen so you are dealing with a 3rd world country so to minimize your risk your risk you’re better of having 4 or 5 part time staff all doing knowing each others job.
Derek: And it’s easily scalable isn’t it? you know you kind of plug-in extra resources, ask someone you need them.
Paul: And our big a big thing is when someone comes to us if you came to us and you’re an electrician then you got 4 trucks on the road and you wanted us to do your scheduling so that would take probably 4 hours a day so we would *inaudible came through we would record that job on screen with voice within documents a job when would have a folder for you with all your processes and procedures and then we would document proceduralized everything we do for you in there so we pretty much ISO 9001 as you walk in the door now we don’t do that for the client we do that for us because usually the problem with outsourcing is not outsourcing it’s the user, cause they don’t have procedures and not quite sure how to do some of their own tasks that they want you to do cause they don’t have time so we figure it out for them proceduralized it, do the job, give them the procedure they learn the job and we move on from there.
Derek: Yeah, so Outsource Accelerator, we commonly deal with slightly bigger SME that have dedicated staffing needs but one of the education or certainly action plans we take is just to get started, you know don’t spend too much time planning you know you can do needs analysis and things like that and then we absolutely suggest that we work with people to do that but also I suggest from very early on to just get a VA, get a part time assistance even you know using services such as yours because it gets you on that road and as you provided an example previously it opens people’s eyes to the possibility it gets used to proceduralizing things or mapping the procedures and it gets them used to working with remote team so there’s a huge amount that kind of growth in just kind of taking on someone for 1 or 4 hours a day but you must seek out through your doors you know you almost like an educational facility.
Paul: Pretty much, you’re quite right we get a lot of 1 hour people come through and figure out that really don’t have the work they’re just not organized cause they’ll send through what they think is 40 hours worth of work and 3 hours later it’s complete because it’s not what they do so an hour a day is probably too much them but they keep it because they just keep trying more work at it and they didn’t realize that they’re wasting their like doing something they’re no good at or as a 20-year-old can do that job in less than 3 mins if you like so.
Derek: Yeah, do you get a lot of builders or plumbers or something in you know they’re just daunted by task and then you hand it over to 20-year old that’s doing it all day every day and they just work through it.
Paul: Absolutely look we don’t want to engage, we do a lot of social media for people and have a process again we’ve written a process for us so we just decided to use that process for everybody and our social media people will just come up with you know 50 photographics, some interesting photos few bits and pieces we post some articles and just put them in the folder and we post a week for them that’s for them is a massive task they just don’t have time to do it and that’s a very simple example but that’s the most of it there’s a lot of that, that we do and we’re at a point now where our social media team, we pumped out 5 or 6 companies we managed their social with just a schedule of events so it’s not marketing such they’ve got their marketing managers gave them a schedules of events, they’ve move their marketing on they’ve handed over the schedules to us that we then just do the back end work and just get the articles are written for then do the posts systematically all the time and for them great they just haven’t got the capacity to do it to write an article takes a long if you’re not a copywriter so we’ve just employed copywriters that can knock them out pretty quick.
Derek: It’s huge. and Paul so people want to engage with you I mean just give us insight into the pricing structure, it’s fairly transparent and simplicity isn’t it which certainly helps so give us a guide as to the cost?
Paul: Absolutely pricing structure we rather trying to make it complicated I’ve got to keep things fairly easy so staffing on demand prices is pretty easy, Senior Virtual Assistant if you’re doing at hour a day, if you’ll come in at 13 35 so $289.25 per month AUD and that just a subscription paid up front and that’s a good start in point for people to start having over their work now that could someone with a law degree that you’re having do your transcription or that could be someone doing some facebook marketing for you.
Derek: Yeah it’s an incredible way to just dip your toe into outsourcing isn’t it and the potential upside then if you find out the true potential for outsourcing it’s huge and you know I think because people are slightly daunted by outsourcing proper in an inverted commerce because it means hiring staff that means engaging with BPO service writers that means contracts but actually if you can get going for $200 a day and that opens up your eyes for the full potential it’s an incredible if you ask me.
Paul: It is and all this packages there are no contracts we have just a subscription based model, no contracts, no lock ins it just rolls from month to month because it’s really not worth writing a contract for an hour a day. If people get to the point when they’ve got full-time employees we look at contracts then but until the it’s you’re in control of the subscription should you not like the service you turn if off, it’s not a great business model but we lease very few people because it’s priced well high-end staff we know we deliver so we don’t have to worry about the contracts terribly much our light packages for 2 hours a day 1242 an hour so that’s what $538 per month but even our 4 hours a day the most popular is 3 hours a day the best seller rate and I don’t know why it just is 3 hours a day 1082 an hour so $700 a month gets you an employee for 20 hours a week so that’s exceptional and that’s a senior person, your juniors coming at less than that but a senior 4 hours a day again $916 a month for a senior virtual assistant on 4 hours a day some about $10.50 an hour so to give you an idea of the quality of someone and the standard of someone on that kind of money probably looking at someone who’s got a management their business degree studying a law so that’s the quality people you get.
Derek: And again it includes all of the desk cost, the infrastructure but also your process is your procedures your assistants your kind of paternal education of the new client there’s a huge amount to bought in and racked up services that you can tap in.
Paul: Rather than specifying it all in we’ve packaged that all up so covers all your infrastructure cost and we’re in an A class office in Cebu look at the Telstra tower next to us there, we’ve got good security in there it’s all A class good internet server rooms all refrigerated it’s a high end office and all of your supervision in there as well so that’s all looked after so that’s your supervision or your IT it’s completely looked after really we manage the staff you, just manage your tasks and send them the work and do the training on any particular things in your business that are only you can train is only that’s your role our role is everyone at work label provided by the HR looked after payrolls, looked after seat and IT is all looked after for you, biometrics so no one can get in and out of the offices unless they’re actually registered in the biometrics thumbprint, so it’s a good secure high-end office that you’re buying into really.
Derek: Cause again people have an impression of misconception that the Philippines is a lot of sweatshops and people are receiving the rough end the streak by taking these jobs but actually it’s a long way from the truth and there are incredible offices facilities here and the jobs that you are offering people in the Philippines really are fantastic jobs there’s your educating them and it’s very much win-win.
Paul: It is we’re in the middle of IT park in Cebu there so it’s kind look like CBD of any westernize anywhere in the world.
Derek: Fantastic Paul, amazing insight and again you know it’s an incredible opportunity I think not only you know to get a very cost effective employee for $10 an hour but also it’s an opportunity to really really transform your business and step into outsourcing and see where it can literally you know transform your business and the opportunities in your business. how can they get in touch with you Paul if they want to know more?
Paul: The easiest way to get in touch with me is if they go to the website eastwestenterprises.com.au, there’s a phone number on there that they can call and that phone number comes to me, otherwise they just jump on the context sheets and then email put my name in the subject line if they want to have chat with me and I’m happy to walk anyone through the process to see if outsourcing is for them because again it’s not for everybody you need to be at least semi organized before you step in to outsourcing and if you’re not at least we can help you get semi organized and start you off.
Derek: Fantastic Paul, all of those contact details will be in the show notes and of course your website and thanks very much for joining us.
Paul: Thanks, Derek.
Okay, that was Paul Magiatis. I hope you enjoyed that and I certainly learned a lot chatting to him if you want to get in touch with Paul or want any of the show notes then go to outsourceaccelerator.com/110 for all that information and of course if you want to email us and ask us anything then do so at email@example.com. See you next time.