August 10, 2018
Tom Grealy – Outsourcing Differences between SME and Big Enterprises
August 10, 2018
Second time guest, Tom Grealy shares deeper insights in big enterprise and SME outsourcing, with host Derek Gallimore.
Tom Grealy is an outsourcing expert. He has worked extensively across regions in Indonesia, Malaysia, Singapore, the USA and has served clients from Australia, India, Thailand, Hongkong and South Africa. Half of the engagements are for work related to the Philippines. To know more about Tom Grealy, you may visit Episode no. 173.
- Tom highlights the difference between big corporations and SMEs in terms of organizational structure, resources and management capabilities.
- The complexity of a big corporation is usually around internal stakeholder management and management alignment.
- SMEs are more nimble and can make decisions a lot more faster, but they are not in the same position of big corporations, which can act with the higher level of surety and certainty because they can easily bring in expertise.
- The hybrid model of outsourcing, which is co-sourcing, seat sharing model where a BPO offers office facility, IT, payroll, and basic HR, while the business owner directs the work and oversee day to day performance may encourage SMEs to offshore to the Philippines, where it is becoming popular with Australian and US companies.
- There are 1.35 million people in the Philippines who are working in the BPO industry. The competency of these BPO people and the lower cost of operation makes the Philippines a pretty good choice for SMEs.
- The hybrid model of outsourcing will work well for most SMEs who wants to supervise day to day performance of offshore operations.
- Outsourcing maybe a successful strategy for SMEs to be operating within the framework of operational excellence.
- Every business is unique, and for every business model, there can be a matching outsourcing model that can help the business grow.
Derek: Hi. And welcome to another episode of the Outsource Accelerator Podcast. My name is Derek Gallimore, and this is episode number 177. So today, I’m talking to Tom Grealy again. He is an outsourcing expert. He’s an Aussie guy and has run massive, massive company offices up to about 15,000 staff for back office operations. And I really have learned such a huge amount from talking to Tom, just his insights in terms of massive scale operations. And the learnings from those can be applied to SME type outsourcing applications. So really good insight from Tom. And I’m sure you will learn a lot. So, this is episode number 177. If you want any of the show notes or to get in touch with Tom, go to outsourceaccelerator.com/177.
Hi. And welcome back, everybody. Today, I’m excited to be joined by Tom Grealy again of Grealy Consulting. Hi Tom. How are you?
Tom: Great, Derek. Good to talk to you again.
Derek: Yes. Exciting. And so just as a bit of background, which I’ll get you to introduce yourself, but you’ve worked extensively in outsourcing, initially, in sort of enterprise level outsourcing, building a team of up to 15,000 people. And now, you have your consultancy. So, I’d love to deep-dive into your knowledge in that domain. But I suppose, first, are you able to just introduce yourself?
Tom: Yes. Happy to. Thanks, Derek. Tom Grealy of Grealy Consulting. My consulting practice is based out of Hong Kong. I’ve lived in the Philippines for the past nine years, established my consulting company four years ago after finishing a career in the Australian Telecommunications Company, Telstra, where I was a Senior Exec. We specialize in work types that are associated with contact centers and shared service centers, like back office functions. Our clients are typically from Australia or in the US and Asia. So, we’ve got clients from those countries, as well as Hong Kong, Thailand, India, South Africa. We’ve done work in those countries, so we worked extensively across the region, Indonesia, Malaysia, Singapore, US. So about 50% of the engagements are for work related to the Philippines, and the other 50% is for work in other geographies.
Derek: Right. And then so I want to spend a bit of time really contrasting the differences between big enterprise and SME when it comes to outsourcing. My Outsource Accelerator is firmly within the SME camp in terms of kind of offering kind of easygoing advice and on ramps into outsourcing. You’ve very clearly worked in the high-end of town with 15,000 outsourced staff at one of Australia’s biggest companies, corporates. And now, you’re advising, I imagine, to a blend of both of those. What are some of the insights in terms of the differences for getting an SME into outsourcing versus kind of operating the process for an enterprise?
Tom: Yes. It’s a good question because not only have I worked for corporate, I actually have another company doing aged care consulting, and we’ve just offshored some roles to the Philippines. I’m a small and medium enterprise, as well as an operator. There’s a big difference. I mean, big corporates have big structures, procurement teams, deep operational expertise, program officers, and project management capabilities. If they don’t have it, it’s easy for them to hire and to bring in expertise. And the complexity for big corporates is usually around the internal stakeholder management and dealing with keeping the borderline, keeping the C-suite aligned. Different parts of the business want to move at different speeds or don’t want to move at all. So, the complexity is usually around that stakeholder alignment. For small and medium sized companies, they’re much more nimble. They can make decisions a lot faster. But typically, they don’t have the external reference points and support to be in a position where they can act with the same levels of surety and certainty that big corporates can buy in. So, a number of times, my firm has been brought in to help big corporates simply because they say, “We want to work with someone who’s done this before and had” and you’ve actually not just advised, but, Tom, you and your team, you’ve actually offshored work. And then you had to weigh the consequences of it. You were running at…
Tom: Where smaller companies don’t have that liberty. Once you move something, that’s it. So, what that means is you need to do more of the legwork yourself. And you need to have the networks and maybe even the consulting support to give you that advice that you need so you don’t have blind spots. It’s not that you’re going to be 100% ready. No one is 100% ready. There’s always going to be issues when you offshore and you outsource. The thing is knowing what you don’t know. That’s the key. And having mitigations for those risks.
Derek: And so, a lot of the focus that I have is really just getting people to start because I feel the biggest hurdle and friction point for a lot of the SMEs really is just the unknowns of the Philippines is a little bit different. Often, operation is kind of a thing that if it’s not broken, don’t fix it. And so, I try and encourage people just to start, just to try and get an easy wind, to try and get used to outsourcing maybe by a VA or a bookkeeper. What are your kind of go-to suggestions for people getting started? And kind of how do they contrast with an SME versus a big corporation, I can imagine those kind of core suggestions are quite different depending on the client, are they?
Tom: Yes, that’s right. I mean, when you’re a small or medium enterprise, you tend to have more of a personal relationship with the people in your business. And so, it’s not a clinical exercise. You’re talking about potentially putting someone that has worked for you for a long time out of a job, so it becomes very personal. That’s the first thing. And so quite often, picking up on your point, the way for companies to step into this, into leverage, the global capabilities that are available through offshoring, is to begin to put roles that don’t exist today offshore. So, it’s an expansion and growth. You put your expansion and growth offshore.
And that typically means that you’re not putting your current operations at risk as much as you might otherwise because that’s the other thing for small and medium enterprises. The owners and the senior folks there go, “Am I rolling the dice? What if this goes pear-shaped, how do I recover from it?” So, one of the things I often say to people wearing my strong Chamber of Commerce hat, “A lot of companies come through the Philippines.” We have a chat with them at our events. I’ll say, “Well, turn it around. Don’t think about you’re putting someone out of a job. You’re adding roles. It’s added to…” And that’s probably the safest way I think to do it. The second thing is you do need to come here. And you need to go and visit with BPOs. Folks who are offshoring have three options. They can set up their own legal entity and run it internally. Difficult for small and medium enterprises. You can outsource it fully, which is where an outsourcing BPO takes full accountability for your work, and they’re responsible for the performance, often not favored by small and medium enterprises. They want to be hands-on. They’re more of the captain coach. They don’t tend to have that vendor model where I hand off my work to someone else and sit there and get report cards. And so, there’s this hybrid model, which has become hugely popular, particularly with Australian and now US companies, which is this co-sourcing, seat sharing model where you have BPOs who offer a facility. They offer the office facility, the IT, the payroll, the basic HR, the help with recruitment. And they effectively are seconding their employees to you, and you oversee the day to day performance. You direct the work. And that’s been very popular. Now, what I encourage people thinking about offshoring to the Philippines is come and keep the ties. Come and take a look. Go and see some of these operators. And inevitably, the first thing you got to walk in is just be blown away by the diversity of companies that are already here.
Derek: Yes. And the sophistication of them. Yes.
Tom: Yes, that’s right. And overwhelmingly, I’m sure you’ve seen this, Derek, the potential clients, the folks who are thinking about offshoring go, “Oh, I’m late. I’m a late mover.”
Tom: “Now, this is a mature market that’s well-established.” And so very quickly, I think decompresses a lot of those anxieties once you step off the plane and go and take a look for yourself.
Derek: Yes. It’s a difference seeing night and day, is that the people that come over here and see the operation, you really can’t get the same experience by reading anything, having consultancies, watching videos. It really is kind of almost transformative by just hopping on a plane and coming here, isn’t it? But again, my concern is that that sort of slightly increases friction because people will just put that off, put that off, put that off kind of thing, but yes, most certainly the best option.
Tom: It’s kind of reaching a tipping point. I’ll use Australia as an example. The industry association here track the workforce details of the industry very closely. If you look at their data, there’s 1.35 million people working in the BPO industry in the Philippines. About 9% of that services Australia and New Zealand. The three biggest companies who buy employee share account for less than 20,000 of those roughly 100,000 Filipinos supporting Australia and New Zealand.
Tom: That means there’s over 80,000 Filipinos working and supporting Australian companies, and they are overwhelmingly small and medium enterprises. And I’m always staggered when you meet an architect, or you meet a web designer, or you meet someone, and they go, “Yes, I’ve got people in the Philippines when I’m back in Australia or I’m in the US, on the West Coast in particular.” And it’s just becoming one of those things where business people, small and medium business owners are talking to each other in Australia and sort of the Western part of the US in particular and going, “Well, get into it. We are.”
Tom: I think it takes away some of that fear factor.
Derek: Yes. And it’s becoming so normalized, isn’t it? And I think this is kind of…
Tom: That’s right.
Derek: When technology improves, it’s going to happen more and more because the barriers and the friction to having someone across the other side of the world are less and less relevant. And I have a theory that, eventually, everyone will outsource. And we’ve done some figures on this, and there’s about 35 million SMEs in the West employing about 100 million people. And I think that there’s potential in 20, 30 years that every single one of those SMEs will just look to outsource or, to put it more sort of broadly, they will employ people regardless of where they’re sitting. And the Philippines is probably going to be a pretty good choice because of cost and because of competency and things like that.
Tom: Yes, that’s right. I mean, I’ve had three careers. I worked for the federal government in Department of Foreign Affairs, so a global organization.
Tom: I worked for Telstra, a highly dispersed organization in Australia and overseas. And now, I’ve got my own company which is doing the workload. It’s just the norm. The challenge for small business owners is they often have a very localized business with one office or two offices in one city. And so that notion of managing across geographies sometimes doesn’t sit well with them, but quite honestly, it’s not an issue once you get up and running.
Derek: No, it’s incredible, isn’t it? I’m just trying to do my best to encourage people to at least just look into it and consider it because it really can be absolutely transformative.
Derek: And so, Tom, you obviously run Grealy Consulting. And so, if people want to engage with you, is there kind of a menu of services or is it…? And I suppose this is a comment on the industry generally, but can you sort of boil things down to three different kind of service products or is every client and every client need is different?
Tom: Every client believes that their business is unique, and it is. However, what you are really buying when you offshore is operational excellence. And when you outsource, what you’re really buying is operational excellence. So, we find that we’ve got two sets of clients. The first, customers, clients who are offshoring and want help with that process, whether that’s project management or help with advisory support with due diligence.
Interestingly, a lot of our clients are companies that have offshored before and it’s failed. It hasn’t worked as well as they wanted it to, and so they’re going back to market to redo the outsourcing, to tender again. And they go, “Well, okay. We messed it up the first time, and we want some help.” So, we do a lot of work in that space. The second one is for companies that have shared service, back office centers, or customer service centers, call centers anywhere in the world, and they’re just not performing at the level that they want. Now, they may be in the US, in Australia or in the Philippines, in Malaysia, it doesn’t really matter. They may be outsourced. They may be in-house. And we do a lot of work about just going in and going, “Okay. Why is your team not able to deliver the results that you want consistently?” And that’s really enjoyable work because the real intent behind that is to make people more successful, to help them be more successful. So, really, I love that type of work. It’s really enjoyable because you’re helping people succeed.
Derek: Fantastic. Oh, it’s amazing. Thank you. It’s really good insight. So, Tom, obviously, if people do want to get in touch with you or learn more about your services, how can they do that?
Tom: Sure. Just drop us an email or drop me an email at email@example.com.
Derek: Fantastic. And that’ll be in the show notes, of course. Thank you, Tom.
Tom: Thanks, Derek. Great chatting.
Derek: Okay. That was Tom Grealy. If you want to get in touch with Tom or know any more about this episode, go to outsourceaccelerator.com/177. And if you want to ask us anything, then just drop some mail to firstname.lastname@example.org. See you next time.