Frederic Joye – Operating an Outsourcing Centre in the Philippines

Hi and welcome to another episode of the Outsource Accelerator podcast my name is Derek Gallimore and this is episode number 95.  So today I am joined by Frederic Joye, I have had a chat to Frederic previously in episodes 77 and 83. So if you want to get his backstory and you want to hear more about his specialist software outsourcing organization Arcanys then please listen to those episodes today I’ll try to make it a little bit lighter and I try and talk more broadly about lifestyle in the Philippines and why he chose the Philippines and the beaches in Philippines but inevitably we ended up deep diving a little more than I intended into business and business strategies and ultimately I suppose we are all just pretty interested in that stuff so it is a really interesting conversation I’m sure you will enjoy it.  If you want any of the content details or show notes then go to outsourceaccelerator.com/95. Enjoy.

Derek: Hi and welcome back everyone today I’m joined again by Frederic Joy. Hi, Frederic.

Frederic: Hi, Derek.

Derek: And Frederic has fantastic background of Swiss banking and building mega startups in Hong Kong and he is now down in Cebu with a high skill outsourcing company called Arcanys so I just want to talk to you and we have interviewed you in previous episodes and I’ll refer to that in the show notes but I want to hear a little bit more about you, Frederic and you know I suppose initially how you came to find yourself in Cebu and how you find the Philippines?

Frederic: Sure, I worked for many many years in finance and insurance and banking in Switzerland and I got an opportunity to move to Hong Kong with a good friend of mine who had an eCommerce venture in Hong Kong and when he offered me to work with him since he was fairly experienced than successful entrepreneur, I thought it was a good opportunity for me to see a bit  what’s out of Switzerland and when your after starting to work on that eCommerce venture we had and opportunity to actually buy a small business in Cebu that was in the same Industry as we were and so we came down to see the business first and then looked at the skills around  and found that the skills that we saw were really very relevant to the business we had and 3 months after  we came and started coming back and forth, we decided to move our entire team from Hong Kong to the Philippines and do it from there.

Derek: So there are 3 Swiss founders of Arcanys is that correct?

Frederic: 2 and 1 Swiss CTO who has joined us a year ago now.

Derek: And you’re all sitting in Cebu?

Frederic: Yeah.

Derek: Fantastic. So how does it compare to Switzerland? Did you sort of ever really imagine yourself sitting in the Philippines building startups?

Frederic: No, i always kind of wanted to live in a tropical country because it’s a very big difference from Switzerland where winter is our not the most pleasant if you don’t live in the mountains, but I was very happy to have this change of scenery and I think the Philippines changed me a lot and I’ve learned a lot from the very different culture than we have in Switzerland.

Derek: What do you see as the future? I imagine like what is your vision for your company I imagine you’re not here just kind of waiting for the surf and sitting on the beach you’re working hard to build this into something pretty big?

Frederic: Yes, I would say we’re pretty ambitious with how we want to grow the business and I think it goes in one direction which is building a great company culture where people want to come in and work.  And if you create that great culture then the clients you have would be extremely happy and keep on talking about the company and refer other people which is actually what’s happening, 50% of the business that we’re getting are referrals of very happy clients that want to work with us.

Derek: And I find the ultimate business plan really in that you are building a high-value proposition and service offering but on a very low-cost space in a cheaper country but you’re still providing the required skills and expertise but then you’re taking that to the west and this is what I try and preach people is by flipping the pyramid upside down and getting all of your as much of your production as possible getting done in the low-cost world and then selling to you know the high-cost west is the ultimate business plan really isn’t it?

Frederic: Yeah absolutely and it’s not extremely easy to do that because there are of course some challenges but I think the fact that for us we manage to bring outside knowledge on they’re already very skilled people in the Philippines is really the best of both worlds because the people we have with us are eager to learn they’re very open they’re smart so it’s like really the best of both worlds we can bring even more knowledge inside with very motivated people and if you create that culture of learning that culture of excellence there’s no reason why we can’t do this in the Philippines vs in another country.

Derek: So where do you see the future of BPO going I mean this is more of a broader question but I’m a huge proponent of outsourcing as being a win-win so win for whatever the western country but also an obvious win for the Philippines.  The BPO industry contributes about 10% to  the Philippines GDP so it’s an absolute winner for the economy but it still only employs about 1 million people of the hundred and 10 million population, do you see that this can expand and grow and employ a really significant number of the population sort of the slight downside to I suppose technology is that it doesn’t actually employ that many people because it’s a lot of machine assistant and things like that where do you see it all going in the future for outsourcing in the Philippines?

Frederic: Well I think it’s going to grow even more in the coming years and I would think that the lower skilled kind of services such as customers service reps are going to slowly disappear because of the rise of AI but if you look at the software development part I think this won’t slow down, it’s actually accelerating because coup are creating more engineers I think the government has understood that it’s extremely important to keep on developing those skills and so I really believe at least at the software development or machine learning or even clouds support services  will actually increase in the coming years in the Philippines.

Derek: And the main centers obviously you’re thinking will be manila or Cebu, Baguio do you think it’s going to spread out into the provinces?

Frederic: I had the feeling that some other cities are developing.  I recently visited Iloilo, for example, they build a huge kind of IT area or it park and I was really impressed by how much space and how many buildings were being built there so I can only think that this is going to keep on exploding in I would say 2-3 cities as well

Derek: And how would you describe the Philippines to someone that is a little bit uncertain about outsourcing because it’s very difficult to give someone a first-hand experience without just kinda dragging them over here but what was your first experience when you walk into whatever office you walked into from Hong Kong coming into the Philippines?

Frederic: Well that was long time ago so that was almost 10 years ago and that was in Cebu which was not Manila and I’ve always had been in you know very very I mean only tier 1 cities in my whole life so it was quite of a shock when we arrived especially because we arrived at night so we’re a bit scared with all the stories we’ve heard about the Philippines and things like that but very quickly we’ve discovered a complete different sides of things and i was amazed by how much more developed the Philippines were gonna initially thought and this is of course got an even better in the last 5, 10 years and so now when people looked at the Philippines and saying oh it’s a you know third world country or it’s one of the poorest countries in the world, I don’t think so it’s extremely developed, the buildings are I mean most of them are brand new the offices are the same kind of quality as we could find in developed countries and I would say in some cases even better than we could find in Hong Kong.

Derek: Yeah that’s how outstripping growth you know huge growth rates with the outstripping China growth at the moment and outsourcing is 10% in GDP and growing double digits every year so yeah again I think outsourcing is a win-win for everyone involved specifically it’s a real opportunity for the Philippines to drag itself out of you know previous kinda third world status and for it to trickle down into and develop a middle class which is super exciting.

Frederic: Yeah absolutely.  Well, we’ve seen so many changes over the last 10 years. I never thought I would witness that but yeah it’s incredible.

Derek: Do you have any direct experience with Upwork and Freelancer and things like this cause I find that it’s a really interesting entry point for a lot of Filipinos into the digital world and it’s almost like a kind of portal that can zap them into the western world of employment apparently I hear statistics that they are up to a million people in the Philippines working on Upwork but unregistered as working.  What are your thoughts on Upwork and this whole kind of Ecosystem that it creates?

Frederic: Well i think it really levels the playing field for Filipinos for example who want to find a job some of them I know at the beginning they were students they wanted to earn a little bit of money so they found some clients and maybe it even started a bunch of different careers for these people so I’ve used upwork both ways as a client and as a provider so it also helped us find a few clients although I think the quality of whats going on in upwork is debatable, it’s complicated, it’s probably sometimes a bit risky so I would say it has both good and bad but I think it must be pretty difficult to navigate through and to find the right fit.

Derek: And do you see a time when a programmer is earning the same in London as they are in Manila because you know it’s based on output and meritocracy and skills or it that a long way away?

Frederic: I think it’s a pretty long way away I mean in the next 10 20 years probably not but of course the rates are going up faster in the Philippines than they are going up in London but the simple fact that people are in the Philippines and the perception of ok they are living in a country where everything is cheaper than the salaries will always lower but the difference is getting narrower.

Derek: Fantastic.  And so I’m in Manila which is very much a big concrete city with not a lot of oceanfront and you’re in Cebu which is I think the second biggest city in the Philippines but you also have endless beaches and endless tropical islands on your doorstep.

Frederic: Yeah, well I think that’s one of the great chances of living in Cebu compared to Manila for us and that was part of our choices as well and there’s no regret because you’re just 10 mins away from going off the city and hitting the beaches around the island.

Derek: Yeah and I suppose just to round it off and this is going to be left of cent a bit but I find that the Philippines is almost invisible to people you know, it has a 10th of the tourism than Thailand at least as beautiful and it’s some terms cheaper but also you know outsourcing is a huge opportunity but people aren’t aware of it and it’s the biggest export of the Philippines in somewhere else.  Do you agree, do you find that people just don’t know about the Philippine and what potential it has>

Frederic: I think so because like for me before I had this opportunity I had never really thought about going to the Philippines and I wasn’t familiar with anything and I think a lot of people are not aware of what the Philippines has to offer I think it’s slightly changing but yeah compared to Thailand and some other countries it still has a lot of work to do and has so much potential.

Derek: So a part of my promotion of outsourcing is I’m trying to lobby the government to have a promotional campaign promoting the Philippines as the Swiss banking of outsourcing because I think there’s a good message there and it’s something everyone can relate to but I think there’s a huge future and potential for the Philippines.

Frederic: I absolutely agree with that.

Derek: Fantastic. Thank you so much, Frederic, for your time and insight and if people want to get in touch with you for anything at all but obviously Arcanys the software solution that you offer, how can they get in touch?

Frederic: Yeah they can simply email me at [email protected] or drop us a line on our website on the contact form, I’ll be the one to reply to it.

Derek:  Amazing

Frederic:  Thank you so much!

Derek: How was that? That was Frederic Joye and I hope you enjoyed that conversation if you want any of the show notes or to get in touch with Frederic go to our webpage for this podcast it is found at  ousourceaccelerated.com/95 and if you want to ask us anything then please do just email us, email us at [email protected], see you next time.