Mike O’Hagan – Into the World of Outsourcing

Hi and welcome to another episode of the Outsource Accelerator podcast.  My name is Derek Gallimore still and this is episode number 96.  Today, Mike O’Hagan is back with us so I first spoke to Mike O’Hagan back in episode 72 and also 84 so if you want his back story and the kind of his journey into outsourcing then go and listen to those podcast and today we are deep diving a little bit more into his very advanced deep knowledge of outsourcing and his significant experience in outsourcing and even in being in the Philippines.  So he’s been living in the Philippines now since for about 4 years and first started outsourcing here in about 2010 so he’s got some great experience under his belt.  I’m sure you will enjoy this episode if you want to know any more about Mike or get in touch with Mike or know any more about the show then go to our show notes and you can find that at outsourceaccelerator.com/96.

Derek: Welcome back and I’m joined again by the outsourcing guru Mike O’Hagan,

Hi Mike.

Mike: Hi there.

Derek: And today we want to share a few and I want to tap Mike’s experience in terms of outsourcing tips and tricks so Mike, you have had what is it nearly 6-7 years direct experience outsourcing now and you’ve seen it through thick and thin so I want to share some of that knowledge that you have with the crowd out there and I suppose initially what are some key things that you give advice to people if they just want to get involved in outsourcing?

Mike: Well there’s some very strange behavior of western businesses when they go to outsource they seem to suddenly think that they can get these a lot cheapest services as a remote thing they don’t have to do anything just turn on and it’ll happen and it doesn’t happen that Filipino workers are very very similar to most of the western workers there’s good, there’s bad and they’re as good as the way you manage them. Training is essential and they have different behaviors so I think one of the biggest mistakes I see is that they don’t connect to somebody the owner of the company will come up on one of my business learning tools and look around go back in just give it to a senior management team and say build some stuff in the Philippines nobody is engage they disengage from the very start

Derek: They treat them like outputs instead of people behind the monitor yeah?

Mike: Look a Filipino team is absolutely the same as a team in Australia, USA or UK It’s no different the people and you as the owner of the company or the manager have to provide all the leadership things you’ve got to provide tell them where you’re going why you’re going there, put some enthusiasm in to the business, set some KPI’s around and manage the KPI’s. It’s about training them to do what they do now. These guys already will have all the core skills that they need, their english is fine, their ability to talk is fine, microsoft office is completely normal it seems to be breath in to them from day 1, they know that there’s no problems with any of that stuff, they don’t know your business and in some cases they don’t know your actual country so you need to countrify them all of us up here have very large training programs developed countrifying them, by the way I done just have many movers here I’ve got a whole lot of other businesses here including my business learning tools but all of us have got this massive great powerpoint presentations saying what our countries are about and how it works and the terminologies, you got to countrify them you gotta teach them what your business does and how it works and who’s who in your business and then you got to emerge it with their own culture differences now the philippines is culturally closer to us than any other Asian country by a long shot

Derek: They’re quite unique aren’t they Southeast Asia and even Asia?

Mike: Yeah, totally unique the only Christian based Asian country to start with and they also happen to speak English which is the third largest English speaking country in the world and they are American standard educated.

Derek: And it’s a huge population of a hundred million with a very young population as well.

Mike: 2/3 of them are less than 15 years old.

Derek: And a very good university graduation rate and there’s about 500 thousand graduates a year.

Mike: Yep and it’s all feeding it and numbers are now being sucked up though there’s still numbers coming into the market this industry in nowhere near employing them all but, they are different culturally they are extremely family orientated which is very different in how we are in our countries.  Extremely family oriented, it’s a bit confronting when you first see it but once you understand it it’s actually quite a wonderful thing but you need to go with it in the workplace and you need to allow it for the workplace you need to adjust, you need to have good Filipino middle management advising you what’s right and what’s not right, what’s excepted what’s not acceptable when somebody in the family gets into trouble it causes a lot of drama and trauma that’s normal.  Some of it you ignore some of it you have to get involved in the death in the family are quite common and they’re quite big and they do have like a 5 day or a 1-week funeral cycle, that’s normal.

Derek: There’s a lot of western business owners that come here and they want to treat people well but I think they overlook the new ounces of cultural differences don’t they and you really can’t underestimate Filipinos are different and we’re all culturally different but you need to acknowledge that to get the best out of your team don’t you?

Mike: Yeah, look it is very common for a Filipino to give all of their money, every single thing they earn to the family unit.

Derek:  You have really interesting insight into this so, in the west, people are very commonly motivated by money because it’s their money isn’t it and they love bonuses and you know they will drive for an extra $100 so the end of the week so how does it work with the Filipino workforce?

Mike:  Well there’s 2 types of filipinos, those independent, those are outside of the family network and their money is their money and they will be motivated very similar to western worker with money, that is the small part of the market, and then there’s the big part of the market who are in a family unit and sharing back in the family unit, that mean they decided to living in it but most of them are still living in a family unit, but all everything they earn goes to the family unit and the family then whoever in the family redistribute amongst everything everybody in the family.  Now the issue with those is that money doesn’t motivate them the same way so if you want to have a sales bonus and you want to give a $10 bonus it doesn’t mean much to the sales person of every cent they earn goes to the family but if you were to call that person out in front of their peers and praise them how wonderful job they’ve done and get everybody to clap and give them a chocolate bar you will actually get more out of the work doing that than you will out of the $10 and that’s because of their background and the way they are, your learning experience when you first came here we all messed that up I know you did, I know we did and took us awhile to get in the groove a hang, this is different they think differently, it’s not rolling the way they think they just think differently and as a result you can use that to your things, same locking them into benefits, sorry locking them into employment with you as you realize Manila has a high staff poaching problem the country is and as bad because of the high growths here and when you get good staff, staff you really want to keep you want to put some locks in and you do that by typically by including their family into their health benefits and tricks like that so you need to learn all those sorts of tricks as well to do it but it’s all different it’s all about family here, family comes first and really much comes first now when you offer somebody a job here odds on that they’ll go back to the family unit and say they’ve been offered a job they will show them the conditions of the offer and the whole family will discuss whether they will work for you or not so this is very very different and the same when they leave you before they leave you, you can bet to they went to the family and said they have a problem or that they have another offer or whatever it is all that done with the family level it’s quite different.

Derek: It’s very strong community here and that transfers as well into the office environment isn’t it because of them become very close with their office colleagues and again you know if you give them commendation in front of their office colleagues it’s very powerful and they have a strong community in the office they have summer outings, they have Christmas outing, they have a lot of social events.

Mike: Yep you need to socialize with them, socializing is extremely different, in the karaoke if you if you come up here and think no can’t do karaoke with the staff you’re wrong you do we all hate it absolutely hate it but they do it they have a lot of fun without alcohol while we need alcohol so their event are commonly thing but listen running through this is a saving a face thing if there’s still an Asian thing here called saving the phase so they are very concerned about what they appear and their principals think of them and if the best way to get rid of a filipino worker is insult them in front of their workmates from the point of you that you’re angry with them or unhappy with them, if they think the bosses aren’t happy with them and they appear know that because of the way boss reacted they will literally walk out the door and never come back again, so they are quite tender you’ve got to just treat them a little bit differently.

Derek: I think that term is a very high-rank structure here as well isn’t it and a lot of western whatever entrepreneurs come here and think they’re going to have the flat structure and they’re going to have the whole Silicon Valley thing and it just quite doesn’t work the same people actually want to know their position, they want to know their roles they want to know the pecking order and the ladders and they prefer more of a defined-

Mike:  They love KPI’s, they welcome KPI’s and if you don’t give them KPI’s they’ll come up and say boss we don’t understand what’s needed and of course that’s the complete opposite of all my workers in other countries absolutely the opposite it’s quite amazing how they thrive on that they love KPI’s, they’re different the family thing is very very strong, saving the phase thing is very strong these unseenable issues. They’re actually issues that you can use to your advantage, but you need to learn how to do it to make it effective here.  The other common mistake an extremely common mistake when people first come here is overpaying, people come up here and pay them too much money they think why because we think money and we think better house better car and we think that this what drives the world so when we see an employer and we want them we will offer them better money and believe me money is not what its about at the end of the day, it’s a very it’s nowhere near the motivated that we used to.

Derek: I think a lot of western people come over here you know if the salary is whatever $400 a month they can easily flick in an extra 25% another $100 a month and it doesn’t mean anything but actually it doesn’t register the effect that they hope it would because there’s a lot of other motivators.

Mike: Exactly, you’re not tickling them or giving the right motivators in place and money is not it, it really isn’t what the vast enjoying them.

Derek: So we’re talking there about maybe bigger teams but what are some tips maybe your things that people need to think about if they are looking to have 1 or 2 staff they might not come over to the Philippines for the first year, what are some key tips for managing a remote team I suppose some of it sitting in your office next to you?

Mike: You know there’s a whole lot of people around this industry that is talking about structured processes and set processes.  Look, I run a business that’s very very process driven and unstructured and systemized. The reality was that when we first came to the Philippines our back end operation was not systemized or processed we started here without the system and processes and actually i believed it’s part their reason we were successful out first employee we simply started by sitting on the phone on skype talking to an Australian who is doing the job who explain how to do the job which is exactly the same way we would have started somebody in Australia they would have started on the first day, we would have set them down beside the first doing the job and they would have explained the job so we did that with our first employee, she picked it up like we couldn’t believe their ability to learn is amazing they learn a lot faster than anybody I ever seen, she picked it up and she got it right so we did that and then later on when we decided that other people would come in to the Philippines operation we used her to train the other and then between them they actually wrote structured set processes that we have today so the way that I like to teach it to other people as I say we move the tastic knowledge we move the internal knowledge of the business up here and then we use the Philippines to build their own system and I see a lot of people deciding I’m going to offshore so they sit down and write a whole lot of new system and process that have never been tested never been used arrived up here with everything in writing and say there it is just run the process and they fail.

Derek: The nice thing about coming to the Philippines I mean you’re getting cheap and affordable employees but you’re actually buying into a country that has 25 years experience now it outsourcing so they have phenomenal skill and experience in building these processes and pulling processes out of whatever western company and optimizing them re-optimizing and making things efficient as possible.

Mike: So I see micros coming up here and hiring 1 or 2 which is the dumb thing by the way there’s a thing called the danger of 1 trust me I’ve seen a lot of people get 1 and then this wonderful person and teach them all this wonderful thing and then something goes wrong and they lose the person and go right back to step 1 so there’s the thing called the danger of 1, if you get a good 1 unfortunately then you going to have to get the second one to back that up to back it up but I see there’s people coming up focused on systems and processes  falling over when really it’s about developing tastic knowledge sharing that up here and encourage them the same way you encourage anybody else to make them part of your business you need to know the whole family the name of all the family members there has to be somebody in the other country in Australia, USA or wherever you’re coming from there has to be somebody back there who knows the names of every family member, their children and what all that’s about you need to connect with these people you do that you’ll get a wonderful product.

Derek:  You need to get to know the person behind the monitor don’t you

Mike: Yeah they need to be engaged.

Derek: I mean this isn’t a question it’s more of a loaded comment but I find a lot of people come here as well and they take the 1 person you know they want to hire 1 person they want to spend $300 a month and they want them to do everything they want them to be a VA they want them to be a web expert a social media expert and also do the sales for them do you see that a lot? You know they wouldn’t expect that from someone back home

Mike: Every week I get a phone call from somebody saying look I need somebody who knows salesforce who can go on the phone and make calls who can also do Zero and book keeping and we want them to do web dev too just simple little wordpress, we need them to be able to build wordpress as well and I go to them and my favorite thing to say can you find that at home and they’ll go no why do you think you can find it here and it’s a completely different for mentality cause at home it’s so expensive we need to get that multi skilling thing here, it’s so cheap we don’t do it that way we do it singular and it works a lot better

Derek: I had a guy that said the exact same thing and then at the end, he said I also want them to be experts because I don’t want to spend any time training them all, you know it’s like it just won’t work but thank you very much, Mike.

Mike: Thank you

Derek: How is that? That’s Mike, Mike O’Hagan he is a very wise and experienced businessman so if you want to get in touch with Mike, please do and you can get his contact details and all the show notes at outsourceaccelerator.com/96 and if you want to ask us anything then just email us and that is at [email protected].