Introducing the ‘CPO’: taking 10,000 jobs to the provinces

A White Paper, by Outsource Accelerator, exploring the potential for a community-led outsourcing initiative, aimed at generating 10,000 white collar provincial jobs.

Preamble

I am a firm believer that free (and fair) market economics can provide a country with the necessary tools and motivators to take it from poverty, into a thriving educated state.  Specifically for the Philippines, i think there is a huge opportunity to pull its 100m people from poverty and create one of the most prominent economic successes of this century. Outsourcing is the catalyst with which this can happen for the Philippines.

The Philippines is one of the world’s leaders in outsourcing.  I believe that there is a very strong future for outsourcing, particularly as the world becomes increasing connected through ever-advancing technology and commerce.

The outsourcing industry is nothing short of an economic miracle for Philippines.  In 20 years, it has gone from nothing into one of the country’s biggest earners. It now constitutes more than 10% of the country’s GDP and employs c.1.2 million people.  Outsourcing offers abundant white collar roles, and the opportunity to upskill and climb a corporate ladder. It also allows it workforce to stay at home, and in the country – which has not been the case with the Overseas Foreign Worker (OFW) options.

However, despite contributing 10% ot the country’s GDP, it only employs less than 1% of the country’s population.  And the vast majority of outsourcing, and its benefactors are concentrated in the main 2-3 cities. There is very little spread out into the provinces, where jobs are so sorely needed.

I wrote this paper one day after pondering how we could make a grassroots effort to propagate and disseminate the benefits of outsourcing out into the provinces.  From a reductionist point of view, outsourcing is basically about earning money from doing work for someone from sitting in front of a computer. And in that respect outsourcing jobs, in so much as the provisioning of facilities, are highly transportable, and easy to set up.  The dropping costs of technology and hardware means that the tools needed are, and should be, available to everyone that wants access.

There are now ubiquitous project based ’employment’ platforms such as Upwork, so there is now little need to setup the technical infrastructure.  There is already a thriving ecosystem out there, that would-be ’employees’ can just log in and tap into.

As such, I looked at the possibility of setting up 100 facilities, across 100 provincial locations, with the ambition of employing 100 people in each.  This employment would provide on the job training, and allow them to climb the – almost unlimited – ladder in terms of their knowledge, deliverables and income.  The following paper is the result of those thoughts.

I had not originally intended for this paper to be ‘public’.  It is not complete and it is not polished. It is just my opinion, and musings on how we could get 10,000 people quickly, and cost effectively employed in the provinces.  A such, i ask that people read this with a tolerance for my raw candor.

Instead of this idea just sitting in Google Drive, I now feel it is better to be published and out there.  It might at least start a conversation, and maybe start ‘a ball rolling’ somewhere. I would love to see a project such as this receive support, and gather momentum.  

Derek Gallimore, Outsource Accelerator

January 2018

I. CPO executive summary

The mission is to build 100 community-based BPOs (CPOs) in 100 provincial towns, which provide 100 jobs each. THIs is a total of 10,000 entry level ‘white-collar’ jobs where previously there was little opportunity for work, never-mind a white-collar role with progressive opportunities.

The CPOs will be community-led projects, and supported by the public and private sectors. This is a win-win for all stakeholders, not least the government, who benefits from 10,000 employed provincial workers, all of whom will be paying tax, whilst progressively up-skilling.

II. Introduction

Outsourcing – a commercial force for good

Business Process Outsourcing (BPO) is a huge contributor to the Philippine economy, with c.10% of GDP, double-digit year-on- year growth and employment of over one million people. The primary contribution is accompanied by countless other positive secondary and tertiary associations. Outsourcing provides a range of medium-to-high skilled jobs within companies which offer good career ladders and continued professional development. The sector creates a middle class in which the workforce has safe work environments, good medical cover, strong labor laws and happy workplaces. It allows for skilled labor to stay in the Philippines (as opposed to OFWs), with their family, and earn a world-competing salary from their home country. This is a virtuous circle which further strengthens the Philippines and broadens the education levels and skill-base.

However, despite the outsourcing sector contributing c.10% to GDP; it only employs c.1m people – under 1% of the population. Computer-based and white-collar roles produce high income, but typically provide low levels of employment (compared to heavy industry or farming etc.), so there is a need for proactive development of mass-outsourcing activities, so that outsourcing’s employment prospect can trickle down to the masses.

Taking the benefits of outsourcing to the community

Outsourcing is making the Philippines richer, and is creating a middle class, where previously there was none. However, the benefits of outsourcing are mostly confined to the highly educated and urbanized parts of Philippines. There is little penetration of outsourcing into the remote provinces, nor into the less affluent or educated parts of the country.

Outsourcing employs one million people – which is fabulous – but there are still over 99 million more Filipinos; many of whom could really benefit from the proliferation of outsourcing. Despite enjoying the highest growth rates in Asia, Philippines suffers from one of the greatest wealth disparities in the world, with more than 20 million people live below the poverty line. Outsourcing provides an opportunity to spread the opportunity to earn – across the Philippines.

Defining and harnessing outsourcing

Outsourcing takes on many different guises.

The ‘traditional’ outsourcing is typically very structured and complex, which serves sophisticated multinationals, for which the country has built a sterling international reputation. This might be considered the top-end of outsourcing. However, there are a vast array of outsourcing activities that aren’t so sophisticated, that work on more basic tasks, and that need far less infrastructure.

Taken to the extreme, this ‘basic outsourcing’ can be done by relatively uneducated people, with only the most basic access to the most basic hardware (and internet connection).

The fact that there are people ‘out there’ looking for someone to do tasks, jobs, and activities for them, at an affordable price, provides a great opportunity for the less affluent people of the Philippines. The matching of people that ‘want things done’ with people, that will ‘do those things’, forms the basis of all trade. But more recently, there have been vast numbers of online marketplaces popping up that match people from both sides of the equation.

These marketplaces are more common that you might realize. Uber is a well-known marketplace. This matches people that want a journey/ride, with drivers that are willing to provide that journey/ride. There are dating apps that match males and females. And there are jobs boards that match potential employers with employees.

Of late, there has been an explosion in outsourcing, project and task based sites. The biggest examples of these are Upwork, and Freelancer. However, there are many other examples such as Task Us, Fiverr, 99 Designs, Task Rabbit, and many many others. These are by no means new. There are unofficial estimates that Upwork and Freelancer already have one million Filipinos working on, and earning an income from these sites.

These marketplaces typically work on a project based contract – there is not so much full-time employment. But the jobs on these sites are abundant, they offer good money for Philippine standards, allow people to work from home, and are infinitely varied.

Anyone can ‘apply’ for these jobs. Regardless of your background, and where you are sitting. These jobs are based on pure meritocracy – i.e. how good you are (plus some marketplace ranking algorithm) – which presents a huge opportunity for people sitting in the Philippines.

This paper proposes to take advantage of the huge flowing rivers of jobs from these platforms. With the provision of simple computers, a desk to sit at, and some basic education and guidance from community supervisors, provincial workforces can be created and mobilized. An empowered provincial workforce would then quickly be able to benefit from the fast-flowing deep rivers that these job marketplaces provide. To stick with the metaphor, we just need to provide people with some basic fishing equipment, and teach them how to fish.

Scope of founders

Outsource Accelerator and the organizing party are from now referred to as “founders”, but due to the lean nature of the organization, they are limited in scope and depth of work. This project will best success through a coordinated, self-motivated community approach of local partners.

III. 100 X100 CPO program

There is a fantastic opportunity to take outsourcing’s employment potential out into the community, and deep into the provinces.

We propose a provincial outsourcing employment plan – referred to as: 100×100 CPO (Community Process Outsourcing). This plan boldly proposes:

• 100 provincial towns to receive CPOs
• 100 employees in each BPO
• 10,000 jobs created
• 1,000 days to implement
• Development of a profitable, self-sustainable community-based enterprise

Note: the term ‘CPO’ is a play on the BPO term. It refers to these BPOs being a community-based and self-managed organisaiton, hence Community Process Outsource (CPO).

This 100×100 CPO plan would create 10,000 jobs where they are most needed. It would take skilled job opportunities deep into the provinces.

The only minimum requirement is that the community has a reasonable internet connection, and a basic ‘internet café’ type facility provided. There would be capital requirements to set this up, but the requirement would be relatively minimal compared to any other development which would provide 100 jobs in each location. There are many ways to fund and develop these CPO facilities – they can potentially be done very cheaply, and can also attract private-sector partnerships, and even, sponsorship.

There is also a requirement that the chosen community has a good supply of 100-200 willing and eager ‘job candidates, where they minimum thresholds of computer literacy/ability, but also the motivation to learn, the discipline to reliably show up to ‘work’ each day, and the drive to earn a reasonable income.

Each CPO facility would be profit-generating and a self-sustainable exercise. Once the seed of this plan has been sewn into the communities, it is likely that private-sector opportunists would even emulate this model, which would mean a further proliferation of community CPOs, which would add even more jobs.

This would be a community led program needing minimal staffing, and minimal setup costs. It is critical to realize that in order for those CPOs to succeed, they must be seen and managed form the perspective that they are a community organization – one that is built by the community, and run by the community for the benefit of the community.

The program would provide on-the-job training, quality control and employment opportunity.

IV. Project constituents

The community

For a sustainable program, it is essential that these CPOs are completely community based. It is essential to stress from the very start that these community based BPOs are run by the people, for the people.

Centralized support will come in the form of limited guidance, but its main value-add will be in the form of providing education and training and enhancing sophistication of the overall project.

A board (of directors) – consisting of a range of stakeholders – should first be created. This is the first activity to be completed, before all others commence. Once the CPO Board (CPOB) has been created, they can make key decisions and take key actions to set up everything, including house rules and vision, from day 1.

The CPO workers should be made aware that it is a privilege and not a burden to have the opportunity to work in this environment. They will be referred to as something like CPOAs (CPO Associates), to give them a sense of pride of their title, but also to give them a sense that they aren’t employees, but they are a critical part of a team, which requires everyone to work their hardest.

Whilst the CPO founders can be involved strategically, due to budgetary constraints and the projected scale of the organisaiton, they cannot have extended operational responsibility. The founders will guide the process and provide a structure for the exercise.

The exercise needs to be (i) self-sustainable, (ii) cost effective with low setup costs, (iii) low friction in terms of setup paperwork, (iv) have buy in from local town hall, and private partners.

Ricardo Semler of Semco and “Maverick” fame has a community-led commercial model which is celebrated and ascribed to by companies spanning the globe. There are various existing business models which ascribe to ‘’democratic workplaces’. This is something that should be a central tenet of the development of the CPOs.

For profit, thus sustainable

The objective for this exercise is to be profitable, and sustainable. However, support from the community is encouraged. The nature and sources of partnership will vary from location to location. Some possible likely partnerships include:

• From big corporate (Globe, San Miguel)
• From big BPO (Accenture, Convergys)
• From Govt, Church, Education facilities.
• Seek support from the platforms – Upwork, Freelancer and PayPal
• Support from Udemy for cheap/free access to online courses.

CPOA activities and income

The CPO will be taught how to educate the CPOAs. The CPOAs will be taught how to utilize the online freelancer ecosystem, and taught skills for which they can complete jobs, and earn money. As briefly mentioned above this worldwide marketplace offers an endless river of project/job opportunities. The vast majority of these jobs are well paid (for Philippines standards), and literally anyone can register and apply.

The CPO will be given suggested ‘routes’ to market, and they will be taught how best to work the market. They will also be introduced to the vast online free educational resources that allow the CPOAs to self-educate and progress their skills.

Tasks

The jobs on these sites are as broad as ‘work’ itself. There are literally jobs as simple as drawing a picture, to as complex as designing a space rocket. The only limitation to applying for any of these jobs are the capabilities of the person (and also the profile score of the candidate).

These skills can be taught, as well as the process to build and groom a good online profile so that the CPOAs can build a good online reputation, which will allow them to ‘win’ better jobs more easily.

For the jobs, we propose that people start on small basic jobs. Become competent and achieve good reviews and feedback, and then take on higher skilled jobs, which attract more money.

Below is an outline of proposed early-stage potential jobs.

• Admin & Finance
• Graphics & Design
• Writing & Translation
• Web Research
• Presentation Design
• Proofreading & Editing
• Data Entry
• Logo Design
• Transcription
• Customer Service
• Infographics
• Articles & Blog Posts
• Bookkeeping
• T-Shirts Design
• Research & Summaries
• Lead Generation
• Cartoons & Caricatures
• General Translation [English to Tagalog]

Below is an example of a real ‘live’ job at the time of writing. The process to ‘win’ and complete this job, can easily be taught. It is a basic job, earning $10, but as discussed, this is enough to live by for most people in the Philippines – at least to start with.

CPO location space and resources

CPO locations

The CPO will location will be determined by the community and the CPOB. The CPO should be built with the objective of becoming a commercial hub for the community. It needs to become a happy and healthy place, and one that all stakeholders have great pride in.

Ideally the space could be provided (potentially for free) by something such as a church, townhall, school or university. Also, the private sector might have an ideal site available, which can either be donated, or provided at a discount.

The space will be big enough, at a minimum, to provide 50 workstations comfortably. The workstations can be utilized for two shifts each day, which allows then for 100 people to utilize the workstations ‘full-time’ each day.

Ideally the space will have more room for meeting and training, and socializing areas, but these are ideals, and not essential.

Hardware and infrastructure

This will need to be provided using a range of public/private, paid and voluntary sources – see below.

Staffing and education

The staffing, education and support will be provided through a combination of paid employees at the local level; paid employees at the Founder level, and then a range of volunteer support roles.

The purpose of the Founders is to provide the skills and strategy necessary to facilitate successful CPOs.

The individual CPOs will have 1-2 local paid employees. These employees will be trained by the Founders, and be given the necessary skills to educate and support the CPOAs towards their financial independence. The paid employees would be responsible for everything from site management, to education and training, CPOA recruitment, and also cleaning etc. However, it should be stressed that this is a community organisaiton, the hope is that some of the more mundane tasks can be carried out by other CPOAs and also as many community volunteers as possible.

Oversight of project selection, winning projects and quality control of work produced will all be a function of th e CPO manager. Instruction on how to do this will be provided by the Founders. The Founders will provide a troop of roaming educators, whom can tour the 100 CPOs providing an educational curriculum.

Senior strategy

This will be provided by the Founders. The Founders will continue to provide ongoing oversight, strategy and support. Once there are 100 CPOs then the Founders will have the benefit of the combined ‘intelligence’ of 100 individual CPOS. This means that the most effective processes can be shared with the rest of the network, which makes the network progressively more effective.

Win-win for Government

This project would constitute a huge win-win for government.

• It promotes outsourcing – which is a high-value, safe and high-skilled sector
• It propagates outsourcing to the provinces, where jobs are most needed
• Setup costs for such employment is relatively low (especially compared to heavier, more basic, industries which typify the provinces)
• The project creates 10,000 jobs
• The government will receive taxes from those 10,000 people

V. Plan, budget, income and costs

Basic structure and ROI

Setup costs will VARY GREATLY for each CPO. Not only will the different sites, site specifications and locations vary; but also the ownership and funding model can vary immensely from project to project. It is the role of the Founders to raise awareness of this mission and try and match public and private partnerships for the sites. Depending on the generosity of potential benevolent partners, the setup costs could be completely mitigated.

There might also be an opportunity for funding from local and/or national government, or alternatively a line of favorable credit might possibly be extended for setup costs.

Regardless, even if each site had to be 100% paid for at market prices, the plan is still viable, and highly cost effective. The expenses below have been modelled based on an estimated full market price.

The project is intended to be profitable for all stakeholders. So the setup costs and ongoing costs should be reliably calculated, and a reasonable return on investment (ROI) should be expected.

Who pays what

The site will be setup and established by a collaboration of the community and the CPO founders. The facility will be a for- profit operation, and the facility will earn its income from the CPOAs. This means that the interests of the facility are aligned with that of its community of users. The fuller the seats, and the more successful the CPOAs, the more successful the facility will be.

CPOA income

It is the minimum ambition that each CPOA will earn USD10 per day – to start with. But eventually his could increase (with the community training and guidance) to $20-100 per day.

The potential is quite huge. And the great thing is, that eventually once given the skills, the CPOAs can work independently, they can work from home, or go and get jobs in formal BPOs. The income, and career potential is vast.

Setup costs and ongoing expenses

Property/facility

Rent: P10,000 per month (max)

Ideally the property could be lent to the CPO from a local partner, however, if market rates are needed to be paid, then a maximum budget of Php10,000 per month should be set.

Ideally a 5 year lease could be granted – at a preferential rate, with flexible terms – maybe a max of 10,000 php /m. Ideal land partners are universities, town halls, churches, and local business.

Each facility would need to comfortably accommodate 50 desks, chairs and computers. The space needs to be commensurately safe and comfortable, and enjoyable to work in. The better the space created, no doubt, will follow better results.

The space should be designed to become a community centre of sorts. If the space becomes a loved and cherished part of the community, then the prospects of success for the CPO, the community and its stakeholders increases exponentially.

Utilities/internet

P10k per month for internet and utilities.

It is essential that there is satisfactory internet

Hardware

P10k initial cost per workstation max.

So at 50 workstations, this is P500k. Assume lifetime of c.3 years for the workstations, thus a monthly amortization cost of

(500k/36 =) P13,9000 per month (or P277 per workstation per month)

Estimated Ongoing Costs

P10k rent, plus P10k utilities, plus P14k computer amortization, plus P10k maintenance each month.

Total facility costs: P44k per month.

Staffing costs can be budgeted for P50k maximum per month, although ideally we can tap into volunteers.

Cost of capital

If no financial assistance is provided, there might need to be a total capital investment of c.P750k. The cost of this capital can be calculated at c.9%pa, which equates to P5,625 pm

Interest on P750k @9%pa = P5,625 pm.

Total ongoing cost

Thus, there is an estimated capital requirement of c.P500-P750k. From this point, there is an ongoing projected cost of p100k pm total (including cost of capital and a depreciation of hardware).

Thus, a safe margin for profitable sustainable model is 2.5x costs, which is P250k per month.

Thus and minimum required income of P250k per month, would generate a ‘gross profit’ margin per CPO per month of P150k. This would be a gross profit of P1.8m pa per CPO; and P180m for all 100 CPOs.

From this gross profit, 50% of this is recycled back into a fund for management of the overseeing body, and enhancement of existing, and 50% distributed for shareholders.

Facility income

The facility derives its income from the CPO Associates paying for their ‘desk’. The 100 successful CPO Associates (CPOAs) will access the full facilities through this singular comprehensive payment. There will be an obligation that they work a set roster of hours – ideally the standard 40 hour working week. The CPOAs will effectively rent their desk, from which they can earn their money. Not only will the CPOA get access to the hardware, internet connection and a safe environment, but they will have access to the training and community which will teach and empower them to build an outsourcing career whilst progressively up-skilling.

Projected facility income

Each facility will provide 50 workstations which – with ‘hot-desking’ can provided 100 shifts per day, five days per week. This produces 2,000 shifts per month (minimum aim / KPI)

Each desk has a suggested P150 levy per person per shift (or 20% of income, whichever is lowest over the month)

The facility has built-in spare capacity – from the Saturday and Sundays and the hours between the two shifts. This means there is at least another 50% earning potential from the facility – if the CPO and community wanted ot take advantage of this.

However, the facility can and should also be used as a community facility, for things such as education, training and community building, and team building.

A payment of P150 per person per shift means that the facility comfortably covers its P250k overhead requirements.

The payment of P150 from the CPOA means that they have an interest in the facility providing the services they feel they deserve. One of the most significant value-adds will be the strong supportive community. There is a need for a modern incubator/co-working space type of vibe…

Staffing income

Minimum KPI is that they earn $8-10 net each day (this is an aggregated KPI). The CPOAs will then pay for the facility fees, and then they will also pay government taxes.

They can be paid via PayPal accounts, or the CPOs can be helped to set up employee currency wallets to help them with the access to their salary and cash.

If the CPOAs aren’t earning at least this amount, then the system is failing. There should be an intimal grace-period allowance as the new CPOAs get up to speed, but after that it should be treated as a commercial agreement – which should be honored.

Community guidelines

The basic guidelines will be provided by the Founders, however each CPO will generate their own guidelines. The rules are to be decided by the community for the community.

VI. Project concerns and technicalities

Below are some general concerns and considerations for the project. They are in no particular order, and should be discussed with the aim of finding easy solutions, with the best upside for all.

Company incorporation and general legal structure

I do not know about the local company structure for this. I don’t know how the facilities will be ‘owned’, or funded; nor do have insight into an ideal share/equity structure. We need a very flexible model for this, as different towns might have different ownership and stakeholder structures. These things are not core to the process, so we need them to be as ‘light’ and minimalist as possible.

Labor laws and office standards etc.

Somehow the inevitable bureaucracy needs to be sidestepped, otherwise it could take 6 months to open just one facility, if one had to go through the standard process of incorporation, permits, site certificates etc. etc. etc. There are many barriers to doing easy business, which somehow need to be eschewed, otherwise it will be incredibly exhaustive on time and resources to set up 100 structures, which hold 100 facilities and 10,000 workers.

HR considerations

These are contract workers. No minimum income…. No money unless they earn money. This is the free market-world. On the upside though, there is no ceiling on what they can earn… and they will receive fantastic education and support, and be shown the path to creating at the bare minimum, a great income for their location.

Despite having no fixed minimum income, the CPOAs will have obligation to perform, otherwise they lose access to the seats, and their spot will be given to someone who is keener and more able to perform.

Health insurance

It would be fantastic if we could incorporate health insurance as a benefit for the CPOAs. If we have 10,000 CPOAs then there is considerable mass to make bespoke arrangements.