Planning to set up a team in the Philippines? An alternative model to traditional outsourcing – “staff leasing” – is surging in popularity. Find out how leasing works and the keys to making it a success.
Outsourcing business services offshore is now a familiar model to most Australian businesses, as they look to drive competitive advantage, expand, and gain access to a large English-speaking skilled labour pool at less than half the price of an onshore workforce. What’s new, however, is the engagement models between clients and offshore vendors. The engagement model that is growing exponentially, particularly among small to mid-size businesses, is Staff Leasing. This is also known as “co-sourcing.”
What is Staff Leasing?
Staff Leasing is the model of choice for companies that don’t want to cede control and management of their offshore team to a third party. The offshore team reports directly into the Australian business, and the third party simply provides office space, computer workstation, recruitment, HR, payroll, and support services. Other services are generally available a la carte menu style.
Under this model of offshoring, businesses can get the best of both worlds – the ability to remain in complete control of their business process, while also partnering with an experienced specialist in a low-cost, yet highly skilled labour market.
Importantly, this approach in the Philippines is estimated to be around 70% less than comparable onshore operations, with no additional Capex or Opex driven to the bottom line.
It’s just like having another division of your business, but instead of being in your building, they are based overseas.
What are the best practices and traits of success in Staff Leasing?
Companies that succeed in establishing a rewarding Philippines outsourcing operation typically follow these guiding principles:
- Over-invest in the beginning. The overall savings are significant so over-invest in the beginning and commit time and resources to getting your Philippines team off to a solid start. Establish clearly defined and transferable workflow, set clear objectives, apply selection rigour, train the staff on the ground, get to know your people and the Filipino culture.
- Start with easy processes. Businesses that commence offshoring operations often test the waters with basic non-core functions, and move on to complex or more specialised work once they achieve their desired results. This staged approach reduces risk and builds confidence and know-how in the team.
- Actively participate during the initial stages. Make it a point to either visit the leasing provider in person, or if travel is not possible, via Zoom meetings. Assist in or facilitate training, and collaborate with the local staff to establish clear processes and KPIs to ensure accountability.
- Prioritise the skills of candidates, rather than negotiating the wages. Engage a provider that will help you achieve your goals by creating job profiles that reflect the skillsets you need, and appeal to the local market. Paying someone $100 more a month is a big deal in the Philippines and will enable you to attract and retain higher qualified candidates.
- Openly communicate with your provider. Businesses who establish a sound relationship and work closely with their provider’s management and staff are more likely to succeed.
- Implement performance drivers and retention programs. Performance drivers and retention programs should be established to motivate the offshore team, give credit where it is due, and reward results.
- Treat the offshore team as an extension of the local operation. Explain to local staff that the offshore team is not a replacement, rather an extension of the local operations.
Offshoring is not just for large scale businesses any more – there are multiple models that can suit almost any business. Staff Leasing is the perfect middle ground for businesses that are looking to expand operations in the Philippines yet leverage the vendor’s expertise, resources, corporate infrastructure and assets for up to 30% of the cost of building a team onshore.