Getting better ROI setting up operations overseas

January 4, 2013 by 123outsource
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Many companies set up shop overseas. Some prosper and others don’t. Many Americans are violently against this. But, people need to consider that it is very expensive setting up shop in certain locations. The labor rate might be high just to get mediocre employees. The rent might be sky high as well. There are other costs that you could consider as well. Avialability of labor that has the skills you need is another huge factor. Many companies will consider political stability as well. Starting an outsourcing company in Kabul might not be the best idea these days (or any days). There are various factors you have to think about when setting up an operation in a location.

So many locations?
Let’s say you were setting up a call center. You could do so in India, The Philippines, Costa Rica, Africa, America, Romania, or Canada. Which location makes more sense? America has the most expensive labor, but has workers who speak clear English and have cultural skills which might be a challange tofind overseas. But, the rent is not necessarily more expensive in America! You can get five square feet of space in Arkansas for the same price is one square foot in Pune, India. Is that foot in Pune any better than it’s corresponding foot in Arkansas? Africa has cheap everything, but god knows when the next coup d’etat is coming not to mention if your internet will be compromised. Each country has different attributes and costs, so how do you decide?

Look into the future
Big companies do very sophisticated analysis as to where they should set up their operations. Some choose Mexico because it takes 17 hours to truck their goods to a central location in the U.S. Others like India for its huge pool of people with technical skills. One company might choose Canada to save on its air conditioning bill (just kidding). But, you have to remember, that conditions never remain the same. The cost of land in India might be expensive NOW. But, in ten years, the population will be up by a significant percent due to the unending birthrate. Additionally, the wealth accumulated in India in the next ten years will push the price of Real Estate up yet another notch. Companies in India are often moving into remote areas to save on rent. But, those remote areas will not be cheap for long the way things are going. The beauty of America is that land in Texas was cheap in 1850. It was still cheap in 1950, and will still be cheap in 2050. If you buy the realtor a few bottles of wine, he might even throw in a few longhorns on the property.

Calculate ahead of time
The bottom line is that some places will have land prices that are priced out of the market in 10 years. Other places will have labor rates that are impossible in 10 years. Many places might have been blown off the face of the earth after 10 years due to political problems. The only way to make up your decision where to get optimal ROI is to really study numbers and look at trends. Visit the places you are thinking about investing and get to know the locals. Get to know what is going on.

Outsourcing can save you 60-90% of costs

January 1, 2013 by 123outsource
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We all know that you can save a boatload of cash by outsourcing.  But, outsourcing is scary and risky because you have to deal with overseas companies who you have never met.  Only god knows what they will go to you — or if they will leave you high and dry.  The truth is that companies in America are very likely to cheat you and leave you high and dry. You might be able to sue them here, but getting taken for a ride is no fun on any side of the Pacific!  Outsourcing involves more skill when managing work and choosing companies.  There are cultural differences, geographical differences, and time differences.  It is harder to meet with your overseas counterparts in person, and harder to talk to them on the phone.  So, is it worth it to do offshoring, nearshoring or outsourcing?  If you plan on mastering the skill, you will save 69-90% on related expenses and I say — JUST DO IT!

Costs are deceptive – willingness to work is  a factor
It is baffling comparing costs when outsourcing tasks.  I have seen programming companies that charge $15 per hour and others that charge $180.  The irony is that the company that charged $180 refused to do business with me, and the company that charged $15 per hour took me on, and then refused to finish projects.  Those who say, “You get what you pay for” are simply wrong.  The reality is that you get people who either refuse to function or can’t function unless you shop around and find people who actually do function.  A rate of $15 per hour is not a real rate if you refuse to complete work — or if you say that the work is complete when you never started.  A rate of $180 per hour is equally meaningless when you refuse to take on new clients.

Definition – A REAL RATE is a rate that someone charges who is actually willing to work on a regular basis for that rate without putting you on hold for two months while they are busy with another project. Don’t compare rates unless it is a REAL RATE! And there is no way to tell what a real rate is unless you have tried out a company for 3 months and seen how they function.

Hour padding – adjust for slugginness and dishonesty

Many employees and bosses do hour padding. They will add on hidden costs, or say that something took longer than it did.  Koreans do “Reverse hour padding”.  In Korean culture, you lose face if it took you too long to do a simple task.  Koreans are notorious for learning to be the fastest and the best at whatever they try to do. My experience is that if a Korean does one hour of work, they will charge you for 45 minutes.  While, someone in India might take 2 hours to do the same task and then bill you for four.  The Korean might charge $125 per hour and accomplish the work relatively error free.  Hour bill would be $100 for 45 minutes from the Korean in my imaginary example.  Meanwhile in Hyderabad, your Indian counterpart will be finishing their samosa and finishing the two hours which they will bill four hours for and submit a bill of $60 for work that is far from being up to specifications.  So, after all is said and done, the Koreans are still more expensive  on a “by the job” basis. But, the error rate will probably be less which saves you management time.  Therefor, your total expenses including management time are EQUAL when you compare a $15 per hour company and a $125 per hour company in this silly example — make sense?

If you work with companies and have a sense of how long particular tasks should take, you can guess how much hour padding they do, and you can keep a log book of what their REAL hourly rate is.  Additionally, you can consider various factors to give them an OVERALL SCORE

Example.
                                Hourly Rate  Adj Rate       Follows directions          Page speed         Consistancy  
Sun Myung & Co           125                100            80% rate                         Fast pages             A                

Chakrapati & Co              15                  60            40% rate                           Slow                      D        

Krishna Infosystems        25                  40            70% rate                        Medium speed     B+

AKA Infosystems           150                  120          80% rate                         Great                   A          

In my example above, Krishna Infosystems (a fictional company) doesn’t have the lowest published price.  But, their work is more efficient and less “padded” than their other Indian counterpart.  Additionally, they do a better job following directions. When all is said and done, they would be your ideal company to hire.  Their rate is cheap, they don’t cheat in any detectable way, and they follow directions relatively well.  No programmer that I have ever met has a 100% rate of following clear written directions

Mistakes are costly

If you hire a programmign company to do a task, and they do it in a way where pages load slowly. You might have to have them recode much of the work.  This is very costly, not to mention the lost revenue that you encounter as a result of your slow pages.  If you hire companies that make mistakes, you are looking at very big costs.

What to look for first when hiring an offshore company to attain cost effectiveness.

I tend to have a “what does it really mean” attitude when people quote their prices.  If they quote too low I will think they are incompetent. If they quote too high, I will wonder if they are really, “all that”.  What I am looking for is much more involving questions that effect overall cost efficiency:

(1) How hard do I have to crack the whip to get you working.  Do you start on your own, or do you ignore me?

(2) How fast do the pages you create load. If it is too slow, then the work is almost useless.

(3) How consistant are you about getting work done?  If you have a competing big project, do you put me on hold?

(4) What is your rate of following directions.  I have seen 20% to 70% in real life.. 40% being the minimum to not get fired.

(5) How much do you pad your hours or cheat? (at this point it is actually a much smaller concern than points 1, 2, and 3)

(6) How much work do you get done per hour?  Do you do 30 minutes worth of work in an hour?  It is all relative to my past experience how I define how much an “hours worth of work” really means.

(7) Do you return calls… ever?  If you do, then I don’t believe that you are a real computer programmer.

(8) Is there a project manager involved? Is he/she/it a complete fool, or a competent professional who is, “on the money”.

(9) Can you handle really complicated and sensitive tasks?

There is a lot to analyze when trying out new companies.  I would try out a handful on a small project, each for three months to see how cost effective they really are.  Remember — if a company refuses to lift a finger, then they are not cost effective, and they are not EFFECTIVE at all.

5% of an employees time should be spent on training & refinement

December 8, 2012 by 123outsource
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Many workers all over the place have no sense of communication or responsibility. The reason is because their managers are too busy to teach them, or perhaps because their managers don’t know HOW to teach them or what is important to teach them.

Communication skills are a typical problem for technical people.  They need regular coaching on how to get back to people. How to pick up a phone and dial 10 digits (programmers are genetically incapable of this task by the way).  How to return an email with relevant content.  How to schedule their tasks so they don’t run behind schedule. How to keep in touch with clients and let them know when there is a problem or delay instead of keeping them hanging.

“Not flaking” (not forgetting & keeping track of things) skills are important for lower level managers.  I find that lower level project managers seem to not keep track of what is going on, and clients will be kept waiting for months only to find out that no headway has been made on their projects.  Assistant managers need to be coached on how to KEEP TRACK of everything and not flake.

If you don’t currently have a mentoring and coaching program for all of your staff, you should figure out how to create one.  Your company would do so much better if you did a little training (or a lot of training).  Employee output could go up by 20% without spending an additional dime on them simply through training!

Good luck and use your innovative skills

Creating a test job

December 2, 2012 by 123outsource
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Creating a test job for programmers or call centers

If you hire outside firms to do your work, be careful. You don’t know who they are or how they work until they have done something for you.  Once they have been on board for a few months, then you will know their tricks if they have any.  It is best to design a small job for them to do. Even if it is a job that doesn’t even need to be done, you should create something that you can use to evaluate the efficiency, skill, and communication skills of the company you hire.

I learned that I needed to test out five programming companies to find one that was acceptable to me. My standards are not even that high.  It is just that most companies can’t or won’t get work done on time according to specifications — not even close.  Some companies don’t even return calls.  Others just take the job, and don’t do anything. A few companies cheat and try to overcharge you.  Some companies have workers who don’t follow directions…

All I can say is that — It is a jungle out there… test people out. Stick your toe in before you get your leg bitten off in outsourcing!

Should you have a niche in your outsourcin​g market?

November 26, 2012 by 123outsource
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Many outsourcing companies have various specialties that are popular.  This is normal. But, how many do their work in a special way that separates them from the pack? Would it be a good idea to do so?  Survival in business can be achieved in several ways:  Being the best, being first (having longevity in a particular industry or invention), and being different.   It makes sense to be super in any case, but being unique can get you certain types of clients more easily — clients that tend to like the specialized way that you perform your work.

Lets say that there are ten call centers in India and let’s say that they are all more or less run the same way.  They will be competing on price, and on who knows who, and not much else.  But, what if one call center developed a reputation of having flexible terms.  What if another call center had girls with very pleasing voices.  Perhaps a third had workers who received two hours a day in coaching and that they were by far the most capable and refined in the entire marketplace.  As you can see, there are may ways to differentiate yourself from the competition, and developing a long range brand identify might make sense if you do a good job of it.

There are ways to screw up your brand image.  If you try to promote your workers as the best trained, but still do shoddy work half the time, you will quickly lose your reputation.  Be an extreme of what your branding says you are, and then nobody will ever question you.  If you are cheap, then be extremely cheap.  If you are good, then be really good.  If you specialize in being multi-lingual, then offer 20 languages, and have really good people speaking all of those languages.  You get the picture!

Dedicated Workers

November 23, 2012 by 123outsource
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There are different types of workers.  Some bring their work home with them, while others clock out at 5pm and forget about work alltogether.  Those who succeed typically feel responsible for their work regardless of whether they are in the office or not.

A portrait of a super-worker is the person who lugs a laptop with them wherever they go.  If they go on vacation, the laptop comes with them so they can stay up to date with at least some of their tasks.

Getting workers to this level of responsibility is not easy, and in many cases not possible.  But, if they are made to feel that their ultimate success or failure is tied to their reliability to getting things done, then they might start working when they are not expected to be working.

If workers feel that they will never get ahead no matter what, then perhaps they will not take any responsibility after they clock out.  Instilling a sense of long range job security, recognition, and respect being tied to stellar performance is a job that a good manager needs to master.

Getting workers to care

November 21, 2012 by 123outsource
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It should be a science to figure out how to get workers to care.  Managers often study how to milk more productivity out of their staff, but do they study how to make workers care?  One elderly manager in the United States told me that caring / integrity is the FIRST thing he looks for in a worker. He told me that if a worker lacked skills, that skills could be taught, but that teaching integrity was not generally possible.

So, perhaps starting out with workers who care makes sense.  But, a more interesting topic to discuss is how to optimize worker caring.  There are many ways to get workers to care more.  Making them feel like a part of the company and a part of the long range membership of the company makes  alot of sense.  Some executives include all workers in profit sharing and stock options.  With huge companies, I personally feel it makes more sense to have workers reap a long term benefit if their particular department does well in addition to the long term wellness of the organizatin as a whole .

Another aspect that is typically purposely ignored is tying the workers into how the customer feels.  Todays workplaces are segmented with the salespeople selling,, and then forgetting about the client after the sale is made.  The technical staff does its part without interfacing with the customer, and the accounting department doesn’t see a human face of the client either.  Having workers be more part of the whole transaction in an emotional sense seems to be practical.  If programmers see a client when they are happy that things went well, or frustrated when things don’t go well, perhaps they will care more.  If a salesperson is held responsible for selling the wrong thing to a client and actually talks to clients throughout the business relationship, they will have a very different attitude.

Integrating segmented companies is important in business.  Departments need to be able to seemlessly communicate with each other, and all workers need to be in touch with clients in one way or the other. My idea is very unpopular with many companies who don’t want most of their workers interfacing with clients at all.  Additionally,, most workers don’t want to be bothered talking to clients and simply don’t have the social skills to do so in any case.  But, there must be some way to have all workers get some sort of feedback of how the customer’s life is improved by their work, or inconvenienced by their failure to do what they are supposed to.

Too many chiefs and not enough Indians?

November 14, 2012 by 123outsource
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My friend told me a story about his buddy.  His friend seems to go back and forth from India to California.  He had a job here in California managing seven workers.  It was okay, but he longed for India.  He went back to India every year to see family and meditate, etc. This time, he decided to get a job in India, so he could be close to the family.

This character is a perfect example of how NRI Indians have a tough time readjusting to Indian life.  Indians get used to America after a year or two, but getting used to India after living in the states for five or more years is daunting and perhaps impossible for many.

In any case, this loveable NRI got a prestigious job in an IT firm in Chennai.  Instead of having seven people under him, he got twenty-four. Yes — this is how management is done in India.

In America, everyone wants to be the boss, but few want to be the worker. We call this scenario by a name created based on Native American culture —

Too many “chiefs” and too few Indians.

When we say Indian in this context, we mean Native Americans since they were confused by the early European explorers and thought to be Indians from India despite the fact that they didn’t wear saris or cook dosa!  I don’t think the Christopher Columbus ever had the luxury of ever having a dosa (he should have stopped for a bite in New Jersey).

But, in India, management has the opposite problem.  Too FEW chiefs, and too MANY Indians! How can any one manage 24 employees? In any case, this manager was on call 24 hours a day it seemed. The phone was ringing off the hook.  There were hundreds of projects simultaneously going on.  The stress was piling up. Finally, he took a vacation to a remote part of Tamil Nadi.  He couldn’t enjoy himself, and the phone was ringing off the hook.  His wife askied him why he even bothered taking a vacation if he couldn’t relax.  He said that he didn’t know. That vacation was his breaking point.

It was time to move back to America and go back to managing only seven workers. The moral of the story is — don’t try to manage 24 people no matter how good they are. You will go crazy, and there is no place to run unless you quit and move to California which is not possible for most people.

6 Habits of Successful Outsourcing Companies

October 23, 2012 by 123outsource
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I have been talking on the phone to some of the most successful BPO outsourcing businesses in the market. I bet that you are very interested to know what I learned about their habits. There are those who beg for BPO “processes”, and those who get so much work, that it would make you dizzy. So, what is the difference?

(1) Knowledge at your fingertips
The larger and more successful BPO companies have someone knowledgeable answer the phone. The phone rarely goes to voice mail. The person you talk to on the other line can answer most of your preliminary questions, and make you feel confident that their BPO company can get the job done. The difference I see is that some companies have a very sophisticated and knowledgeable person who will talk to you, while others merely have someone “adequate”, who knows the basic answers. Some people at BPO offices I talked to sounded a bit bored, while others sounded like amazing people. I talked to one gentleman who had been a consultant who impressed me. I asked him how he learned to speak English so clearly. He told me how he did consulting all over the United States and London. He is a breed of his own, and guys like him would be too expensive for most of us to hire. But, if you want BPO business, hire someone really good to answer your phones.

(2) 24 hour phone answering?
I just talked to a company that does IT related BPO processes in Delhi the other day (my day — their night). The guy on the other end of the line sounded bored, but he spoke good English and answered all of my questions. His company had hundreds of workers, so they were doing many things right. I prefer to speak to exciting and fascinating people, but someone who gets the job done is much better than 95% of the OTHER outsourcing outfits do.

BPO Business these days is global. If you want to catch calls from other countries, it might matter WHERE your office is — however, it matters more WHEN your office is. If you have an office in Delhi and you answer your line all night long (which is daytime in America), then you can get American clients. You will need an American phone number so you don’t scare off the Yankies. Having an office for BPO in America with locals answering the phone will make you sound local, but to me, knowledge sells much more than having an uneducated blonde on the other end of the line. Have someone who can answer basic business questions who answers the phone. Don’t make prospects work to talk to a salesman. You wait on them, they shouldn’t have to wait for you.

(3) Having the staff to do the job
Big companies have large staffs. They have staffs of different levels of experience, and different specialties too. No matter what type of BPO job you throw at them, they have the availability to get the job done. If you want to get ahead in your outsourcing outfit, you had better have people who are ready to jump on new projects, otherwise you will not get the new projects. Think ahead.

(4) Being flexible
I have notice that many of the companies with 20-40 workers can be very rigid. They want tight contracts that protect THEM, but put their client in a very constricting position. I noticed that the larger BPO outfits are often more flexible about terms. Since they have such a huge staff at large companies, they don’t NEED to lock you into a constrictive contract. In any case, you should be in business to make life easy for your clients if you want to have enough clients to have 200 workers. Think like the big guys — do you think they don’t philosophize about how to please their clients better?

(5) Having higher level workers
Many companies that offer BPO in India have low-end staff, and perhaps a few senior workers who have four or five years experience. If you want to get serious clients, please consider having high-end staff available. Some projects require higher level skills, while some require a mixture of levels of skill. If you only have low-end people, you will scare off the serious clients. If you want to grow your business big, you need big clients, and big clients want smart workers. Think ahead! Big companies in India who do outsourcing have a higher percentage of high skilled people, and they are more accessible than in medium or smaller companies where those “experts” are likely to be tied up on some other project and too busy for your new clients. If you want to get clients like the big guys, give them some skilled workers. It makes all the difference.

(6) Good communication
Some companies in India have great workers, and write good emails, but have a horrible phone manner. Little BPO companies in India almost always are horrifying on the phone. No respectable client would hire them to even pour a cup of coffee with their bad communication skills. The bigger companies seem to have a much better command of phone etiquette and English. However, even many huge companies in India still are far from perfect on the phone — phone manners seem to be a problem across the board in India. But, I will say one thing: the larger BPO companies are MORE LIKELY to have staff with good English and good phone etiquette than the smaller companies.

Don’t interview the salesperson

October 22, 2012 by 123outsource
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Don’t interview the sales person.

If you do business with high tech companies, or other outsourcing companies, the salesperson is the worst person to talk to.  They only care about scoring a sale, and will answer yes to all of your questions.  If you talk to the technical manager, they might say no to all your questions, but at least that is honest.

In the long run, you will be dealing with project managers, staff members, and perhaps the boss himself. But, after the sale is made, the salesperson is out of the picture, so why deal with this person in the first place?

Sure, you are forced to deal with the salesperson, but you can ignore everything they say (recommended), and then have your second interview with a real person who gives real answers.  You need to interview all members involved in your work if you choose to hire an outsourced company.  If you can’t communicate with the programmers, or if the call center workers don’t communicate the way you like — you will be sorry — and the salesperson will not be in a position to help either.

Indians who succeed use their real name

October 13, 2012 by 123outsource
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Indians who succeed use their real name!

It seems to be the culture in North India that you have to be Americanized.  But, the Americanization is really fake.  I see people on TV wearing very American clothes and doing American activities, but their style of interaction is very uptight and completely opposite from how Americans interact.  To make it in America, you are better off being a traditional Indian who wears a sari and has good interaction skills.

People in North Indian call centers are brainwashed into thinking that they have to be white skinned, have a neutral accent, and be a fake American to succeed.  Unfortunately, the fake Americanization people go through seems to have no bearing on what the real American culture is, and is just a cheap imitation or what the Chinese might call a knock off.  It is like buying a fake Rolex in Hong Kong for $5… It might outwardly appear to be a Rolex at first glance, but it is an imitation, and it shows.

Even when I see North Indian girls (from Delhi, Haryana, Punjab, etc.) socializing in America, they wouldn’t be caught dead wearing Indian clothes, yet they never seem to socialize with real Americans.  Hmmm.  If they REALLY were Americanized, they would feel completely at home with real Americans, right?  The truth seems to be that traditional South Indians — with their dark skin, saris, arranged marriages, and so on, are MORE compatible with Americans than bleached Aryan looking Indians who wear Denim and shorts and make a fake attempt at being a Westerner.  Why is this?  INTERACTION STYLE.  The way South Indians interact is more gentle and calming — Americans are more agreeable to this style of interaction than the spastic manner of their counterparts in Delhi.

The Indians who I know who are getting ahead — far ahead — are themselves. They are real.  They are good at what they do (really good in fact).  And they do NOT use a fake American name!

Can a techie be trained to be a people person?

October 5, 2012 by 123outsource
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It is so common in companies that the customer service people have nice personalities, but are idiots when it comes to anything technical. They will get the answer wrong 90% of the time, making them nothing more than a pretty voice on the other end of a pretty phone.  Sure, it is nice to talk to someone nice, but how long will you be patient if they give  you wrong answers most of the  time.

On the other hand, there are people who are technically gifted. These folks tend to be very anti-social. Getting them to say hi audibly can be a challange.

So, my philosophical business question of the day is:  Is it easier to train a sociable person to be technically competent — or is it easier to train a technically savvy person to have a good personality — or ANY personality for that matter?

I think that people are not so neatly defined as I make them out to be, and everyone has a different configuration of traits and unique qualities.  I think the answer here could be on an individual basis, but I am learning more towards educating the sociable types.

My experience tells me that antisocial people can not learn to act like humans.  I tried for years to get programmers to have conversations and invited them to many dinners (that I would pay for), and they refused every time.  It didn’t matter if they were Americans, Indians, Chinese, or Martians, their personality traits were the same — anti-social. So, we have to take those who are considered to be “a people person”, and train them how to be a little less idiotic when someone asks them a technical quesiton.  My experience tells me that there are “people people” who are also very gifted technically, and many who can engage in deep thought and sophisticated problems.

I remember a guy named Josh who was the most pleasant person I think I have ever met. He gave very intelligent marketing advice, and gave great answers to questions that were completely outside of his training as well.

If you take ten people people, and train them how to really understand technical issues, you might find that three or four can really excel at answering technical questions.  They might need double the training that their technically experienced counterpart might need, but if they can retain the knowledge and use it for a few years, then the training pays off.