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Outsourcing Scams Refuted – Part I

This blog post attempts to refute or explain comments that I first read here:

It will be a multiple part outsourcing blog post as I get around to each line item mentioned in the original outsourcing article.

A little reminder about the types of outsourcing companies you will find in the Philippines.

1. Tier-One Outsourcing Companies – Rates are at minimum $15 an hour. They only take large clients (ten or more people).

2. Tier-Two Outsourcing Companies – This consist of a network of “Mom and Pop” outsourcing shops owned by Filipinos and foreigners alike. Outsourced labor prices range from the ridiculous $2.00 an hour for labor to $12 an hour.

3. Freelancers – Individuals who work out of their home or shared small office. Prices for this form of outsourced labour range from $1-$5 an hour depending on the tasks involved. Programmers will  cost more.

Here’s a little trivia. Near fifteen years ago there were many outsourcing companies employing thousands of new-hire college grads in the Philippines to serve clients in the online adult industry. Pictures and videos needed to be edited, landing pages needed to be made, programming needed to be done, stories needed to be written for SEO, customer service needed to be done and all the other things that are needed to run an adult online business which was in it’s prime fifteen years ago. Great graphic designers and programmers were made.

Do you know where those workers are today, ten to fifteen years later? Some were so good, they became OFW’s and traveled all over the world with their new found IT skills background. You can’t afford to hire them anymore!

Others are still working for the same clients they were ten years ago, as freelancers (The Philippines chased out all the porn and adult companies gradually, over time). The resourceful employees started working at home.

On a positive note, many of the early outsourced workers went on to start-up successful online companies or work for successful online start-ups right here in the Philippines.

This is probably the group of outsourcing companies that the article I am referring to  is talking about. Other original  Filipino outsourcing workers stayed in the Philippines and blatantly copied their employers outsourcing business model. They quit and tried to compete directly by providing outsourcing services to the USA and Australia. There was only one problem for this group. They had no contacts, integrity, clients or leads! Most failed.  The successful Filipino owned outsourcing companies managed to get by serving the local Filipino businesses only. You need to use a westerner owned outsourcing company to get western results! 

Here are excerpts from the article mentioned above and my commentary on the outsourcing scams mentioned in the quote.

[urbanettete] If you have ever worked at an Internet-based company, chances are you’ve either dealt directly with outsourcing or have heard about it. Thanks to globalization, it’s now easier than ever to outsource your programming, customer service, and other corporate staffing. [/urbanettete]

[PI Outsource] Shameless Plug: This is true! Call PI Outsource for your free outsourcing consultation with an American manager. Call 812-669-4205 Outsource your task based labor in the Philippines. [PI Outsource]

[urbanettete] They give clients fake resumes, so make sure to ask coding questions. Buyer beware! It’s up to you to protect yourself. For every honest outsourcing company, there are two that are just waiting to string you along. Here are some of the practices I’ve encountered with almost every outsourcing company I’ve worked with. From speaking with programmers and Virtual Assistants (VA’s), I gather these techniques are quite common throughout the Philippines and India: [/urbanettete]

[PI Outsource] PI Outsource has to go through 100 resumes to get three people who are qualified! We are sure to test the English and job related skills with industry approved skills testing from Pro Speak and Assessment Analytics Pre-Employment Screening. We present you your employees for your approval via video conference or phone. YOU always have the option to approve your employee before any payment is made!

Further more, always protect yourself and do your due diligence! Ask for and check references! [/PI Outsource]

[urbanettete] If you hire two people they will have one working, and switch them around (all junior). [/urbanettete]

[PI Outsource] Remember what your Mom said, if it’s too good to be true, it probably is! Well, if you hire an outsourcing company with an effective rate of under $4 an hour, you are asking for this type of service. An outsourcing company cannot pay it’s rent, electric, salaries, benefits and internet on $4 an hour and make a profit. They will be out of business before long! It’s a guarantee, what you think is a managed office is probable a ruse, and your outsourced employee is probably working at home. [/PI Outsource]

[urbanettete] If you hire senior they will still give you junior. [/urbanettete]

[PI Outsource] Again, you are responsible for who your outsourcing company “gives you” as an outsourced employee. You must personally approve of all new hires assigned to your account from PI Outsource. We give a one week free trial for you to put your worker through their paces. [/PI Outsource]

[urbanettete] If you hire one “dedicated” programmer, they assign two or three clients to that one programmer. This means less overhead for the outsourcing company – less computers, less staff, infinite number of clients, no need to wait to hire, they always have available staff. [/urbanettete]

[PI Outsource] You need to set deadlines. You need to know your work, how long it takes, how much can be done. It’s all about metrics. You need to make sure you get the hours you paid for. If you pay for eight and the worker works your 8 and 4 for someone else, what do  you care? Everyone needs a side job if they want to get ahead! Manage your workers progress and report any discrepancies ASAP to the owner. [/PI Outsource]

[urbanettete] Charge clients more than six to eight times what they pay the programmers (most programmers in the Philippines are paid about $120 to $180 US per month – for full-time work – by the outsourcing companies they work for) [/urbanettete]

[PI Outsource] This is utter bullshit or it was written in 1972! They average salary of a competent worker in a Philippines BPO would range from $400-$700 a month. You can look in the employment classifieds yourself! [/PI Outsource]

[urbanettete] They tell everyone to say the same stuff on chat, so the client won’t recognize the difference in people “yes ma’am, yes sir, I’m still working on it”. [/urbanettete]

[PI Outsource] This one is an issue with me. I don’t encourage my employees to use more than one “sir/ma’am” per day in chat. Your employees are just trying to give you respect in the only way they know how. The culture of the Philippines is very hierarchical.  Deal with being called sir. You could be called worse. [/PI Outsource]

[urbanettete] They have unrelated people who have nothing to do with the project sit and chat with clients and say “I’m still working on it, yes ma’am, etc.” [/urbanettete]

[PI Outsource] Again, utter bullshit. No one keeps employees on for such trivial tasks. Who makes this stuff up? [/PI Outsource]

Part II in a few days.

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