Outsourcing business processes to the Philippines has kept the dream alive for many startup founders and small business owners
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Every startup founder dreams of creating the next big idea that will change the world. Armed with a starry-eyed idealism and determination, they go in search to find partners, employees, venture capital firms and investors to turn those dreams into reality.
Unfortunately, most of these dreamers never make it. The well documented startup failure rate is atrocious. Though the nine out of ten startups fail is more of a Silicon Valley perpetuated myth than actual figure, the inconvenient truth is that most start-up companies fail in the first two years.
Some of these companies fail because there was no market for their product or service; but for many dreamers, they simply couldn’t keep up with the cost of running a business.
Rising overhead cost in Western countries makes it difficult for startups and small businesses to sustain themselves. This has led to many businesses looking for outsourcing work to run their operations.
How Outsourcing Saves Businesses
Ever since the boom of the digital age, offshoring work to the Philippines has been the saving grace for many businesses. The cost of labor is nearly one-third of that from Western countries; and Filipinos are renowned for their hard work, integrity, and English communication skills.
Mike O’Hagan, founder of MiniMovers, credits building a virtual team in the Philippines to saving his business from the brink of bankruptcy.
Also read: Planning to start an outsourcing business in the Philippines? Consider these tips
When the global financial crisis hit in 2007, Mike found his business unable to keep up with the cost of operating in Australia since the market quickly contracted. In order to save MiniMovers from going bankrupt and putting his staff out of business, Mike made the decision to outsource back-office operations to the Philippines.
He found people highly skilled in marketing, SEO, lead generation, accounting, and employment processes.
This move proved successful for MiniMovers. By offshoring operations to the Philippines, they were able to regain profit, and save hundreds of Australian jobs.
Since then, Mike has been an advocate of offshoring, even setting up business tours for Western entrepreneurs looking to set up business in the Philippines through www.mikesbusinesstours.com
Getting Set-Up In The Philippines
Even with offshoring, hiring and managing employee relations is still an essential part of running a business. In addition, setting up your company offshore is an arduous task if you aren’t familiar with local labor laws.
Entrepreneurs with experience in offshoring like Mike O’Hagan, recommend that companies looking to outsource their talent to the Philippines go through a third-party to set-up operations in the Philippines. This is because of the difficulty of registering your business in the Philippines. The red tape and bureaucracy is notorious, and the government processes documentation at a snail’s pace, it can take months to properly establish your company.
How This Coworking Space Helps Your Startup Grow
The coworking space, Penbrothers, located in the Philippines’ business district, takes care of these processes for you.
“We Hire. You Manage” is the business mantra of Penbrothers. They provide flexible working spaces, legal management, human resource management and payroll services, allowing startups to focus on growing their business.
Penbrothers was established in 2014 by cofounders, Gui Faria, and Nicolas Bivero. They witnessed firsthand the difficulties startups face when establishing their business in the Philippines.
Cofounder Gui Faria, was inspired to start Penbrothers when he was looking for a photo editor for his startup- Uncloset, an online subscription service for luxury brands. After looking at outsourcing options in India, Hong Kong, and the Philippines, he found the latter the best option due to it’s more affordable wages and the ease of working with Filipinos.
After searching for the right person, they found a potential candidate, but unfortunately could not offer employment benefits due to Uncloset not being registered in the Philippines.
“You fail because of time—you ran out of money before you can make an earning,” says Gui in an interview with Techshake, and this was exactly the kind of situation Gui was facing. He found the Philippines the perfect place to outsource talent, he found the most cost-effective price to hire the right person; but he couldn’t act on it, and it was hurting his business.
But his entrepreneurial spirit kicked in, and he found that many foreign startups face the same ordeal. He found an opportunity to provide services that would make it easier for startups looking to build a team in the Philippines, and together with his friend Nicholas, they started Penbrothers to provide a business solutions and a working space for startups.
To date, Penbrothers operates in three locations, with six offices; is partnered with 47 international and local startup companies; and houses more than 500 employees and entrepreneurs.
Rising Powerhouse
The rise of Penbrothers also coincided with the boom of the local startup community. The tech startup community is growing rapidly in the Philippines, and a primarily English speaking workforce that is fast becoming one of the most competitive in the ASEAN region.
The Department of Trade and Industry has committed to the cause of making the Philippines competitive, already launching their first innovation hub in Makati. There has also been an investment by the government to improve their infrastructure with the National Broadband Plan.
Also read: QBO innovation hub will provide resources to enable Philippine startups, launches in Manila
With an influx of local talent, and the entry of big players such as Lazada, Zalora, Xeleb, and the like entering the market, and a commitment by the government to improve infrastructure; the Philippines is poised to become a powerhouse in the region.
With that being said, the outsourcing industry in the Philippines is only going to grow, and is scaling faster than ever. The industry is expected to be worth $250 billion in 2020, growing rapidly every year.
This has led to Penbrothers to rapidly expanding its team to service their clients, and an increasing demand for services and working space. Penbrothers founders, Gui Faria, and Nicolas Bivero, are already looking ahead to growing the company to keep up with the demand. A new 250-seat working space is already on the way, and will be launching in 2018 to help more dreamers grow their business.
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