Hi. First of all I’d like to say hello to my staff in the Philippines and others. There’s a live feed going on so they see the big boss standing up on the stage. Outsourcing, a virtual empire. Outsourcing is a headache it’s truly a headache. You’re lucky to find a staff member in whatever country you choose, whatever language, who is going to be loyal, trustworthy, doesn’t steal your ideas, doesn’t go and to compete with you long term. So outsourcing, it’s cheap. It sounds easy. But in reality, the day to day grind, it’s not that easy. What happens is you find that there’s three main, I guess, problems or issues with outsourcing. First of all, it takes time. It takes your valuable time. I believe one staff member takes about 10% of your time. Forget the time zone differences. It takes 10% of your time to give him or her the instructions of what you wanted him to do, to do QA, to make sure that they are coming to work everyday to do their tasks. Yes, it’s 10%. So, if you have five people outsourcing, either work from home, or they’re in multiple locations, it takes almost half your time to manage them. Now, you imagine what you can do with your money if you spend 50% of your own time growing your business. Even if you have outsourcing staff within your own office. They still take time. The benefit of outsourcing to a country like the Philippines or India, or cheaper countries, is that at least your cost base is less compare to the person sitting next to you or in your office. The other problem I find is the culture and the philosophical problems. You have to understand, and this is why I got the guys to make this video, to give you an insight as to how these people live. What are their priorities? I have staff that live from salary to salary. They have no money to send their kid to the hospital. I established a loan business for them to be able to borrow money, very small interest level, to help them out in sudden occurrences of expenses. So, their whole life is dependent about money. They worry where to eat next, really. I don’t think most of us, we’re being fortunate, brought up in a western country where we have a social security system by the government. We have our family. You really never go hungry. You never really worry where you gonna have dinner tonight or what you gonna have for dinner. The worry is where to have it. They really worry about, “how am I going to afford to pay my food tonight?” I’ll tell you a quick story about three or four years ago. I was very small still maybe a hundred staff and I’m lying in bed and talking to my wife Chloe and one of our staff during the day said, “My wife is having a miscarriage and I can’t afford to pay the hospital fees. Boss, can I borrow some money?” This is tough. This is really tough. He’s a loyal employee, but where does it stop? So, years before that, I used to give money and I take it as salary deduction, you know, a thousand pesos a week of their salary, until I got repaid with no interest or anything else. And the moment you open that up, it’s like I give another hundred dollars, another hundred dollars, another hundred dollars, and it never stops. So, the psychology of outsourcing is that they rely on you on their livelihood, not what Nike shoes to buy or which investment property to buy. So, for you to provide them this sense of security, this sense of belonging that yes, you care about them, you’re not just some cheap guy living in a shed in a back of nowhere. No. You are actually valuable to me. And I think is often the problem when you get people through Elance, and Freelancer.com, etc. For project based, you maybe have a task. I need you to re-data this, or SEO this site or change something. And so, it’s a one-off project you pay them a couple of hundred bucks, see you later. But if you need long term employees, which of course, over the years they got to know your product, they got to know the skill, they become more valuable to you. So, allow them the time, allow them your time. Make them a sense of belonging. Yes, you are important. And, they will call you sir. They will call you boss. This is in their culture. They think of us as the first world. Hello? What the hell, I mean, first world you know. This is how they think. So, it’s very important when you start outsourcing that you keep the psychology part of it at the forefront of your mind. Forget about their skill. You can train anybody anything, really. It’s just a matter of time. But you cannot change character. You cannot change the DNA of somebody. So, if you support them in such a way that you say “yes, you are important.” You’ll get a lot more long term benefit from these people. Also, you have to understand from their point of view. I am sitting here. And the thing is they live with all their families. Their grandma is in that unit. The cousin is in that unit. The thing is in that unit. So, they all live together. They don’t have a “study”, like most of you do, when you work from home. So, they work in a living room, or they work in their bedroom. Suddenly, the grandchild comes running in and the laundry has to be done. And the chickens are screaming in the background when you are on the phone to them. So, keep that in mind that you provide them with the ability to create work and train them, help them, say “look, 4 hours non-stop, you have to tell the rest of the family be quiet, I have to work.” because they get distractions. Can you go up to the shop we have no coffee? Can you pick up the laundry? Grandma needs to go the hospital, please drive her or take her on a jeepney to the hospital. The guys that get this job, they’re based at home either for certain amount of reasons. They need to look after their parents because there is no social security, no social system or a sick brother or a sick mother, so, they have to be home-based. Most of the modern-day Filipinos nowadays and in most countries, there’s a huge outsourcing industry. Call center, data description, there’s plenty of really good jobs with good careers for these people but they have to go to the office. Well, if you’re based in Manila, to travel 5 miles, it can take you 30 minutes or it can take you 3 hours depending on the time of the day. So, a lot of these people have to go to an office to get a good career job, a steady job with Teleperfomance or Convergys or one of these huge global…Accenture. The part that go and work at home are these people that probably really want to have these jobs at the office, but they can’t due to family commitments, mostly. So, they work at home. So, you already know that they probably can’t give you dedicated 8 hours a day. Sure, they are cheaper. Because they don’t have to commute to the office. You can pay them direct without going through a company. Those are some of the pitfalls you have to consider. You have to understand their psyche, their point of view. Why are they on Elance? What’s the reason? Ask them. Just be reasonably straight forward. Ask them. Why are you there? What’s your future? What do you wanna do? The thing is with most of the, I guess the third world or second world cultures, they will never tell you the truth. They will never confront. They will never say I disagree with you. I have spent the last eight years and I have wonderful staff, brilliant staff. I have managers, accountants, lawyers, I have brilliant staff. Nevertheless, nevertheless, they will never confront me. Nevertheless. I take them home. I take them traveling. I take them to Melbourne. I have barbecue parties. I invite them into my house. They’ve met my wife. They’ve met my kids. I’m like a normal guy. I mean, I’m dressed up for today normally I don’t look this nice. I’m a normal guy yet somehow, no matter what you do there’s a barrier that we are better than them. This is how they think! This is how they were brought up. In school books, it says, we’re the first world and they’re the second world. Hello? I’m a high school dropout. I employ people that have degrees, have studied and all that and yet they have this psychology of… this minority psychology so you need to accept that. In the beginning, they all called me ‘sir’. I’m just Martin. So I said I’d take 1 peso out of all your salaries every time you call me sir. After 1 day, nobody had salaries so I said okay, you know what, I’ll settle on ‘boss’. They cannot physically call me Martin and I have staff who are with me for 8 years. They know me. We started with a 4 square meter office with 4 staff. It’s not like we started with a big bang, not at all. They’ve known me from day 1 when we had no money. I had to pay salaries a week late because a customer paid late. They really know how we started. Nevertheless, they cannot call me Martin so don’t try to convince them to be the same as you. No matter what you do, it doesn’t work like that. From an outsourcing point of view, there’s a variety of models available. So you have the direct model where you really… the pros and cons of the Elance or finding your own little guy sitting somewhere in Makati or somewhere in the Philippines or somewhere in Guatamala or Belize or Morocco, or no matter what country you go to, sitting at home. They are probably the least reliable from a long term point of view. Great for projects, great for like specific tasks, you pay them for the task and that’s it. If you’re looking for let’s say a long term support person that can design your banners, do some data analysis, check some stats, etc and you want them to really learn your business, these groups from these types of websites are very difficult to find. You can find them, of course you can. You can find anything anywhere but it’s a lot harder to find them in that group because these people work on these sites mainly for projects and for the money. So the next week, they keep looking. They stay a member of Elance or all the other sites and if they see another project or another job that pays twice as much, they’ll make up an excuse. They’ll never tell you straight. Screw you, I got a job double the money. I would say that but they just can’t. So this is the problem with this group of staff and in most countries they’re the same. Then you have the managed staff sorry there’s one in between which is mainly not so necessarily for you industry. It’s mainly for accounting where there are companies out there that sell you a seat. So they have an office, imagine a big office, double-storey and they have all cubicles with a chair and a computer. That’s it. So what they do, they then find you the staff member, they provide you with the computer, the chair and a desk and a place to go work for that staff member but they report directly to you so you pay this company like 500 bucks a month or something. It’s like a service and you pay the employee direct either PayPal or wire or however you pay them. So that’s the other option. You get probably a little bit more long term benefit. We find from experience that a lot of these long term home-based ones get lonely no matter how much you Skype with them, no matter how much you Facetime with them, it’s lonely long term. Whereas at least these guys have something tangible, not the amount of co-workers but people that work in the same space. And then the 3rd one, you have companies like mine where’s it’s a fully-serviced. I hire the staff, they’re employees of mine, they do different tasks for clients. They’re more expensive but a lot more reliable long term. Now, I’m not here to flaunt my business, I just got an order in that’s gonna keep me busy for the next 6 months so I can’t cope with any more growth. But if you’re looking for long term, this is the type of company you’d probably want to look for. Sure, you pay an extra 20% / 25% but the headaches that you will encounter at this is what you pay for here. Things like 13th month, SSS, PhilHealth, all these benefits of working in a company, having social events in the company, barbecue parties, training, all that sort of stuff so you get the benefit from that. We have quite a few clients that have direct… I don’t even know what they do all day long. I have some designers, some Facebook guys that… We do all sorts of things. They have a manager, a department manager and they communicate directly with the client. The client pays me whatever, I invoice them and the staff member is just a full-time staff member of my company. So there’s a different model, it depends really what you need. Is it a project? Go there. You want a bit more long term, a bit more reliable? The middle one is probably a good solution if it’s a relatively simple task and it you want a fully-supported model, then you go to fully-outsourced type of companies. What else is there? Language is an issue. Language in not so much the grammar of the language, it’s in the way you communicate, the way we understand something. So I would recommend only using email to confirm conversations you’ve had with them. So Facetime Audio, Skype Talk and then confirm whatever you discussed in an email so you have it in writing and the employee or the outsourced person knows the bullet points. The problem is, their perception… My biggest problem in my company with so many staff, so many managers, is communication. It’s the #1 issue, the #1 issue. The misunderstanding of an instruction. Not being clear enough in what the task should be. This is my #1 problem. I have very low turn over, staff virtually don’t leave me. Yet, the biggest problem is communication.