Outsourcing vs Offshoring

Outsourcing vs Offshoring

By Phil Jaquillard, SuperGuardian

Jaquillard Minns Chartered Accountants established SuperGuardian, one of Australia’s leading Self-Managed Superannuation Fund (SMSF) administrators, in 2002.

The difficulty around finding suitable accountants to employ in Australia, and significant growth through the last decade, caused the business to consider offshore locations to be able to resource that growth.  The firm then established its own office in Manila in 2007.

Due to issues of control and security, and the focus on very high quality work, it was important that SuperGuardian be in charge of recruitment, training and systems.

Although the firm had been approached by several organisations seeking an outsourcing arrangement, SuperGuardian chose the offshoring model for its overseas office.

Preparation of financial statements is of course a critical core function of the firm. It did not want to be just another customer of an outsourcing provider in India or Malaysia with the associated business risks.

So rather than outsource to a third party, SuperGuardian established its own company with Phil Jaquillard and David Minns as the Australian shareholders. A local Filipino CPA manages the team, and after 6 years and with 52 staff currently in the Manila office, the project can only be described as a resounding success.

Initially, monthly accounts for all super funds were prepared offshore, with the staff logging directly into the servers in Adelaide using terminal server and local internet connections.  This then developed into year-end SMSF work being finished offshore, and an “e-document” team in the Manila office now print, bind and ship completed financial statements to Adelaide.

The employees of the Manila office also do accounting and tax work for the business services division of Jaquillard Minns.

All work is still managed by CAs and CPAs in Adelaide, who love working with our Manila staff and are happy to visit each year to participate in the company’s team bonding event, always held at a resort location in the Philippines.

Training on new developments is conducted regularly by our Australian staff, and training of new recruits is conducted by our Manila staff. The Manila staff also attend CPD training events held in our Adelaide training room where possible, via video link over the internet.

Recommended Approach

Jaquillard Minns recommend the following approach:

1. Investigate the opportunity

Visit the Philippines and talk to other business people and look at other similar businesses that are operating there.  Understand the culture and business environment, rules and ways of doing business.

2. Incorporate a separate entity

Appoint a general manager to assist you to grow the business and bring them to Australia for intensive training.  SuperGuardian did this with the first group of staff it employed.

3. Work closely with a firm with experience

There is a lot to know and rules are different to Australia.  It is very important to work closely with a professional adviser on all legal and tax aspects.

4. Understand and embrace the culture

Filipinos have a unique culture – they are happy, hospitable and sensitive people. They have a genuine desire to do a great job for their employers. Of course they don’t understand the Australian sense of humour and we can be seen as abrupt! It’s a lovely culture and our Australian staff love going there.

5. Work closely with the people

You will need to work closely with the key foreign staff so that they have a sense of belonging and direction.  Also clear and regular communication, and ongoing training, is of utmost importance.

Costs

Costs can vary depending on the scale of the operation and whether a leased office or serviced office is used.  In the case of a leased office, rentals of A-grade offices are lower than comparative rentals in Australia. Staff costs are significantly lower with salaries being around a quarter of similar roles in Australia.  All our professional staff are CPA qualified.

Internet costs are an important factor, and this is one area where costs are higher than what we would expect to pay in Australia.

Of course the other cost to factor is travel and the time cost for management out of the Australian head office. Our smallest client has 3 to 4 persons employed in a Manila office.

How to Proceed

Based on the success of our own office, clients of Jaquillard Minns sought the firm’s assistance to establish offshore offices for their businesses.  This is now a growth area for Jaquillard Minns, with over a dozen other firms being setup over the last 2 to 3 years, including other accounting firms from around Australia.

Jaquillard Minns assists firms across a range of industries to establish operations in the Philippines, and hosts regular trade missions to Manila for interested participants to investigate the opportunities.

Phil Jaquillard is qualified with a Bachelor of Economics and a Grad Dip in Accounting, Phil has experience in both commerce and the profession. His experience includes positions at KPMG, Horwath & Horwath, and as Financial Accountant with Motorola Communications based in Melbourne. This mix of experience places Phil in a unique position to advise clients in a wide range of areas, including taxation, finance, IT and reporting systems and project management.

As a Director of self-managed super administration firm SuperGuardian, Phil was responsible for establishing that companies offshore office in Manila in 2007. With an in-depth knowledge of offshoring business operations to the Philippines, he advises clients on all aspects of offshoring, and hosts regular trade missions to the Philippines. Advice includes business structures, finance, transfer pricing arrangements, taxation and cultural aspects.

For more information contact Phil Jaquillard on 08 8221 6551 or see www.jmconsult.com.ph

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