Do you dream of having more freedom in your business instead of being tied to the day-to-day details? Today you’re going to discover how to transform from busy to productive with outsourcing.
In this installment, my guest is Derek Gallimore. Derek is a serial entrepreneur that founded Outsource Accelerator, dubbed as the Alibaba of outsourcing. He has also built multi-million dollar property portfolios and bootstrapped a $20 million dollar business.
In 2011, Derek found his passion for outsourcing and believes strongly that it is a transformational business tool that can allow you to achieve the freedom you seek while operating from anywhere in the world.
Listen to the podcast here:
Outsourcing Made Easy with Derek Gallimore [Podcast 232]
Let me ask you, have you been in a place where you were like, “I’d love to be able to grow and scale my business with less stress?” Maybe your operations feel clunky. Your sales and marketing feel fragmented or it feels like it’s hit a plateau or maybe you feel like it’s broken. What if you could go out and find a way, find a solution, not just a Band-Aid, but a permanent solution that could get you optimal results at less cost, not only of time and money. In other words, you bring in an expert. It’s not a how question. It’s not a what question. It’s a who question. This interview is all about the who and then putting the who in place on the backend of your business.
Our guest is expert Derek Gallimore. He’s a serial entrepreneur. He has experienced the highs and lows, maybe like you, of being able to ride that rollercoaster ride. He’s built multimillion-dollar property portfolios. He’s bootstrapped a $20 million business and he has seen it come crumbling down. Can you relate? At the end of the day, we all have ups and downs. He has lived in five countries. He has traveled through dozens more. He has cracked the code on outsourcing. How would you like to have the ability to build a business with true stability and it could be operated anywhere in the world? He has been outsourcing since 2011 and believes that outsourcing is one of the most potent and transformational business tools you can use not just now, but in the future as well. It’s getting bigger and bigger. He founded Outsource Accelerator, which is the Alibaba of outsourcing. It provides a gateway for you to connect with outsourcing partners to make it super simple. Derek, welcome to the show. How are you?
Dan, I’m incredible. Thank you so much for that introduction. I’m totally amped up myself now.
Jot down some notes because Derek’s got a wealth of knowledge. We’ve got a special bonus. We’re going to make available to you some incredible resource you’re not going to want to miss. If you don’t want to learn how to do more with less stress, how to outsource, do it right, get the labor for far less expensive than maybe you’re accustomed to, no worries, no harm, no foul. If you want to learn how to do that, you’re going to want to stick around. Before we dive into strategy, I’d love to get context from our experts like you. Why are you doing what you’re doing now? Why outsourcing?
I started outsourcing from scratch. I was scratching my own itch. I built a multimillion-dollar company in service departments or corporate housing. Early on, I realized that I needed 24/7 customer service. That wasn’t attainable in the West. I was based in Central London and partly wages are very high, but also people in today’s world don’t want to work 24/7 anymore. Someone suggested that I come to the Philippines and explore outsourcing there. In 2011, I got my first employee in the Philippines and then within about four years, I had built that team to about 80 people. We started with customer services and sales, but then we went right up the value ladder. We were doing everything from marketing, marketing strategy, web development, operations, HR, everything within that organization could be executed as efficiently as it could within Central London. That’s my introduction and I saw the power of outsourcing there. The significant hook is that these resources in the Philippines are incredible, well-qualified, highly capable and highly eager people but for approximately 80% discount to the salaries that you’d be paying in the West is pretty significant.
As you’re reading, maybe you’ve tried outsourcing. You’ve tried hiring. Maybe it’s worked, maybe it hasn’t worked. Maybe it’s been a little bit fragmented and you haven’t felt like it’s gotten you the result you wanted. You’re going to want to read on for what Derek has to say because he has got a lot of insight and wisdom being one of the largest outsourcers in the world now. Derek, speaking to that elephant in the room of people who probably tried outsourcing or been interested in it and just haven’t been able to get it exactly right. What do you see are some of the biggest mistakes that most people make when they’re looking to outsource or in the process of outsourcing?
Outsourcing is a broad definition. It’s a multi-defined tool. A lot of people are aware of outsourcing in terms of the Tim Ferriss model, in terms of virtual assistance, in terms of Upwork and Freelancer. I am on a bit of a mission to let people know that stuff is fine, but there is a better option out there, professionalized outsourcing where there’s dedicated staffing to you. Where they come into your organization and they are really just an employee. I want people to think more of outsourcing just as employment except they are sitting remotely to where you are and where your office is. If you look beyond the more basic platforms, Upwork has a lot of disappointment, a lot of kissing a lot of frogs. It is the equivalent of outsourcing versus freelancing is like going down to Central Park in New York trying to find someone there to help you out with a project. He’s probably got a long beard and sleeping outside versus going down to Wall Street to a professional services firm, you know that you will be looked after and that they have the executive knowledge and experience to drive your company forward. It’s the difference between night and day. Still, even when engaging with a professional services firm, with a BPO with maybe 5 to 20,000 staff that are experts in helping build organizational structures, you will still be saving 70%. That is the attraction of going down the more formalized, professionalized route of outsourcing.
I don’t want to assume people know what BPO stands for. What is a BPO, so everybody has clarity on it?
The industry is broadly called Business Process Outsourcing. Historically, when a big company would come over and have their customer service or call center to outsource, that is one business process. It would be a cut out of the organization and placed overseas. That’s a bit of a historical model. BPO has broadly brought the industry as referred to here. The outsourcing suppliers are often referred to as BPOs.
Let’s speak to the next elephant in the room. I think as you describe this, as our readers who I communicate. Literally, working with thousands and thousands of entrepreneurs and business owners over the last decade or more that we hear is we can get a freelance outsourcer single person. I may have to kiss a lot of frogs, but it’s within a risk factor. Whereas hiring a full-service professional organization sounds like a pretty large commitment. What would you say to speak to that elephant in the room to ease that pain or the potential risk?The outsourcing suppliers now are comfortable and familiar working with the needs of small and medium-size businesses. – Derek Gallimore Click To Tweet
The outsourcing suppliers now are comfortable and familiar working with the needs of small and medium-sized businesses. They are as flexible as you require. We suggest that you take someone for a minimum of one full-time person allocation. The reason for that is not the logistics of working with outsourcing supplier, but that person then is dedicated to your organization and you get a 10X return on the investment you put into that person. The investment being the cultural onboarding, getting them aligned with your mission and then getting them excited about coming to work. We recommend that you start with one person. You explore outsourcing and learn the processes of outsourcing so that you can manage people effectively remotely, then you can build your team from there.
As you’re reading, what would have to happen for you to hire a full-time person? What’s the cost of a mis-hire in traditional cost sense in your organization? If you understand what Derek is saying, basically you can bring on a full-time person for about 20% of what normal pay would be considered in US rates. How would you like to decrease your risk, increase your ROI and be able to protect yourself that if it doesn’t work? What happens when you work with a professional service firm or let’s say I hire somebody through that process or the process you recommend and they’re not a good fit? What do I do then?
This will happen. You’ve got to understand though that outsourcing suppliers are in the business of people, of recruitment, of HR. They are specialists in getting you the right fit or the right person. In the US for example, if you want to recruit someone, at the time they’re a bit of a pain in the neck or you’ve got to pay a recruiter maybe 15% of the annual salary. You have to house that employee in the office space. There are a lot of additional costs. With outsourcing, there’s basically one fee that goes to the outsource supplier and then the salary that goes to your staff member. The salary, there is no commission. No one makes any money on that. It’s completely transparent. The fee that goes to the outsourcing supplier provides you with their expert account management. It provides you with HR and all of the recruitment process, including their expertise in that recruitment process plus all of the A-grade facilities, the hardware, the internet and all of the government contributions for that person.
In terms of recruitment, it’s very similar to employment. They will shortlist people for you. They will do a lot of recruitment legwork. You can then put in your job specifications and requirements, then you can go in for second or third round interviews, make them do tests, things like that so that you are completely at ease, comfortable and excited about that staff member. You give them the nod and you bring them on board. Like employment, there are aspects where sometimes it’s not a fit or the person doesn’t work out. The outsourcing supplier will work with you to off-board that person, find a new person, upscale that person and work through it as you would with an employment environment. You are more protected because you affect the contracting to the outsourcing supplier. There’s a lot more latitude in terms of how you deal with individual workers.
Derek, you’ve had this business journey. You’ve built $20 million businesses. You have properties and then you’ve seen it all come crashing. You had this amazing success. You’ve learned how to outsource. You’ve learned the process in hiring, recruiting and developing talent. Talk about your lowest point in business. Maybe your biggest mistake in that lowest point that you had made and what you learned from it that our audience might be able to learn from it too.
I had an uncomfortable situation where I had to close down the company that I built to $20 million in revenues. I bootstrapped this company. We had 250 properties in Central London. This is a big organization with about 80 people. I ended up winding that down. It was in the corporate housing space. Effectively, our revenues went from 3X of our cost to about 1.7X of our cost because of margin compression and hyper-competition within the London market. What I realized from that is we’re running an incredibly efficient business, but we couldn’t outrun the evolution of the market. I believe in radical responsibility. I was at the helm and I was responsible for navigating this business.
I found that some things run away. It’s the difficulty in navigating that is central to the outcome. That was about a few years ago now and I’ve done a huge amount of reflection. There are so many factors involved and it’s difficult to split out the factors. As I know more about business, I’ve been in business for many years. I realize how many variables are involved. It’s almost like a Poker game. The world’s best Poker players are right only 52% of the time. It’s about having the slightly better odds over a large number of hands, being strategic and being good at that. Entrepreneurship business is a heavy mix of random occurrences, heavy strategy, execution and then a lot of external factors as well. It’s multifactorial. I hope I’m not too vague.
A friend of mine in real estate, his name is Dean Graziosi. I have often heard him say that you need marketing stamina. If you can have the stamina, many times stamina will win in any business culture. Lots of factors can take us out. In fact, luck plays a big factor in success in business. I know people don’t want to hear that and people will say, “I create my own destiny.” What you do is you create your own luck. You create your own breaks. There is a certain factor of luck because there are certain things that shift. There are certain things that change. Big companies come in and eat up the market. There are a lot of things we aren’t aware of. I can totally understand like for you, as you’ve worked not only yourself, you’ve worked through this process to rebound, to recover. You called it radical responsibility. What would you say are one to three big breakthroughs that you’ve discovered for you, your company and/or your clients that you’ve worked with over the last few months? What are one to three breakthroughs that you found to be those needle movers to get to that next level?
People in the smaller end of the business, I think that there’s this scary leap and it’s quite lumpy in business that you need to start building up your systems. You need to start investing in the business beyond potentially even the revenue that you’re generating now. Without that, you can’t progress to the next stage. You have a lot of smaller businesses that are existing without too much conscious structure, without too much process mapping. I find that a business starts to mature and then is enabled to scale once these processes are consciously acknowledged, mapped and then you decide how to scale those activities.
We see a lot of businesses coming over to the Philippines. They think that they are highly sophisticated and they can show a developing nation how this thing of business is done. They then come to the Philippines and realize everything is mapped. There are KPIs for things. Processes are laid out in front of you. There’s training, there’s QA, all of these layers on top of something that in the West is commonly done ad hoc. There’s an incredible insight when people come over here that these processes can be matured and then scaled. That enables people to take their business to the next step.Outsourcing suppliers are in the business of people, of recruitment, and of HR. – Derek Gallimore Click To Tweet
One of the other major things as well is the access to highly qualified human resource. There’s a labor shortage in every major country, especially of the highly skilled, highly qualified labor. That is one of the major expenses on any P&L. The awareness that there is this opportunity to access cheaper, more abundant, highly qualified staffing if you look at the world global marketplace instead of your own localized marketplace where there is obviously quite a restriction in terms of supply. It’s a big world out there. There are still about four billion people on under $1 a day. The Philippines, for example, is producing about 600,000 university graduates per month, highly qualified, highly eager and are willing to work for a significantly discounted salary to that of people in the US.
It’s invest in your business, have a process, develop a process, refine the process and you can get great talent and great staff for less if you know the steps to be able to take. What would you say would be the top couple of steps somebody could take or should take to get it right the first time in outsourcing?
There are a few exercises I can take people through, but effectively it’s about establishing what the core value add of your business is. What are the core competencies of your business? What are the core foci of your business? Once you establish exactly what they are, then establish equally what is non-core, what is low value, what are auxiliary tasks to your business. You can then start to separate those from the core activities. We often have business owners that are charging out at $1,000 or $2,000 a day, then they spend one day a month doing the invoicing. They do one day a month doing payroll. It’s about getting to these sophisticated people and telling them that there are better processes that they can focus on that can bring them more into the hype then new areas of their business and allow them to concentrate on that while the other more external processes are reducing cost and then scalable. It’s splitting out what is essential to be kept in the core and then what else is exhilarating to the true core of your business, both in terms of activities, client expectations but also in terms of skills and value add.
To the audience, what would happen for you if you were investing more in your business, you had better processes, you were able to acquire and keep talent for less? You were able to systematize your processes. You’ll truly identify and tune in what your core value competencies are? What are your high-value result, outcome predictors? What is your low value? The more time you spend in your high-value areas and the less time you spend in your low value or have others handling that, what does that do for you? It creates freedom. What would that be worth for you? What would that be worth to you now? What would it be worth to you in three months, six months, a year from now? Ideally, you start to get a glimpse and a snapshot of how the psychology of outsourcing and doing it with a professional organization can help you.
I’ve used outsourcing for years. I’ve been outsourcing for many years, different components of my businesses. I’ve had some full-time in-house. I’ve outsourced a lot of stuff. I’ve done it wrong a lot. I’ve done it right a few times. I love the idea of being able to build a virtual business and a virtual team. What would you say to somebody that says, “It’s hard to build a virtual team and get them connected to my core values when they’re virtual?” That’s a pretty common thing that we hear. What would you say to speak to that?
I agree with you to be honest, especially when people are working remotely, it’s essential that they are more tied into the values and the mission of the company, understand the company product and also passionate and loyal about that themselves. While I encourage outsourcing, I don’t necessarily encourage random remote working. I believe that there’s immense value in outsourcing to the Philippines because there’s about an 80%, 70% discount there but get them all into one office in the Philippines, ideally in Manila where they turn up at 9:00 AM to the water cooler. They know all of their colleagues. They can start building their own culture within the culture. That starts to develop the organizational knowledge, intelligence and momentum of the structure. These things can be transferred easily. You just need to spend a little bit of time with them, show them the corporate video, show them the website, the founder, COO or whoever is in charge of the staffing. Sit down, talk with them, Skype calls and then before you know it, the culture will be transferred. If there’s a critical mass of people sitting in an office in Manila for example, then they bring on new team members, new staff, then you will be surprised at how they start to create and adopt their own culture, which replicates the mothership.
It’s all about building that mothership and it’s so critical to stay connected, to create the tools whether it’s doing a video a week to help your team stay connected. Little things like that make such a big difference when you’re building a virtual team. It’s much easier than you and I have been led to believe as well, as long as you make it a practice to stay in connection, stay in communication with them. You’ve shared a lot of great wisdom. What’s something I should have asked you that I hadn’t yet?
Maybe how do people get started? What is the on-ramp? I feel that people feel it’s a good idea but aren’t sure how to get started. That’s what we are. Outsourcing can be a little bit daunting, typically outsourcing to an emerging economy. There’s fear and uncertainty about that. How do you manage people? How do you know that they are working? How do you know that it’s secured? All of these things we can work with you. We are the world’s biggest outsourcing marketplace that basically we can sit down with you and help build comfort, build understanding and get you in contact with outsourcing management owners so that you are comfortable with the concept. You are familiar with the concept and then you can just start moving forward. Whether you have one employee or 1,000 employees, start with one outsourced employee and you will quickly go up the learning curve, the comfort curve, the understanding curve of what outsourcing is. Once you get started, you will never look back. It is dipping your toe in, getting to that stage where you are comfortable enough to give it a go and then people never look back.
What are some of the things that people maybe misunderstand about what they could outsource or not outsource? Can I outsource sales? Can I outsource my marketing department? Can I outsource copywriting? Can I outsource building sites? What are the things that people should probably get started with considering outsource? What is something that maybe you’ve learned is not to do in outsourcing?
There are different types of outsourcing. If you want a project done, you would not have those staff in-house because it’s oneself like a website. If you’re a gardener, you don’t need a full web team the whole time. That is project outsourcing and that’s slightly different to what we are talking to. The ongoing outsourcing, for example, is if you are a gardener and you need a lead gen and sales team, then you would build and develop that sales team. It’s also not to say that you can easily outsource your problems. If you are finding something difficult within your business, it’s probably likely that the outsourcing team would also find difficulty.You need to start investing in the business beyond potentially even the revenue that you're generating now. – Derek Gallimore Click To Tweet
Where the best quick wins are is if you have backend processes, non-core processes, things that you are regularly doing within your office is easily understood, mapped out and start with that. Start with those roles such as payroll, HR, finances. Bookkeeping is easily done. Lead generation, content creation, social media management and all of these things that are routine within your office and you know those processes inside out. Push those over to an outsourced team or person. Get comfortable with the concept of outsourcing. Realize the incredible savings and gains that you can make and then go, “If we can add these roles, if we can add these processes, let’s test that and grow from there.” You can then organically spread it to other aspects of your business. This isn’t about sacking everyone in the US. This isn’t about job loss. This is about augmenting your team and it’s about looking forward to how you can 10X this business, make more profits, make a healthier business, contribute more towards your community, towards paying taxes. It’s a win-win. It’s the strategic and competitive advantages that you can access here.
There’s a lot of depth in the statement where you outsource your problems. If you outsource a problem you already have, you’re likely going to continue to have a problem. How many times have you had this grand idea, “I’ve got this problem in my business, I need X fixed,” and you try to outsource it? Yet, the behavior repeats itself. Is it a people problem? Is it a you problem? Is it a process problem? Chances are it’s a process problem. When you solve the root of the issue, which is a process, taking radical responsibility personally about that process, get that solved and now it makes it much simpler to outsource a lot of different aspects of your business. It frees yourself up where you don’t have to feel like you’re the chief cook and bottle washer anymore. When you can work on the business, you can work in your genius zone, work in your sweet spot and a whole lot more. If people want to go deeper with you, where can they learn more about you, get access to your resources? You’ve got this amazing Outsource Accelerator toolkit, talk about a wealth of wisdom. How can people reach you? Where can they go? Where would you like them to go?
OutsourceAccelerator.com is our website. We list 700 outsourcing suppliers on there. We have about 4,000 pages of content. We have dozens of videos, we have podcasts, interviews and episodes. We have the toolkit which people can download. We also offer Source Coach, which is ongoing outsourcing support and advisory. That starts at $29 per month. We are completely independent and we are just here to help you with your outsourcing journey and how that can amplify your business. It’s a must-have for every business and there are not any businesses out there I don’t think that can afford not to consider outsourcing for their business. We have endless resources. Get in there, have a look around and explore outsourcing.
It sounds like you’ve got your 10,000 hours behind you and your team as well. If you’re reading, maybe you struggled with outsourcing. Maybe you’re looking for a new avenue of outsourcing. Maybe you’re looking to free yourself from the chains of you having to be the one responsible for the outsourcing. You’d like some assistance, you’d like some help, you’d like some direction with a team that’s got experience doing it. It’s almost like a guide on the side or a copilot to your outsource team, your HR, your recruiting, your training, development, all those things. I encourage you, go check out what Derek has put together. He’s got amazing resources available. You can go check it out at OutsourceAccelerator.com. Derek, what are one to three action steps that you hope our audience take as a result of our interview?
The first step would be exploring outsourcing for your business. The way that you can do that is looking at what are a few non-core, non-high value but time-expensive things that you are doing in your business. Look for an external resource that can help you with that so that you can start to scale your business so that you can look for more profits, can build that business. It’s setting the steps for better business growth.
I encourage you to take that step. If you want to put yourself in a position where you’ve got more freedom, where you’re working more on the business, you’re in your creative zone, your genius zone, that sweet spot, then I encourage you to go deeper with this idea of outsourcing. Even if you’re good at it, consider Derek a resource to help support you on the journey and leverage that. You’re outsourcing the idea of outsourcing to get it right. There are dozens of ways to do it wrong. Have you done it wrong too? I know I’ve done it wrong.
There’s a lot of trial and error with it. There is a learning curve.
If you want to cut that curve down, you want to do it with less stress and more freedom, then go check out what Derek’s got at OutsourceAccelerator.com. I’d like to twist into some personal stuff. You’re a pretty fit guy. You’ve traveled the world. What’s something that most people don’t know about you?
I try to also have radical honesty as well as radical responsibilities. Longevity, like a lot of people out there in the podcast world, I feel there’s a chance that we could live for a long time. I’m personally hoping to live for about 140 years and I’m laying the foundations now so that’s a better bet than not. I’m in bed embarrassingly early. Waking up early, I do the whole meditation thing. I do the whole Keto diet thing. I gradually exercise and excited about all of those longevity treatments and things like that.
What were you known for in high school?When people are working remotely, it's essential that they are more tied into the values and the mission of the company. – Derek Gallimore Click To Tweet
I was never particularly sporty, but then somehow I got into bodybuilding and I became the National Teenage Bodybuilding Champion for New Zealand. That was certainly unexpected for most of my peers and me as well. That was a pivot earlier on in the piece.
Do most people know that you were a teenage bodybuilding champion?
Very few actually, and to be honest, it was about ‘98. It’s largely before the internet, so it’s not even that easy to find.
If you were giving advice to your 25-year-old self or 20-year-old self, what advice would you give you that you would hope you would get?
This is probably a better way around answering that earlier question that I had, but it’s more take your time, build solid foundations, build a solid structure. Don’t be in such a rush to get there and enjoy the ride as well. Build things for a longer-term mentality as opposed to all or nothing. That’s definitely what I would advise myself now.
That’s wisdom you can take to the bank now, right here, right now. I encourage you to take action with what Derek has been sharing with you. Consider long-term outsourcing perspective. Enjoy every moment in the ride because you get to choose whether it’s fun or not. You can decide whether it’s more fun or it’s more frustrating and hard. You get the choice. It’s a whole lot more fun when you make it fun and that’s the key. I encourage you to take action with what Derek has shared with you. Do you want to go deeper with those resources? Go check out OutsourceAccelerator.com.
Derek, it’s been a pleasure to have you with us on the show. I would encourage you to take action. I’ve got three-and-a-half pages of notes here. Everything from invest in your business, processes, staffing for less, identify your core values, your high value, your low value. Stay away from the low-value stuff. Get more in your sweet spot, in your genius zone. Look at outsourcing as a way to do more with less. If you do it right, maybe you look at working with a firm like Derek’s. There’s a good chance if you do it right, you’re going to save 80% of traditional costs if you do it right. What would that be to the long-term aspect of your business to give you the ability to be fluid and flexible as things go up and things go down? What would that do for you? There’s a lot of wisdom here. If you never want to miss an episode, go to GrowthToFreedom.com/subscribe. Seize the day. Make it a great week. We’ll see you next time on GrowthToFreedom.com.
Resources mentioned in this episode:
- Derek Gallimore
- Outsource Accelerator
- Dean Graziosi
- Outsource Accelerator Videos
- Outsource Accelerator Podcast
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About Derek Gallimore
Derek Gallimore is a serial entrepreneur who has experienced the fullest highs and lows of the entrepreneurial roller coaster. He has built multimillion-dollar property portfolios, has bootstrapped a $20 million dollar business and has seen it all come crumbling down. He has lived and worked in five countries and traveled through dozens more. He has embodied remote, online and international work since 2008 – well before the phrases were even coined.
Derek has been outsourcing in the Philippines since 2011 and believes that outsourcing is one of the most potent and transformative business tools available today. As a result, he founded Outsource Accelerator, which as the ‘Alibaba of outsourcing’, provides the gateway for businesses to connect with outsourcing suppliers.