[vc_row][vc_column][vc_single_image image=”9844″ img_size=”full”][vc_column_text]In 2010, Zookbinders celebrated our 15th year producing high quality wedding albums. We were proud of the solid growth we had in the first 13 years. Every year we hired more people, bought new equipment, and expanded to more space. Then… the good times came to a screeching halt. 2009 was our first down year, and while we were in denial, the continued decline in 2010 demonstrated that the disruption caused by Digital Photography was our “new normal”.
As we prepared for 2011, we were certain of 2 things:
1) due to decreased demand and downward price pressure, the days of raising our prices were over.
2) the cost of doing business would continue to climb 3-4%.
So with a projected revenue decline of 3-5%, how could we possibly maintain profitability?
In 2011, we had just launched an Album Design Service as a new revenue stream. We hired 5 new Album Layout Artists, and they were at full capacity within 6 months! However, we quickly realized that we underestimated some costs, and were barely at break-even. Our clients loved the service, however as a company we needed to find ways to increase profits, not erode them.
In a meeting with my COO, she said to me: “I have an idea: We are paying our designers $17/hour or $35K annual – with benefits, taxes, insurance, etc. the total “all-in” cost is $42K. You know…I am a born and raised in the Philippines which is a hot-bed for Graphic Design Talents. We can hire offshore Graphic Designers for $18K, and save $24K per person. This would net an annual savings of $120K, which would more than offset the projected annual cost increases.
And so began our path towards outsourcing. A year later, we hired our first Senior Software Developer in the Philippines for $35K, saving us an additional $65K. Over the next few years, our top-line revenue continued to decline, however, we maintained the same profitability by increasing the head count of our offshore team. Ultimately, we moved 100% of Accounting, 75% of IT, 50% of Marketing, 50% of Customer Service and 100% of Pre-press, Album Design, Photo Editing and Video Editing.
In 2017, when our overseas office talent head-count exceeded our Chicago based team, we decided to start our own Outsourcing business. MCVO Talent Resources now helps other US and UK companies reduce the cost of office labor by providing low cost, highly talented office workers from the Philippines.
Your Business Savior in 2020
COVID-19 Has Changed Everything. 80% of all businesses have been negatively impacted by COVID. However, as believers in “there’s always a silver lining”, here are the positives:
1) Businesses have become accustomed to virtual staff – it’s no longer “weird” to talk to a colleague, client or prospect through a web cam
2) With companies facing severe financial hardship, offshoring office work can save your business in the short and long term
Pre-COVID, when talking with business owners, one of the most common objections to offshoring was: “I don’t want to take away US jobs”. I agree 100%. During our peak years we had 96 employees, were very profitable, and never thought about offshoring. We only started offshoring office work when it was desperately needed. Had we not, our company would have shut down 3-4 years ago. So when we shifted the majority of our back-office staff to offshore, we maintained profitability and saved the jobs of our entire manufacturing team many of whom have worked with us for 15+ years.
What To Consider When Building An Offshore Team
As our country (and the world) continues to reopen, most industries are expecting a slow and steady ramp up. Due to a decrease in topline revenue, many companies will be unable (or unwilling) to hire back their full office staff. Depending on the severity of your company’s financial position, here are some suggestions to consider:
Phase 1 – Determine the easiest jobs to transition. These are typically repetitive jobs with the shortest required training time such as Data Entry, and Office Administration.
Phase 2 – Determine the jobs with the biggest financial impact. Bookkeeping and Accounting jobs can typically save 30-50K per position. Software Developers and other IT functions present huge savings and Customer Service positions (which cost ~ $10.00/hour) can save 20-30K.
If you need help figuring this out, my partner Cherry and I have 9 years of experience with outsourcing and can help make recommendations that will minimize the disruption, and deliver the cost reductions your business will need to survive….and thrive.[/vc_column_text][/vc_column][/vc_row]
