The Wize Way

Episode 136: How to Effectively Manage Offshore Teams

• Wize Mentoring for Accountants and Bookkeepers • Season 2 • Episode 136

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In this engaging episode of The Wize Way Podcast, Brenton Ward is joined by Ed Chan and Jamie Johns to unpack the essentials of managing offshore teams for accounting and bookkeeping practices. The conversation kicks off with a discussion on the ideal financial margins when setting up offshore teams. They delve into the significance of achieving and sustaining profitability through strategic pricing and resource management.

They also covers the pivotal role of technology and security in ensuring a successful offshore operation. They provide actionable advice on the right tools and protocols needed to maintain data integrity and protect against cyber threats.

Listeners will gain valuable insights into practical staffing strategies that enhance productivity and foster a seamless partnership between onshore and offshore teams. Whether you're initiating an offshore team or refining your existing processes, this episode offers crucial guidance tailored to help your practice thrive.

Tune in to glean wisdom from seasoned experts and elevate your offshore team management game. Your next step in optimizing your practice starts here!

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Brenton Ward:

From Wize Mentoring is The Wize Way Podcast for Accountants and Bookkeepers, a show about accounting and bookkeeping practice owners and the many stories, lessons, and tips from their experience of transitioning from a time- poor practice to a business that runs without them. I hope you enjoy and subscribe.

Brenton Ward:

Based on your experience with your offshore team, what should be the minimum margin on your experience with your offshore team? What should be the minimum margin on your offshore team and she's got to suggest that out of six times, what would your suggestion be?

Jamie Johns:

Yeah, look, your minimum margin should be. We always go with the KPI of 40% of our cost of goods, right, or gross profit of 60%. So with your offshore team you're not confined to that, you're gonna. You're gonna get much better than that. So you know, you might get up to depending on how you price your jobs and depending on your, your specialty and your niche marketing and how good you're at sales, you could get up to. You know we get up to like 90 gross profit. So you know, like you might even get sort of six, seven, eight times. It just depends. But I've just given you the minimum there. So that's, but you'll get much better than 60% GDP or 40% cost of goods. So that would be the minimum. But I can tell you now you'll get much better than that with your offshore team.

Ed Chan:

It should be based on the market price. So whatever the market price is that you're charging out for. So if it's bookkeeping and the market price is, you know, $80 an hour, then you should charge out $80 an hour. But if you're outsourcing, then it's like 10 times the cost, the hourly cost.

Jamie Johns:

Another way to look at it. You know, just because you've invested in a really, really efficient factory, it doesn't mean that you have to be the cheapest.

Brenton Ward:

You know.

Jamie Johns:

Although you know, if you're going for a very price-sensitive job, you probably have the ability to perhaps drop the price lower than another firm that doesn't offshore. So, as you said, ed, it should be just more market value. Just because you've got a really efficient factory doesn't mean you have to be the cheapest or go under market value.

Ed Chan:

If you're after market share, you might have to. You know there are different ways to win market share. You can drop your prices to win market share or you can, you know, improve your turnaround times. You can, you know, there are different ways to win market share if you're after market share. So often people are not after market share. They're after making a decent profit, giving very good service. So it just depends on what your drivers are as to how you price it. But the normal cost is three times your costs or three and a half times your costs. But when you outsource you can get up to 10 or 11 times your costs. It's quite profitable and it obviously gives you the opportunity to compete at a better price to win market share, if that's what your goal is.

Brenton Ward:

That makes sense. I do want to touch on the topic of the technology and the security piece from working from home, because, when we're talking about working directly, I do want to touch on the topic of the technology and the security piece from working from home, because when we're talking around working directly and working from home as opposed to a BPO or an office, certainly one of the biggest questions we normally get and it's obviously one of the biggest risks. So, Jamie, can you just touch on a couple of different layers to that as to how you've protected yourselves against that?

Jamie Johns:

Yeah, so over the years of doing it myself and then talking to other firms, there are probably three or four main points. One is you need to cover all these things off. If you're hiring from home, for example like a not-for-a-BPO, you should download the contractors agreement that we have in the Wize Vault, and in that agreement it'll cover a lot of the main things around security and cyber security issues. And you know if I sort of like quickly list them. You know you need to make sure that all your antivirus and anti-keylogger software is kept continually up to date. So we pay our IT firm to do that. And that includes, like all your critical Windows patches. You know, because people are always trying to work out and they have for years how to get into a computer, how to hack it or whatever it may be, and it's a continuous battle. And then you have your software companies, whether it's Apple or Microsoft, always updating and putting critical patches on security. There's no way you would just let a computer sit there and not have the patches updated. So you must have that in a contract with your it company to keep those patches up to date now. Thirdly, you should have a system there are different systems that is like LastP ass. There's um, there's practice protect that we've used for years, which just gives you one password and into a portal where all the other passwords aren't known. So practice protects another one.

Jamie Johns:

The other thing that you should have in the contract or spell out is that if the offshore team member is using a computer, it's just for work purposes, it's just for their job. You know you don't have the kids coming in or the husband or wife all come in and use that computer. So that's another thing that I've learned from experience as well is just that the computer should be solely dedicated to the team member for the purposes of your work. You know there are some of the main things, Brenton, but certainly the IT side of it, the things that I mentioned, is critical. Then there's just the practical things. You know. Another thing that we include in the contract is that all our offshore team members are not allowed to print. We just thing that we include in the contract is that all our offshore team members are not allowed to preach.

Brenton Ward:

We just blatantly say in there that you can't print things off and have paper laying, and so we just work in a paperless environment. Any comments on how to best ingrain the offshore strategy into the culture and for the leadership team to drive this forward?

Ed Chan:

There's no question that working you know, from home or working overseas, brings up with it a different challenge, and you know keeping an eye to make sure productivity is up and so forth. But you know, in our environment of timesheets and there's checks and balances, and you know software like TerraMind and a whole lot of different other software that you can implement, that's minimal, but overriding all of that is that you've got to teach the staff a sense of leadership. I put that down to a sense of responsibility, doing the right thing and taking responsibility for their actions, whether it's mistakes or other matters. But you've got to always drive this leadership aspect through your teams and take responsibility.

Ed Chan:

No blame, you know, don't blame people for making mistakes. Focus on solutions, focus on fixing the problem, and this sort of culture needs to go through the organization so you have an abundant environment, not a scarcity environment, and everybody's worked towards the same goal. And if people do make mistakes, just focus on fixing the problem, looking for a solution, rather than blaming people, so that that all comes down under leadership. So you need to make sure that they understand that right from the under leadership. So you need to make sure that they understand that right from the first time that you employ them, your culture is about working together to solve problems and find solutions.

Brenton Ward:

Okay, Jamie, final points on leadership and really making this strategy work for a firm.

Jamie Johns:

Yeah, I think the main thing is that you don't just leave people sitting there. I've spoken to other firms over the years where the leadership of the firm might want to embrace offshoring but then the second layer of management, whether it's the senior production manager or even the senior client manager just don't embrace it. So while the owners of the firm or the partners might embrace it I've seen that happen but then I've seen the next level or the level under that not embrace it. And then they'll say, why didn't it work? Or well, I couldn't get the accountants or I couldn't get the associates or I couldn't get the managers to do it, and so it can become sort of an attitudinal point that you know, I just don't want to get on Zoom or I don't want to get on Microsoft Teams and call the person. So I've seen that more than a few times and I think that's more of just having a fixed mindset that offshoring just doesn't work, whereas if people have the right attitude and they give it a fair go, it can work.

Jamie Johns:

So I think leadership in terms of, you know, designing a firm and leading the firm in the right way, you can never understate that it's just. This is the strategy. This is why we'd like to do it. It's a win-win, it does work. You know you might get pushback from your team members, but, as Ed always comes back to it, he said you've got to lead because otherwise, if you don't leave, your firm will end up like what all your clients want and it'll end up like what all individual team members want. As the leader, you've got to do your best. Concern for everyone and not just one person. Yeah. So yeah, do your best to bring everyone on the journey, but you might find it might be someone who doesn't like it, and it's just the difference of values.

Brenton Ward:

Thanks, Jamie thanks for tuning in. If you like this episode, please remember to subscribe and leave us a five-star review for more practical, wise tips on how to build a business that runs without you, head over to wizementoring. com/ podcast to download a free copy of the Accountant's 20-Hour Workweek Playbook. We've included a link in the show notes below. See you in the next episode!