Increase profits by outsourcing work to virtual assistants
In a networking conference this year, I met Joe who owns a manufacturing company. According to Joe, business was good although profits were markedly lower compared to last year. The primary objective of the company this year was to re-structure costs and align more resources toward activities that would contribute in improving revenue. But costs were already at a point where if these were streamlined further would affect the quality of their service without significantly contributing to the bottom-line.
I asked Joe if he had thought about outsourcing.
He said that he did but he was not sure how to go about it. Joe attended the networking event to learn more about outsourcing and meet prospective service providers. I introduced myself as a third party service provider and gave Joe an orientation on what outsourcing is and how it would help his company meet its goals.
Outsourcing services advantages
- Lower costs – Outsourcing was designed primarily to lower costs of business by taking advantage of economies of scale available in another region. The hourly cost of business in the United States can range from US$92 for conventional work to US$500 for more specialized industries. If a company from the US outsources back office or support services to the Philippines, it would only cost US$9 to US$12 per hour. If these are specialized services, the range would go up to US$25 to US$35 per hour. The comparative advantage found in the Philippines is in the cost of labor. The average wage rate for an outsourcing agent averages US$2.45 per hour. In the US, the average wage rate is US$23 per hour.
- Improve productivity – An overlooked benefit of outsourcing services is its ability to contribute directly to productivity. By outsourcing its non-essential tasks, a company can drive more resources to functions that relate directly to revenue generation. Second, a company can use the cost savings earned from outsourcing to further shore up its resources to support revenue generating activities.After Joe’s company green-lit the outsourcing project and signed the service agreement, I discussed the plan in detail with Joe. Included in the virtual call was Ricky an owner of an outsourcing company from the Philippines. I had worked with Ricky before and was confident of his ability to bring together a team capable to managing all the outsourced tasks and responsibilities.Joe’s company would outsource the following services to Ricky:
- Back office operations
- Customer service
Joe employed 3,000 people and shared that it costs him US$200,000 a month to maintain accounting, human resources and IT. Ricky’s project fee to manage these functions for Joe was US$90,000 a month which would translate to an actual savings of more than 50%.
Ricky’s customer service framework was designed not only to retain markets but to create new ones. My team of virtual assistants would be integrated into the customer service framework to further bring down costs and improve productivity.
A Virtual Assistant or VA is a person contracted to do a specific set of services and plies his or her business online. Virtual Assistants are freelancers who cover their own expenses for rent, internet, telephone and power. The cost of hiring a VA varies from US$7 to US$10 per hour if they are based in the US and around US$4 to US$7 if they are sourced from the Philippines or India.
The customer service framework would include the two components of Inbound and Outbound support:
a. Live call-in
b. Chat Support
c. E-mail Support
a. Lead Generation
b. Appointment Setting
c. Digital Marketing
d. After Sales Surveys
Joe’s company did not have a customer service department. It hired secretaries and office assistants to manage the day-to-day business matters. Joe was advised that having a customer service department would make work more efficient and address more issues expediently.
“In business, time is an important commodity. Time spent unproductively is an opportunity that could be capitalized by your competitor.”
Joe admitted the company had been remiss in addressing customer related issues as well as concerns from their distribution network and these could be factors that accounted for the decline in profits. The objective of inbound support was retain the company’s market by immediately attending to their concerns and arriving at a resolution at the most expedient manner.
Outbound support had three key objectives. First, it would build Joe’s network through a system of prospecting and generate leads. Second, the team would work to convert these generated leads into sales by setting appointments for the company. Third, the team would solicit valuable input and feedback from customers on how to improve service and strengthen relationships.
Ricky suggested that customer service be managed by my team of virtual assistants. Joe had a limited budget for customer service but it did cost them US$40,000 per month to cover the salaries and benefits of the secretaries and office assistants. My proposed budget for Joe was US$22,000 per month for a team of 16 virtual assistants working five days a week. Ricky’s IT team re-worked Joe’s website to include chat support and linked it to the company’s social media accounts for my team to manage. For added value, we included personal assistant services to Joe and his executives.
In addition to improved savings, customer service team would assure Joe continued patronage of his company. The customer service team will also help Joe’s efforts in building new markets.
We just renewed our contract with Joe’s company this time for two years. The arrangement was a success by improving Joe’s bottom-line not just through cost savings but additional sales.