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Offshore labour hire has become a very popular solution.
Offshore Labour Hire
To grow your practice, you need staff. Without staff, even with the best technology, sooner or later – all by yourself – you will hit a ceiling. To scale and grow, you need people.
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So you have options, eighteen to be exact but not all variations make sense. To cover all your options, you basically ask three questions.
Question # 1 – Whose Employees?
Who legally employs the people who do the work and who manages and trains them? You have three options.
1 – Your Employees
You can hire your own staff, your own team, your part-time and full-time employees plus casual employees, possibly supported by contractors during peak times. They are all your people, there is a contract between you and them.
2 – Outsource
Or you can outsource the work, so you engage another business for their people to do the work. You just tell that business what end result you want to see, but the rest is up to them.
They train their people, they supervise them, they manage them and then deliver the result to you that you requested. You basically just buy a service.
And this pure outsourcing you might do for SEO work, social media marketing, website development etc, but also possibly for SMSF work – there are providers out there that basically offer outsourcing of SMSF work, where you don’t really work with the staff but just get the SMSF Annual Report plus audit at the end. So that is outsourcing.
3 – Labour Hire
But then there is also a hybrid model that has become very popular. You hire somebody else’s staff.
Just like outsourcing you engage another business. Just like outsourcing the only legal relationship is between you and the other business and not between you and the people who do the work.
But you work with those people (who do the work) as if they were your employees.You train them, you supervise, you manage them, you tell them what to do. So like a labour hire, and I know labour hire sounds like construction or farming work, but the basics are the same.
So these are the three options you have. Your own employees, outsourcing or the hybrid in between, labour hire – you work with somebody else’s staff.
Question # 2 – Which Country?
Let’s put outsourcing aside, then the next question is where your people are based. Are they based in Australia or overseas? Whether they are your own employees or labour-hire staff, if they are overseas, this is called offshoring.
For offshoring from Australia, the Philippines are the most popular destination, followed by India. And then there is also Taiwan, Vietnam and Sri Lanka and other countries of course. For us in Australia, East Asia is the easiest to work with, since our time zones are very close together.
For Europe, offshoring destinations are often Africa and East Europe. And then for the US, it is South America, but this is not set in stone. For example, there are a lot of teams in the Philippines who work overnight and in India who works very late to serve the US market, so the time zones are an issue, but not an insurmountable obstacle.
Question # 3 – Whose Office?
And then the third question is whose office are your people working in. Do they work in your office, the agency’s office or in their own home office – so working from home? And this one doesn’t have to be an either – or, you might have a central office for example but your staff might also work from home.
And with those three questions, who employ the people who do the work, where are they based – in Australia or overseas – and whose office do they work in, with those three questions you basically cover all the options you have.
Not All Options Make Sense
Now purely mathematically that gives you 18 options – 3 x 2 x 3 = 18 – but not all variations are practical.
Let’s just focus on direct staff (so people you hire directly) and labour hire (so people employed by others but who you work with as if they were your own employees), so we don’t cover outsourcing (where you basically just buy a service).
And let’s only look at teams overseas, so only offshoring, and not teams working in Australia.
And then for the third question, where they work, let’s cover all three options, your office, somebody else’s office and working from home.
So in this episode let’s talk about labour hire, so people who are employed by another business, but who you treat as if they were your own employees. And then in the following two episodes, we will talk about setting up your own team, so hiring your people directly, without a labour-hire agency in the middle.
We talk with three accountants about their labour-hire experiences. All three have or had their staff working in the agency’s office, so no working from home, apart from COVID of course.
There are providers in the market who offer labour hire for accounting staff working from home, but that is still less common.
The first interview is with Brett Pack of Top Bookkeepers in Melbourne. Brett was actually a front-runner. He offshored very early on to India, long before most of us ever even knew that was an option. It must have been quite traumatic in the end. So bad, that Brett completely turned his back to working with offshore teams.
The second interview is with Nathan Watt of Watson & Watt in Brisbane about his experiences with his TOA staff member. You already met Nathan in episodes 250 and 251 and also in update 27.
And the third interview is with Charlotte Norfolk of Bondi Bean Counters in Sydney. We follow her journey from a fully Australian-based team working in one central office to a fully remote working team with three staff members in the Philippines.
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Disclaimer: Tax Talks does not provide financial or tax advice. All information on Tax Talks is of a general nature only and might no longer be up to date or correct. You should seek professional accredited tax and financial advice when considering whether the information is suitable to your or your client’s circumstances.
Last Updated on 09 August 2022
Tax Talks spoke to Brett Pack, Nathan Watt and Charlotte Norfolk - Bookkeepers, Accountants at TopBookkeeper, Watsons and Watt, Bondi Bean Counters - for more details.
