Executive Interview: Horst von Wendorff from VKWInc.com

Horst of VKWIncHorst von Wendorff founded Virtual Knowledge Workers Inc. in 2009. VKW Inc helps companies outsource scheduling, customer service, telemarketing, social media management and more. We asked Horst about his experiences while operating a BPO in the Philippines.


1. Tell me more about VKWinc.com
VKW was an academic pet project of mine during my MBA studies – more of a learning tool than a company that I actually intended to launch. It was 2010 when I graduated during the financial crisis in the US. I applied for jobs but there were simply none. VKW became Plan B. If nobody gives you a job, you employ yourself. I would hire myself, certainly; and so I did! VKW started signing clients and with that Plan B became Plan A. I became an Entrepreneur more out of necessity than inspired choice. And with that VKW was born.


2. Why did you choose to setup in the Philippines? What are the benefits of the Philippines?
I looked at various countries including India, China, and Eastern Europe. Philippines stood out for the US-Market. With a little training, workers can become accent neutral, in-tune with US culture, and, above all, there’s strong pool of quality talent. It’s an HR dreamland.


3. Who is your target customer?
We’re very friendly to early stage companies. We have client friendly cancellation terms, no minimum headcount, and no setup fee. We are invested in the client as much as the client is invested in us. In fact, many of our clients started with just one agent and now they employ teams of 5 or 10+ just a year or two later. We’re here to earn mutual trust and with that grow with our clients, together.


4. What services do you offer customers?
Our core competencies are customer service, content moderation and sales-support. We have interesting case studies posted on our website. We’re happy to let you look over our shoulders. All our agents are equipped with a webcam. Come talk to us. We’re open.


5. What pitfalls should be avoided when operating in the Philippines?
During my MBA studies, I learned that there’s a disconnect in the BPO market. BPO providers sell on price, but the market is asking for Quality & Trust. The trend in outsourcing is to find reliable quality labor. Buyers of BPO services don’t want to buy employees or time-sheets, they want to buy results and key performance indicators for their business processes. Yet, the BPO market sells on price as if contact center agents are a commodity item. $6/hour, $5/hour, $3/hour. Offering an ever lower price does not breed Quality & Trust.

VKW is not a discount provider nor do we aim to be one. We’re good at attracting and retaining quality workers and make them available to our clients.

6. For other foreigners coming to setup a BPO in the Philippines, what advice would you give them?
While Filipinos have a good understanding of US culture, that doesn’t mean you don’t need a good understanding of Filipino culture.


7. Regarding PayrollHero, why did you choose it for your BPO?
PayrollHero was built by a BPO company to solve their own payroll problem. We simply have the same problem. PayrollHero is a perfect fit for us.


8. What is your favorite feature or benefit of PayrollHero for you?
Great customer service!


Executive Interview: Nicholas Sinclair, President of the Outsourced Accountant

As part of a new series on this blog we will be profiling PayrollHero users to learn more about them, their business, where they go to learn and best practices.

Nick-Sinclair-photoNick Sinclair is the President of the Outsourced Accountant. The company is a BPO in the Philippines that helps accounting firms in Australia and New Zealand improve their client value added services. We spoke to Nick about his experience in the Philippines.

  1. Tell us about your company.

The Outsourced Accountant is dedicated in helping Australian and New Zealand Accounting firms identify their current workflow blockages and employ the right team on a full-time basis to help them become proactive in client value added services. We are a BPO focused solely on this niche and our offering is unique and not like traditional BPO offerings.

  1. How and when did you realise the need for Australian businesses to outsource accounting?

I visited Manila for an Entrepreneurs Organization board conference approximately 3.5 years ago and I went and spent the day with Mike O’Hagan and saw his operation there, as well as a range of other businesses. This then got my mind racing and I then thought how I could flip my accounting and financial planning business to become more efficient and allow my Australian team to actually add value to clients. This then grew into a business when others in my industry saw what we were doing and didn’t want to reinvent the wheel so we started an outsourcing business based on what frustrated us most with the providers we used in Manila. I understand that most accounting firms are buried in paperwork and process-driven tasks, causing them to lose focus on adding value to clients. We want to help these firms get back to client facing work by having an offshore team who can take care of all the compliance and administration work.

  1. Where are you headquartered?

Our office in the Philippines is situated in Clark Freeport Zone, while our headquarters in Australia is located in Queensland.

  1. How many locations do you have in the Philippines? Why did you choose this location versus other locations that are perceived more conventional (i.e: why Clark over Manila)?

Just one inside Philexcel Business Park in Clark.

I prefer Clark over Manila because it’s a lot quieter and less congested environment. A lot of our team members who live within the region have already worked in Manila, since it’s obviously one of the biggest work environments in the Philippines, but they wanted to come home and live with their families. Here in Clark, it’s easier to get to work as people will not be sitting in traffic for hours. We’re very much about work-life balance with our team over here so we want them to spend more time with their families.

Moreover, Clark is accessible to expressways, has its own international airport, and enjoys a variety of amenities and government incentives. We also have a talent pool of close to 8 million people with very little competition (compared to Manilla and other regions).

  1. What was the biggest roadblock to establishing yourself in the Philippines?

The biggest roadblock was the time that I had to spend being in the Philippines, being away from the family and missing out on school events of the kids as I was constantly away.

The biggest roadblock to setting up in the Philippines is the legislation and getting the right advice as it isn’t straight forward and you need to register with multiple departments and each department needs the others approval. There are lots of experts who charge anywhere from $1500 to $10,000 AUD to provide this advice but a lot of the time they dont know what they are talking about. We struggled until we found a local lawyer, who is well connected and has a wealth of experience and endless connections. The other challenge is no one tells you all the things you need to have to even operate, things like Workplace health and safety approval, fire approval, a company nurse when you hit certain levels of staff. There is a lot more involved then get an office, hire some staff and your off.

6.  Was there an unexpected outcome (positive or not) from moving into the Philippines?

The business we now have was an unexpected outcome. We originally did this to service our own firm’s needs, but we have since grown to 180 team members in less than 18 months and I have now sold my accounting and financial planning business to focus on our outsourcing business.
Outsourced Accountant BPO

  1. How do you see this industry changing over the next few years?

I believe the industry is going to go through continued growth, but more BPO’s will start to niche in specific industries rather than be generalist BPO’s as this market is starting to become flooded with new BPO’s.

  1. What were your evaluation criteria before you chose the Philippines? Were there any other countries you were considering?

We had tried outsourcing in India, Vietnam and in Australia (and failed in all). The Philippines wins hands down.

The Philippines has a strong english culture, a strong accounting workforce and an even better number of accounting graduates coming out each year (its one of the main degrees Filipinos complete). The time zone suits perfectly as its only two hours behind for all Eastern states of Australia and the same time zone for Perth.

  1. What do you read to keep yourself up to date with your industry and the clients you are serving?

I don’t get too caught up in the BPO industry information, I focus on what is happening in the accounting industries in Australia and New Zealand. We focus on knowing our client, and talking to them regularly so we can continue to tailor our offering to meet there needs. We aren’t a traditional BPO. We also read a lot of industry information, specifically from industry thought leaders like Rob Nixon.

  1. What advice would you give a businessman moving into the Philippines, that you wish you knew before moving to the country?

It isn’t as easy as some people make it out to be (or it looks to be). I have had so many people say that we have had massive growth and made it look easy, but they don’t see all the work that goes on behind the scenes to deliver what we do. The Philippines isn’t a straight forward place to operate, its very paper based and not technology based which makes it hard. I also would say don’t employ an expat that hasn’t had experience managing a business the size you want to grow to. I have seen many expats that couldn’t manage 50 people in Australia but are managing more than this in the Philippines and failed due to lack of experience. There is plenty of local talent that have significant experience, so look locally (we just hired a gun Country Manager that has over 20 years’ experience managing large operations and he is a gun).

  1. What results that you delivered to your clients are you most proud of? 

The growth of our business is testament that we are on the right track. 60% of our current growth is from existing clients putting more people on. We have plenty of case studies on it working for our clients. The comment we get regularly is our team are world class and pick it up quicker than our clients expect them to.

  1. How has PayrollHero helped streamline your business? 

First of all, it made timekeeping more convenient. It has let us process calculations accurately, and kept us compliant with tax regulations. It also made it easy to manage and generate reports for government statutory benefits since the required forms are already provided and automatically filled.

The big benefit is our leadership team can login to the system, anywhere in the world to see the stats at a quick glance. The system has allowed us to focus on time and attendance and manage this as one of our business’s key strategic goals, and with tardiness being less than 1% late per day and attendance at 98% average for the year to date it is working (compared to the industry average).

  1. How did you run payroll before you found out about PayrollHero?

Before, we used biometrics door access control system for timekeeping, and we did payroll processing with excel spreadsheets. PayrollHero has certainly sped the process up and made it significantly more trackable and accurate.

14. What convinced you to choose PayrollHero over other payroll software     vendors?

The unique TAS (Time, Attendance and Schedule) feature wherein team members have to take selfie photos to clock-in and out plus the good client experience (contact persons are accommodating; quick response time on queries raised) from inquiry to sign-up stage made us decide to go for PayrollHero.

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5 Reasons Why Australian Businesses are Outsourcing to the Philippines

Australian's Opening BPOSOver the last 10 years, business process outsourcing (BPO) centres have cropped up all over Asia. Two countries have emerged as leaders in the BPO sector: India and the Philippines. While Bangalore city in India ranked first in 2014 for top outsourcing destinations, Manila ranked second. The Philippine BPO industry is likely to do extremely well and possibly overtake India soon.

Australian businesses have caught on to the trend. There is a growing number of companies that are looking at the Philippines for their offshoring needs. Australia is in a particularly favourable location because of its proximity to Southeast Asia. There are a number of reasons why Australia gives preference to the Philippines for outsourcing.

Inexpensive Labour

Common knowledge suggests that labour is cheaper in Asia. But to put that in perspective, an experienced BPO agent in the Philippines earns USD500 a month whereas the equivalent in Australia earns USD2700 a month. Back end operating expenses fall by a magnitude of 10 simply by offshoring. With wages rising in India, the Philippines looks like a good candidate for offshoring.

Literacy Rate: 97.5%

97.5% literacy rate is a staggering number. To put this in perspective, India stands at 74% and China at 88.6%. As a leading country in the BPO industry in Asia, this is very suitable for Australian businesses because of ease of communication with locals. The Philippines has the third largest educated workforce in terms of absolute numbers (after India and China).

Close to home, similar time zone

The Philippines is one of the closest countries to Australia.It is just a 6 hour flight away. Australia also enjoys the benefits of sharing a timezone with the Philippines. This wipes out the hassle of a mismatch in working hours for both countries.

Cultural Similarities

The Philippines was colonized by the Spanish for nearly 375 years until the Americans came along and colonized the archipelago for 48 years till 1946. The lifestyle of the Americans left a deep mark on the Filipino culture. Culturally, they are similar to most western nations, which is an anomaly in southeast Asia. The similar background makes for a negligible culture shock for Australian businesses. The friendly nature of Filipinos makes this the perfect place to set up customer service outsourcing.

Strong Government Initiatives

The government has been promoting the BPO sector for a few years now, through training progammes for Filipinos and financial incentives for companies. The financial incentives include Special Economic Zones, tax holidays for 6-8 years, import and customs duty waivers, reduced tax after the tax-holiday ends (down to 5%) and more. The government is also making efforts to improve infrastructure. Although the progress has been slow, internet connectivity is improving. The country does well in terms of office spaces. Around 80% of office spaces are occupied by BPOs.

There are a number of ancillary businesses that cater to Australian businesses that want to outsource to the Philippines. One of them is Mike’s Manila Tours by (you guessed it) Mike O’Hagan. Mike gives tours around the Philippines for businesses who need reliable information from someone closer to the ground. We spoke to Mike and featured him on our blog. You can check out the post here. We have also published a series on Australian businesses that outsource parts of their business to the Philippines. We have PANALITIX, ServiceSeeking Manila and Wint & Kidd Inc telling readers about what you need to know before taking that crucial step of moving to the Philippines.

If you would like to learn more about setting up in the Philippines with PayrollHero feel free to reach out and one of our team would be pleased to speak further.