Considerations When Outsourcing With Overseas Labor

The other day I had a call scheduled with a potential client. The subject of the call would be about a rather mundane task of data backup. Instead, the call morphed into a cautionary tale of international deceit and fraud.

The potential client I spoke with, let’s call him Fred, provided some background about his company. A real estate billing management, call center, that had grown 3x in the last several years. Business was good. He had no US employees; every employee was located either in the Philippines or India. His COO is in India.

Interesting premise. Fred completely outsourced his employees overseas. Keep the overhead low, find English speaking call center employees who work from home, provide them with VoIP phones and laptops. Start taking calls.

Things were rolling along until one day, a prospective customer (let’s call him Rob) Fred hadn’t heard from in a few weeks reached out with a strange question. Rob asked Fred if he had heard from his COO about getting on-boarded as a new client. Fred said, that no, he had not heard anything from the COO. Rob mentioned that he was in the process of being onboarded and wanted to reach out to Fred about the process.

Fred was baffled, he asked Rob if had any emails about the onboarding process. Rob then sent Fred several emails from the COO and another employee, who was CC’d on the message. At this point Fred started to get a bad feeling in the pit of his stomach.  He felt something was off. There was no logical explanation, in Fred’s mind, for these things to occur.

Fred was right.  He confronted the COO on a call and asked him about the email and onboarding Rob. The COO responded that he had indeed onboarded the perspective client… his own company! Fred later found out the COO had built a “shadow company” that looked and acted just like Fred’s company.

This “shadow company” took the name of Fred’s company and just added the world “Global” to the end of it. It had a website that looked almost exactly like Fred’s. It even was built and designed by the same company, in India, that built Fred’s website.

It seems that the COO was all too happy to help Fred get the systems up and running. He had good reason to do this, the COO had set up all the licensing in his name. However, the billing was setup in Fred’s name.

Fred hired attorneys in India, the Philippines and in the USA.

Going into the call, I really had no idea it would take such a dramatic turn. To say I was surprised would be an understatement.

With further discovery, I learned not only did the COO license the email server, but he also registered the company’s domain name. In the virtual world, this is a major problem.  It basically means that the COO owns the company’s website name and everything that goes along with it.

Fred wanted to know if there was any way we could wrestle back the email server from the COO. Nothing else was important to Fred, only the email was valuable. Fred was paying for the email, cloud storage and CRM software for the company. He thought that because he was paying for the licensing, it was licensed to him.

In this case, the COO had all the cards, without access to the domain name and administrator access to the email servers, Fred was out of luck. He would have fight it out in court.

Here lies the cautionary tale.

The COO had taken advantage of Fred’s lack of technology acumen and understanding. By placing trust in someone you have never met, in a country on the other side of the world, you take a huge risk.

Yes, hindsight is 20/20. However, let’s get in Fred’s initial mindset. The COO was the perfect partner. He was tech savvy, had connections to find qualified labor in Asia and had a background in call center operations.  This COO would allow Fred to build a business model that he could scale quickly. On paper it made a lot of sense.

Until it didn’t. Businesses today are reliant on technology, especially business that are built to scale quickly. Building a business, especially one that relies on technology, means you must have good consul; a trusted partner with the technology experience that you lack. (There are a lot of technology consultants to choose from, however it’s important to know that most consultants specialize in certain areas of technology. Ex- a web design company can build a website, however, don’t ask them to help troubleshoot slow wifi).

Ask business associates, tenant reps, bankers, or friends for a reference to a good IT services company. If all else fails, search the internet for a local IT services company. That way you can meet with them, ask them questions, and make assessments to see if they are a good fit.

Over the years, I’ve worked with many rapid growth companies. A good number of these companies came to me for assistance, because they underestimated the need for well-designed infrastructure and proper technology governance.

These companies focused on their core business, which is understandable. However, they all failed to understand that technology powered every aspect of their business. When the technology can’t keep up with the growth, business processes become muddled and inefficient. Companies that get in this position often find it an expensive and time-consuming process to right the ship.

If your business doesn’t work with an IT consultant, I recommend that you start to determine what you don’t know. Write a list of the technology you currently use or think you need for your business. In many cases, that list will be about 30%-50% of what is needed. Even with the basics, you can start to have discussions with a prospective technology partner.

A technology partner will do a deep dive to understand your business and its objectives. They will do much of the heavy lifting of finding vendors, software, infrastructure, etc. that will run your business. The consultant will gather bids from various vendors, listing the strengths and weakness of each vendor. They will queue up all the vendor contracts and agreements for you to execute.

Remember, technology consultants are experts in this field, they know more about technology than you do, or you ever want to. Taking this step will allow you to focus on growing your business

I was a CIO. One of the many duties I had, was vendor management. Some vendors could be challenging to deal with, even for a technology professional. I realized that a business without a CIO or IT Manager could find a lot of difficulty navigating the vendor sea. I decided to leave the C-level role and founded TechNoir Solutions with the intention to be a technology advocate for my clients..