Top Risks in Running a Service Delivery Operation in the Philippines and How To Counter Them
The first requirement for success is to not fail. Failures are predictable. Most businesses have been tried. Let’s learn from the experience of others, so that we avoid the usual pitfalls.
Advenient.co is entering a partnership with a European company. They handle sales and strategy; we provide marketing technology talent. This is classic offshore service delivery. I cut my teeth in corporate tech back in P&G/HP by running a 24x5 30 person operation servicing a global clientele. That was IT service delivery. This is the marketing technology version of it. And the Philippines probably has one of the deepest experience pools in business process outsourcing.
So I asked this question in a local business group:
I summarize the answers and added my own in this risk register. I scored them and added contingency and mitigation steps.
The showstoppers are the following:
- One-sided contract
- Non-viable pricing (both sides)
- Undiversified client base
- Disagreements between parties
Among these, having an undiversified client base is the biggest risk from our side. Especially if this partnership grows and becomes our dominant revenue source, losing the partnership could cripple the company.
We need to either diversify our client base or share ownership of the company with our partner. I prefer the latter approach. Co-ownership of the Philippine company would also mitigate or circumvent the following risks:
- One-sided contract
- Pricing disagreement / non-viable pricing
- Delayed payment
We will work together in 2021 to prototype the partnership. By the end of the year, I’ll sell part of the company to them (cash or stock swap). If we grow by 5x before the end of the year, I’ll propose to advance the sale. I’ll have to work on the legal solution within the year.
Disagreements between parties is also a key risk. 2021 as prototype year will mitigate this. This will require both work chemistry and trust. Chemistry is not only work personality and culture, but process. Our partners are also a young company. We should help them with evolving their processes.
We need to be more direct and open than Filipino culture prepared us for. This is key to working with Europeans and Americans. This is sort of my native work culture (I also work with the garage door open — this article you are reading is an example), but I need to actively train my teammates and consciously pull our culture toward this direction.
On the financial side, my main guides are ensuring 12 months of operational runway (never forget 2020) and paying the team top salaries. Here’s my benchmark:
In Pinoy Tech? What should your salary and hourly rate be?
“Set and enforce an aspirational personal hourly rate. If fixing a problem will save less than your hourly rate, ignore…
Ultimately, this partnership is founded on our capability in marketing technology / growth engineering. Personally, this means:
- Hiring well
- Training well
- Removing obstacles
I like Netflix’s analogy of work teams with athletic teams. I’m hiring top athletes for the team. My job is to ensure they perform at peak levels (training, mindset, equipment, environment). This is the key to winning, individually, as a Philippine team, and as a bigger global team.
Winning is not only about preventing failures, but maximizing the upside. The next article will be on that.