Dec 2017

Offshore labour firms are not your friends

Offshore labour firms are not your friends

By: Odyssey Outsourcing
Tags: hidden fees, offshore labour, Philippines

As the Philippines market matures, we’re seeing that the offshore labour model continues to challenge Australian accountants in terms of actual productivity benefits.

The dominant offshore model is still the offshore outsourcing model, where the risk and responsibility is fully transferred to an overseas provider.

But at the moment, we’re seeing massive competition amongst the offshore labour providers, and the squeeze is being put back onto the Australian accounting firms.

The offshore provider is not your friend.

The offshore provider is incentivised to provide workers, and to encourage you to hire more workers.

To that end, they’ll usually entice you to “get some skin in the game”, by requesting a “finders fee” to find the staff, by encouraging you to visit their operations, then invite your new staff down to your office in Australia, whilst at the same time paying for their expenses. We’ve heard plenty of stories of Australian accountants who are $10,000 in the hole and trying to make the money back.

However, once you’ve swallowed the bait, the offshore provider encourages you to create (pay for) an environment that allows retention of the workforce, even though you are usually paying a “seat fee” that is supposed to cover this environment.


  • Invite the offshore staff member to visit your office, in order to encourage engagement. Then you should delegate a different staff member each day to look after visiting staff!
  • Give the staff Welcome packs upon arrival in Australia, with local Australian produce and goods
  • Treat visiting staff to a local experience, by taking them out somewhere nice.
  • Ensuring visits for training and support are regular (to and from local country)
  • A going home pack to the Philippines pack – gifts for other colleagues (e.g. key chains, koala’s, souvenirs)
  • Celebrate birthdays and cultural days (e.g. Melbourne Cup) . Offshore staff then not only have local holidays, but also experience Australian holidays!
  • Have end-of-year functions
  • Provide pre-paid mobile and cash cards, even though this is usually covered in the “Seat Fee”
  • Team-to-team bonding activities. Sending your offshore staff to resorts for team building!
  • Retention awards – 2nd year anniversary, complimentary lunch at the cafeteria after a year of service
  • One provider suggests after the 2nd year anniversary providing a month-long vacation leave..

Certainly it is in the best interest of the offshore provider to encourage you to provide better conditions than are experienced in other offshore providers. This allows for better retention by the offshore provider.

However, this calls into question the purpose of the “seat fee” which is supposed to include the appropriate working conditions.

Only time will tell when the Australian accounting firm pushes back against this business model.

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