The MSP Success Thought Leaders Program invites leaders
in the small business IT/MSP industry
to share their insights and advice with MSP Success readers.
It’s tough to be profitable AND competitive in the world of managed IT services. At some point in time, we all end up in salary/benefits wars with competitors in our markets as well as with corporate IT departments, municipalities and big tech. We’ve all had recruiters actively approach our technical staff and try to lure them away. They do this because, in many cases, the best techs are actively employed and not on websites like Indeed and Monster looking for the next job.
We all know that corporate IT, super MSPs and mega VARs will often offer salaries and ascension plans that might not be possible, let alone affordable, for the average sub-$5 million MSP. I once had to increase a lead technician’s salary to retain them when a big tech company made them a big salary offer. It wasn’t that they weren’t worth it or that the company did anything unethical, they just had deeper pockets than my company did.
So, is offshoring the answer for finding Level 1 technicians (who solve 70% of service tickets, according to Service Leadership) or even higher-skilled technicians and project managers at a price MSPs can afford? I explored this question back in 2020, when I had a client account manager position go unfilled for six months, after letting go of a “bad fit” US hire previously.
It has worked out well for us. We found candidates who had worked for major SaaS and tech companies to fill account manager roles and other client-facing positions. We have since added offshore and near-shore (think Mexico/Canada, etc.) staff in service, sales and marketing roles. They are valued members of our team and we treat them as such, just like our local and remote US staff. We have had to consider US regulations for nationality/citizenship when assigning any resources to client accounts, but overall the experience has been so positive I expect we’ll never go back to just US-based staff.
If offshoring might be in your future planning, here are some tips I gathered while exploring this idea with a variety of staffing companies.
Offshoring Is Not The Same As Outsourcing
First, it’s important to understand the distinction between offshoring and outsourcing. Outsourced labor does not work for you. The outsourcing company has the relationship with the worker and, in most cases, they decide who you get. They might give you some people to pick from, but these folks are likely on their bench already.
With offshoring, the vendor functions as the recruiter and payroll/HR department for your offshore team. Based on your requirements, they present candidates for you to interview and make an offer to.
It’s Not Just About Cost
Cost isn’t the only reason companies offshore. According to Erik Reid of Virtustant, an international staffing company, “I think the most important thing is the quantity of high-level talent around the globe. The world is much larger than just the 172 million Americans between the ages of 25 and 64. Offshoring grants you access to highly educated and diverse talent that may fit your business needs better.” Additionally, there are times when the demographic you serve may not be well represented in your locally available talent pool, so additional language skills available offshore, where perhaps they are natively spoken and written, make a lot of sense.
I’ve heard from peers who have found offshore staff through open position posts and have decided to hire them and then pay them directly through payment apps like PayPal, Venmo and Cash App. However, be aware that in some cases, it’s actually illegal to employ someone in a country where the employer doesn’t have a corporate presence.
One such country, the Philippines, is a common location for finding technical, marketing and finance staff. My company has offshore staff there, and as we have no corporate presence in the Philippines, we partner with a staffing company that does. We do the same with other partners for all our international staff.
According to Chris Van Vladricken of offshore staffing company ScalableOS, when hiring direct, the required taxes may “not [be] paid locally by either the employee or the employer. The local labor laws are not adhered to, and most importantly you have no enforcement capabilities with the employee whatsoever. This creates huge risk and liability for the MSP; the risk likely goes up further if their clients knew they had unbound, illegally employed foreign workers in their systems. Even insurance companies may take issue with certain claims as the information comes to the surface.”
Therefore, it’s critical to partner with the right company when deciding to not go direct (assuming you don’t establish a local presence). Some less scrupulous vendors may get between you and your offshore staff. They may move them to other accounts, and they may even not be financially stable, causing your offshore staff financial hardship or even putting them out of business.
Work From Home Prepared Us
Work from home should have given each of us the skills needed to manage a fully remote staff member. As Peter Bell of offshore staffing company Techno Global Team puts it, “If the job can be done between the chair and the keyboard, it can be done offshore.”
If offshoring is not something you want to pursue, Paul Cissel, one of TMT’s Experts in Residence, often states that MSPs need to be recruiting and training organizations. That is so true. The mindset of “always be selling” must be joined with “always be recruiting” as one of the main tasks that leadership engages in.
However, you may want to consider offshoring. As Bell puts it, “You don’t have to offshore, but you also don’t have to be in business in the next few years either. Whether you like it or not, we are a global economy, and you need to find a way to stay competitive.”
