Feb 26, 2024
Startup Growth
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 min read

Building your startup with $5/hr staff

$250B. That’s what the outsourcing market is worth today, and it’s continuing to grow by 9% per year. So, what is outsourcing and why should every startup leverage it?

I’ll start with a short story. Back in 2008, I used to be a YouTuber reviewing mobile App Store games, and the demand was crazy for businesses wanting to work with me. I ended up hiring an assistant at $5/hr from the Philippines, who worked full-time on handling business inquiries and doing cold outreach. I was 14 at the time, and was able to hire a full-time assistant. This would not have been possible if they were in the U.S. Before anyone mentions labor standards, it’s important to know that $5/hr is still higher than the average pay in the Philippines over a decade later.

Fast forward to 2022. I started a company - now acquired - to help businesses to do exactly what I did in 2008. I was able to scale this company with 85% outsourced staff from the Philippines and Latin America,

But I’m sure you’re wondering: how can your startup be built around talented staff at $5/hr? Let me show you how.

What roles to outsource

The big secret to scaling with outsourced staff, is to first pick the right roles, which many get wrong out of the gate. Most of the talent pool at this hourly wage range will not be making CEO-level decisions or speaking with your VIP clients who spend $5M per year. However, the roles / functions that I’ve seen work best in this capacity are below:

  • Operations Managers
  • Project Managers
  • Executive Assistants
  • Social Media Managers
  • Community Managers
  • Marketing Coordinators
  • Sales Assistants

You want to pick roles that have the following attribute: structured. Rather than picking roles that require massive daily decisions, it helps to pick roles that are built around a set list of tasks. E.g. In the case of a sales assistant, their primary tasks would include sending call reminders, follow-ups, invoices, reporting on funnel metrics, etc.

Tips on hiring global staff

I’ve found that many startups believe that global hiring is best left to the giants like Amazon, who have large call centers in other countries. While it’s not a walk in the park to hire staff based internationally, it’s definitely worth it for the savings and the newfound ability you’ll have to scale.

When hiring global staff, below are the prominent methods:

  1. Direct (i.e., Upwork)
  2. Headhunter
  3. Agency

I’ll graph them out with cost and safety in their respective axes, and explain.

Blue = direct, black = headhunter, orange = agency.

The lowest cost to hiring direct is surprisingly, not the safest, especially for first timers. Many get a bad taste in their mouths for hiring global talent, because they start with this method and get burned by hiring someone incompetent or unreliable. I’ve seen this time and time again. It’s not impossible to hire through a service like Upwork, and luckily, they act as a middleman for payments. But just be wary that it could take longer to find truly great talent using this method.

Second, hiring a headhunter to find global talent for your startup, is much safer than direct and only marginally more expensive. The fees for a headhunter are typically 10% of the yearly salary of the individual being hired. So, for someone at $5/hr, it would roughly come out to be a $960 fee. With this fee, you get a headhunter who is experienced in knowing what to look for with talent from various countries. Oftentimes, they’ll include a replacement guarantee if you’re not satisfied. I believe this is the best method to hire global talent.

Third, you’ve got agencies that will help source talent and provide a much more hand-holding experience throughout the relationship with your staff. Outside of purely sourcing talent, these agencies will handle training, staff payments, have staff backups ready, and various other benefits. With this comes the highest cost to hiring, with you typically paying a 2x premium on your staff’s hourly wage.

What to look for with outsourced staff

Whether you choose to hire directly, or with an agency, there are two big items to look for in the talent you pick.

I’ve overlooked this various times and wish I had known this earlier on: spoken English does not translate to written English. I’ve hired talent who seemed perfect with amazing spoken English, only to find out later on that their writing skills were not up to par. I found myself having to spend multiple hours correcting their work, which defeated the purpose of having an assistant in the first place. Even if the role you’re hiring is more focused on numbers and spreadsheets, written English will always bleed into team communications and can potentially cause issues down the line with other tasks added onto their plates.

Equally important to vet, is their reliability and how long these individuals have been in their latest roles. It seems obvious and something you’d check for when it comes to local talent, but it might not be top of mind when the role isn’t as significant. I’ve seen a few startups hire global talent with extremely low reliability, leading them to restart their search multiple times after staffers ended up taking another role shortly after being hired.

Culture with a global team

Just because the talent you hire overseas isn’t physically present with you, and are getting paid lower than their U.S. counterparts, it’s important to make them feel embedded in your team. It’s sad to say, but I’ve heard stories of those who treat their global employees as less-than. This is an unfortunate reality, and a losing formula.

If you want the best work output and individuals that care about your mission, make them feel important and treat them well. Even though the tasks they’re handling might be structured, ask them how they feel things could be improved and for their feedback regularly. They are humans with opinions, after all. I personally make sure to start every meeting with any staff, whether local or global, asking about their personal lives before diving into any work. The big takeaway here is that global talent should be treated equally, and their work will shine.

As an added bonus, invite your global staff to your Zoom town halls or events that your startup holds. Make them feel welcome and a part of your startup.

Take it from me – someone who built their latest startup and sold it eighteen months later, with a team of forty that was 85% composed of global talent. It’s not only possible, but the smartest tactic to scale your startup. If you’re looking for more of my tips and tricks to growing your startup, subscribe to this newsletter with the conveniently located button below.

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