To Outsource or Not?

It’s not just about cutting costs. Hawai‘i outsourcing companies provide expertise in preventing cyberattacks, complying with laws, hiring the right people and more.

Deloitte’s 2022 Global Outsourcing survey called on 500 business and technology leaders for insights into why the outsourcing industry continues to grow. Cost savings remain a major driver of why companies depend on outsourcing, but an increasing reason is companies’ inability to find the employees they need to keep some functions in-house.

According to the companies that Deloitte surveyed, the top areas of outsourcing are cybersecurity (81% outsourced those functions), IT (77%), legal (64%), taxes (61%) and HR (57%).

To know if outsourcing is the best fit for your company, the first step is to understand what it would look like.

Ben Godsey, CEO of ProService Hawaii, says some people have a misconception of what HR outsourcing really is.

“Once they know and understand it, they oftentimes adopt it because they say, ‘Gosh, I’m trying to do these things. It’s taking up my time, it’s taking up my key managers’ time. We don’t understand all the rules, the rules keep changing. It’s getting more complex every year. We make mistakes, our employees are unhappy,’” Godsey says.

He says ProService has experts in all areas of HR and can also help with specific needs while remaining cost effective.

Another major local outsourcing business is Altres – parent company of Altres Staffing and SimplicityHR. Debbie Padello, Altres’ director of operations, says SimplicityHR helps business owners focus on their core businesses – whatever those businesses are.

“Say you’re a doctor. You go to school all these years and you become a doctor. You didn’t go to school to become an employer,” Padello says. “There’s so many requirements, from legal compliance, HR laws, taxes, payroll.”

“It’s more simple to have an expert like us do the employment administration, and then they can run their business.”

Some companies replace their entire departments with outsourcing; others use it to supplement their in-house teams.

Connecting to Tech Leaders

Another benefit of outsourcing is having a connection to experts in rapidly changing fields like IT and cybersecurity – so it’s not surprising that those were the two most outsourced functions in the Deloitte survey. Pacxa helps its clients in business, nonprofits and government maintain and modernize their technology infrastructures and reduce cybersecurity risks.

President Kelly J. Ueoka says Pacxa has formed partnerships with major tech companies like Oracle, Microsoft, Hewlett Packard Enterprise and SonicWall to provide hardware and software solutions for its clients.

“It’s really about providing the expertise to pull a myriad of these leading-edge technology vendors together to help (clients) modernize IT infrastructure, reduce overall cyber risk, increase productivity and efficiency,” Ueoka says.

The latest service that clients want from their IT experts is help learning and dealing with the challenges and benefits of using AI. That need will almost certainly increase.

“I think that within the next 12-24 months, we might see an influx of companies having to adopt AI because they will be getting attacked by AI,” Ueoka says.

There are so many cybersecurity aspects to oversee that once AI is used for cyber-attacks, it may be more than what humans can handle, he says. That’s a challenge that Pacxa and its partners are gearing up to face.

It’s Hard to Find Talent

Chamber of Commerce Hawaii CEO Sherry Menor-McNamara says outsourcing is one solution to a huge challenge faced by local businesses: finding the right workers to fill positions.

The chamber has outsourced most of its accounting and HR needs since 2000, which Menor-McNamara says frees up resources to help local businesses, continue advocacy efforts and engage in activities that support the chamber’s mission.

And for companies that retain their own HR departments, Altres can serve as a “toolbox” for their specific needs, Padello says. “We customize our service to our clients.”

After decades of low inflation, Godsey says, Hawai‘i has seen price increases in the past three or four years that many people haven’t faced in their professional lifetimes.

“Employers have to work to be more efficient to stretch their resources to be able to deliver at a price point that their customers can afford,” Godsey says. Outsourcing can help reduce those costs.

“Before Covid, the prevailing view for local employers was, ‘Why would I outsource HR?’ Now, it has turned into, ‘Why wouldn’t I outsource?’ Before Covid, everyone wanted their HR team in the office,” he says. Now, “we are our clients’ HR department. We just don’t happen to be in their office. … And now it’s much more like, ‘Of course that makes sense.’ ”

Contact Center, Not Call Center

Outsourcing is not limited to HR and tech.

“When you talk about call centers, normally you’re talking about telephone,” says Max Tsai, owner and president of TC Kokua, a Maui-based customer support company. But instead of a call center, his company operates a “contact center” because it covers all forms of communication, including telephone, online chatting, email and SMS texts.

His clients include businesses from all sorts of industries in Hawai‘i and on the mainland.

“In this day and age, if you are calling Hawaiian Airlines, they’re in the Philippines,” he says. “I think our big differentiator here is being local. That’s our biggest value proposition.”

Godsey cautions against hiring a mainland or international outsourcing company because it may not know Hawai‘i’s unique state and county requirements. “If you trust a mainland company, they’re probably going to have you out of compliance with local rules and regs.”

On top of local knowledge and expertise, he says, there’s ProService’s “care and commitment and desire to do right. I don’t think you get that, even if you have all the expertise, if you’re just handling things from the Philippines.”

Both Godsey and Padello stress that building trust with their clients is essential.

“People need to be able to trust us,” Padello says. “And that all falls back on our people and the culture in our company, and being able to make sure that we take care of our people so that they can take care of our clients and that they’ll stay.”

Godsey says: “At the end of the day, trust is simple to talk about but it takes a lot of hard work to earn. I’ve run the business for 20 years. In the early days, we didn’t have a great reputation for consistently doing what we said we were going to do but we built that over time.”