Outsourcing and How to Evolve Staff Level Roles with Nick Sinclair

Before we jump in, I want to give a big shoutout to the sponsor of this episode, Canopy. Canopy is the firm-wide operating system that helps accountants build a firm they'll actually enjoy working at. Canopy streamlines firm operations, from client management to managing your financials or your firm's performance, they've got you covered. And something I really like about them is you can actually demo their product with an interactive tour without having to sign up for a sales demo. They let the product do the talking because it is just so good. So if you're running a firm or in charge of improving the operations of a firm, go to getcanopy.com and click on the button that says take a tour to check out that interactive demo. Now one more thing before we jump into this episode, following the layoffs at PwC, the Aprio and PS Plus alliances, so PS Plus who got acquired by Aprio recently, got in touch with me bringing forward a whole ton of job openings to help job seekers land on their feet. The Big 4 Transparency talent pool has been very busy this week and I have been trying to make matches between as many candidates and roles as possible. We've already got a few interviews going for some folks who are let go from PwC, but there are a lot more opportunities available. So if you are a job seeker in accounting, go to big4transparency.com slash recruit, fill out the intake, it takes literally two minutes. And you'll only hear from me if there's a job matching your desired criteria. As a thank you for using the service, we've always paid out $1,000 for any successfully placed candidate. But for the next few months, at least we're going to double that for anyone who is seeking a new job as a result of a layoff at their firm. So we just want to help you land on your feet, give you that little bonus to get you going. So yeah, make sure you go check that out, big4transparency.com slash recruit. If you are a job seeker, I'm going to be honest with you, a lot of the jobs are for seniors and managers, but it doesn't hurt to try regardless. And now thank you very much and enjoy the episode. Hello and welcome to the Big 4 Transparency podcast. I'm joined today by Nick Sinclair, founder of Toa Global, an outsourcing agency with over 4,000 team members. Welcome to the pod Nick. Thanks for having me Dom, so excited to be here. Yeah, my pleasure. So we've had a couple conversations in the past. I think you had actually asked me to be on your podcast. I don't know if that's live yet, but I had a really good time chatting with you and I have yet to speak with anyone who is kind of an expert in outsourcing. And so yeah, I'm super excited to have you on. And it's great to be here and talk about a topic that I think has mixed reactions out there and I think it really lacks knowledge to a degree. Yeah, yeah. Well, so hopefully we can kind of clear some of this up. You know, it is a little bit awkward timing. We were talking about this after there were some pretty newsworthy layoffs, but that, you know, they're not necessarily entirely going hand in hand. And, you know, ultimately we are seeing outsourcing happening. And, you know, one of the kind of biggest things is make sure that it's happening well, at the very least, if it's going to be happening. And so, you know, you're doing a lot to make that the case. But before we kind of jump into everything Toa Global, I want to understand kind of your involvement with the accounting industry. Like what was your kind of initial involvement in accounting? So I ran a financial services business for 12 years. So we're predominantly financial planning slash wealth management, got into property buyers agency, we help people to buy their homes and then really got sick of waiting for the accountants to do the work for the finance division and for our financial planning division and decided that it couldn't be that hard. So we bought an accounting firm, realized how challenging it was, went from, you know, the fees were 300 grand worth of fees. It was all old school. We went on to zero and, you know, grew that over two years to one and a half million in fees and just added a real, I suppose, value to our clients. But it was a lot more challenging than I thought. And that was sort of my foray into the accounting world. I qualified accountant, but I've never done technically a tax return. I'm not a CPA or CA, but I did the degree and yeah, that's sort of how I fell into the accounting world. Okay. So you actually did the degree in accounting. I was not aware of that. I thought you had just kind of like bought your way into it because I do speak with some people who do that and have no involvement. And like, to my surprise, like a number of them have done pretty well. And I do think sometimes having that like outside perspective of like, you know, you're not as stuck in the way things have been done in accounting firms can actually sometimes be beneficial, but that's good to know that you had the background. And you 5Xed the revenue of the business basically in two years. So like, how did you do that? Was it mostly like via cross-selling to like your existing wealth advisory clients? Yeah. So our whole approach was the wealth, with the wealth advisor is that we looked after their total needs. So any financial need they had, we looked after. So we just took on their bookkeeping, their accounting. And yeah, naturally it was that they needed to use all services to be a client of ours. We didn't just do wealth management or we didn't just do the finance or the buyer's agent. They came to us and we looked after their total needs. So it was quite easy to add in the accounting because it was just another service that we provided them as part of their overall package. Yeah, that's interesting. I, I kind of come up a lot like with conversations about this, where there's a lot of people I speak with who are really like strong advocates of the coupling of wealth management, financial advisory and, and accounting. And I think it is interesting because you know, they all rely on very heavily actually on building that relationship of trust. And so like Rory Henry, for example, who I've had on is like a huge advocate of return on relationships. And if you are, you know, already kind of doing all of that legwork around building that relationship and that trust, well, it makes sense to tack on, you know, those kind of maybe higher value per hour of input services that is maybe more aligned with wealth advisory. But you actually did the opposite, which I think is really interesting. But did that change the operation significantly? Like, did that just sort of make all of the operations flow a lot better? Was that one of the key benefits? I mean, we just wanted a deep relationship and look after their total needs. So we didn't want to just provide services. We wanted to have a real deep relationship and manage their financial future. So look forward as well as looking back. And, you know, we kept each of the divisions, we just had specialist teams producing the work. And then we had our client facing teams that covered all of the different services that we ultimately provided. So they had one relationship with a primary advisor and then a secondary advisor, and then the work got done behind the scenes. So they didn't really see that. So we just set up an internal technical division that did the work in essence. So it wasn't, you know, you come and saw the accountant, then you saw the financial advisor, then you saw the mortgage broker, then you saw the property guy. It was, you just dealt with us as a business and we had the technical divisions. It was a lot more challenging than I thought it would be. I thought accounting would just be plug it in, it can't be that complex, but it was. Particularly when we bought an old school accounting firm that was paper-based, you know, the workflow was on a whiteboard and we had to transition it. Then that was when Xero was brand new in Australia. It was not really in North America at all. And we moved everything to the cloud. So it was very, I suppose, different for the clients that we did buy and the ones that we were transitioning to this new world of accounting. Yeah. No, that's wicked cool. And I like hearing that there was such rapid growth, right? Because you know, there's probably a lot more accountants listening to this than financial advisors, but I think the opposite is true as well, right? Where if you do an introduction of services into an existing customer base, like I think you're kind of starting on second or third base in terms of baseball analogies, right? Like you already have that person, you have that trust, they're probably paying for that service elsewhere. And so they might be over the moon at you starting to offer it and just kind of like simplifying their lives. Yeah. Yeah. It's deepening the relationship. It's what I call ring fencing. It's building more services so that you're building that fence around it because if they are using a wealth manager and then that wealth manager starts to add accounting services, for example, and they've got a deeper relationship because they're connecting with them every month or every quarter and you're once a year, you're likely to lose a client. So the ring fencing is adding a deeper relationship and more services to that client. That's cool. And it's good too that you have that background. You've kind of lived, at least for a couple of years, the firm life. So now that you're serving firms kind of more broadly speaking, you probably kind of understand what they're talking about and all that. And so here, actually, you know what, before we move on to Toa, I did have one more question about that actually. Which of those services do you think was easier to scale for you? Like, was it the accounting because it was kind of more like modular, like add inputs to kind of scale or was it the wealth advisory front? I actually think it was the accounting because everyone needs to lodge tax returns. Everyone needs to... There's government compliance across the world in all countries to wealth management and finance and property is nice to have. It's not a must have. So the tax and accounting was definitely a lot easier because it's not by choice. It's the government regulates it. They have to. Yeah. Interesting. And then, so you actually overlapped the start of Toa Global with your time at that firm called Wealthfarm. What's the story on that? Was it that you were doing some outsourcing on your own and then some buddies were interested in help? What did that look like? Yeah. So Toa was never meant to be a business. So I was on a board called Entrepreneurs' Organization in Australia with a guy called Rob Nixon, who coaches accounting firm owners. And he was running a three-week roadshow called Capitalizing on the Cloud. And I'd set up my back office in the Philippines. So I had a team of 15 in Australia and 30 in the Philippines, and it was working really well. It was only really three, four months in. And Rob said to me, look, I want you to come on this roadshow with me and basically tell your story about what you're doing because it's going to change the way that we work. And I was like, well, our accounting firm is really small. I want to learn from all these firms over the next three weeks on how to run a proper accounting firm because I've never run one. So that was my ambition. It was never to launch an accounting firm, or sorry, an outsourcing company. But after the first event, I had five firms come up to me saying, Nick, love what you do. We're not going to go and set up in another country like you have. You're like, that's a very bold move, but do you have some spare desks? And we had a 50-seat office and 30 people. And I looked and I went, well, if I sell those other 20 seats, it'll cover all of my costs. So then I'm only paying for my stuff. I'm not having to pay the office costs or all of the recruiters and HR. All of that's going to be now covered by these other clients. But what happened is over three weeks, I'd sold 90 people. And then we went to a year later, 200, 400, and just kept growing. So I sort of fell into this by accident. It wasn't I saw this opportunity and set up this business to help serve. It was I was doing it for myself. I let others in and then it became this business. And 12 years later, we're close to 4,500 people, 25% growth year on year, a couple of hundred people every month starting with it. So it's been an interesting journey. That's incredible. And so on that initial setup, right? Because what you offer is essentially like an agency service. So they don't need to go set up their whole entity and find people and all that. But you did that at the time. What was involved in all of that? Did you have to go down to the Philippines for some extended period of time? Yeah. This is the thing. I mean, there's different models now. But recruiting in a developing country is not as easy as a lot of these providers make it out to be. It's challenging. It took us six to eight months just to get entity set up, to get registered with government departments and all of that. It's complex. It's paper-based. It was really challenging. For the first five, six years of the business, I was living in the Philippines every second week. So I lived in Australia one week, lived in the Philippines one week. I've spent an extensive amount of time in the Philippines and I understand how the country operates. And that's one of the biggest challenges is we've built a course for our clients now that's an eight-module. It's a one-day learning course that basically teaches you how to run a global team because it's not as easy as just hiring someone for a cheap rate. And they're just as good as one locally. It's not plug and play. It's not that easy. There's a lot more to it. And why the Philippines specifically when you got started? Yeah. So when we started, I tried pretty much all countries with my own firm. So I tried Vietnam. I tried India. I tried Sri Lanka. And for me, the Philippines was one. It was, in essence, it's a state of America for a long time. So American English, it felt like mini America in a lot of ways when I went there. The time zone worked really well for Australia. But the main thing was the communication because if I was going to build a team, we had to have something that had really strong communication. And out of all of Asia, it was one of the best for English. And that was probably the big reason along with time zone and just access to talent was huge. 12 years ago, most of the outsourcing was done through India and Vietnam and places like that. There wasn't a lot in the Philippines. So there wasn't a lot of talent, I suppose, competition at that time at all. Mm-hmm. Okay. That's interesting. Yeah. Some of the quirks of language and whatnot. I had worked with the team out of India a lot when I was at Deloitte. And some of them had actually very excellent English, but it was funny communicating with them. There was little things that made me smile, greetings for the day and little sayings like that. But super polite people, hard workers and stuff like that. So that was the Philippines and that was getting set up. So that was, I'm sure, very difficult. And now when a firm wants to add folks and they're working with Toa Global, what does that process actually look like in comparison? I mean, we've simplified and made it. We do a lot of the onboarding training. We do a lot of the pre-training. We've got office facilities so they can work in office, hybrid or remote. Our IT infrastructure is significant and we have a team on the ground. So we've got 495 support staff supporting our clients. So there's a huge team of HR, IT. It's there to make it easy. And this is... Our model is different than the traditional outsourcing. You don't send the job, we do it and we send it back. We actually help you build a team. So we've got... You get an assigned person, right? Yeah. So it's a dedicated team, but they're just working within our facilities and within our structure. And we're making that support on the ground easier. So we've got top 10 firms right through to sole practitioners. But we've built the system to make it easy for firms because there's a lot to learn when you're building a global team. And even when you've had a global team, some of our clients have been with us for 10, 11 years, they're always learning new things. And having that support and structure around them is ultimately what we want to do. We want to take the burden of managing the team and every part of that aspect away from the firm so that they can just do the work. Be as productive and efficient as possible. And these people, when you're hiring them offshore, are they already have some designation equivalent in US taxation, for example? Or is this just people who have some background or interest in accounting and then you're doing the training and the designation? Yeah. So in the Philippines, it's not as advanced in that aspect as places like India, for example, where a lot of the big four have been in India. So they're American trained and qualified and have got 15 years of American experience. We were one of the first in the Philippines and we're 12 years old this year. So there isn't the pre-trained talent that there is in other countries. So that was one of the pros and one of the cons when we set up in the Philippines. But what we did to offset that is that we now, every team member has a nine to 10 year career plan. So for an American client, for example, that if they're doing tax, they would become an enrolled agent, they would become an American CPA. So the people that we hire all degree qualified, they're all accountants in the Philippines. There's a chunk of them that are CPAs in the Philippines, but they need to learn the American tax system in most cases. Now, because we've been in there for 12 years, there's definitely a pool of talent that does have five to 10 years of experience now. But we're talking, we're four and a half thousand people. If you put all of our competitors together, there's probably only a talent pool of 10, 15,000 accountants that are working for international firms. And most of that, to be honest, is probably in the Australian market because the Australian firms were more into the Philippines earlier. The US is probably only in the last five to six years. So there's not a huge pool of talent that is trained in American tax, for example, at a senior level. There is some, but not as much as other countries. Interesting. And so when we were sitting up here, we were chatting a little bit about like, where you've got talent and you mentioned South Africa as well. I've had Zane Stevens on here, who's South African. And so for him, it's a huge point of pride of like, nice, like I have my team in South Africa. And for him, I think it's a big element of pride, but he also talks about the talent there being unique where they speak English. I think, I don't know if that's the I assume that's the main language there, the primary language. But what are some of the main advantages of each and how does the costing compare, let's say, between the different markets? Yeah. So if you compare South Africa and the Philippines, South Africa is, compared to America, it's still a 30% discount on the talent cost, roughly, give or take. You're still getting a cost arbitrage by using South Africa. But one of the benefits with South Africa is it's one of the hardest countries to become an actual CPA accountant. It's like a seven-year degree by the time you do your articles and you've got to do actually work experience as part of becoming the CPA there. So it's one of the most challenging in the world to pass. And it's like seven to eight years of going through to become an accountant there. So the quality of education is really high, which means you've got a high caliber of talent there and you get that cost arbitrage of about 30%. And there's a good access to talent. The thing with South Africa, though, is they call it the brain drain. They've had an enormous amount of talent leave the country and go to other country. So if you look at the stats on the amount of accountants that are still left in the country, I don't know what the exact number is, but it was something like 30% or 50% of them have already left the country. So they're growing this great talent, but they're all leaving to go and work in places like America and UK and Australia. So from a talent point of view, strong talent, time zones are really challenging. Environment is challenging, meaning that the electricity challenges they have, they have brownouts all the time, what I call brownouts, which is electricity cut out. So it is a more challenging environment to work in. It is a Commonwealth country, so there's some benefits around that. When you look at the cost arbitrage with the Philippines, for example, compared to a US salary, you're looking at about a 60% saving by having someone in the Philippines. And South Africa, you said 30%? 30%, yes. So the Philippines is almost double the benefit, if you want to call it that. And India is even a little bit cheaper. It's one of the countries where we're currently exploring opening into. We're getting dragged in there, if you want to call it that, by clients of ours that have teams there that want us to take over the operational parts of it. So for me, it's around, and this is our philosophy with Tauru, is how do we help you get the best talent globally? It doesn't matter what country they are, as long as they have the skills and competence and capability. The cost arbitrage obviously helps. We have a thing called the accounting talent mix that we believe accounting firms should have a combination of local team, global team, and then an on-demand team. So an on-demand, meaning you can ramp up and down based on the workflow that's coming through the firm. Predominantly, you still need a global, like when you have a global team, you need a local team. The difference is, and this is where firms get it wrong, is they don't fast track the careers of the local people when they build a global team. So they just bring on people and they don't have a proper people strategy for their global and local team and even the on-demand. So they're not fast tracking careers. The whole point of having a global team is that you fast track the people locally because you need people that are client-facing. You need people that are there locally. You always will. It's not one or the other, it's both. But for me, it's around having a very clear strategy around, well, how much of this global team is going to grow? How much of the local team is going to grow? And how do we accelerate the careers? And most firms struggle because they don't know how to train. They don't have career plans for their people, whatever country they're in. And that's, I suppose, one of the benefits. We do that with the global team and then they're like, oh, can we just take that and use that with our local team as well? And we're like, yeah, take those and roll it out because you want to accelerate the careers of the local people. And as we know, the younger generation coming through, they don't want to do what we did when we were in firms. They don't want to work 10 years to become a partner. They want to be there in three years. And I'm like, well, how do we help them to do that rather than saying, no, you need to bide your time because I did. How do we progress? And that's, I think, the benefit of having global teams. Yeah. Yeah, no, it's interesting. A lot of the firms, like with Big Four Transparency, we run a talent pool and really no one's biding at the intern level and at the analyst level, but then there's this huge shortage at the senior and at the manager and maybe early senior manager level. And I think a lot of that is probably what we're seeing. I mean, part of it is that they have established pipelines in colleges and whatnot, and that's how they do their recruiting for interns. But I think part of it too is the current definition of what an analyst or staff or intern role is, is being eroded by historically offshoring and more future looking AI. Meanwhile, as these firms scale their offerings and whatnot with these teams, well, they need a lot more folks who are going to be client facing. And it does seem like the industry just hasn't figured out, well, how do we get more people into client facing sooner and faster? Um, because there's this huge shortage, right? Of like, yeah, seniors, managers and whatnot. But there's this probably surplus of like intern analyst level people, um, from my experience anyways. But like, it is interesting where people need to figure out how to kind of rebalance those things. Um, and it is interesting you, you know, saying that like, yeah, you need a plan on how you're going to get your people there. Yeah. And offshoring gets all the blame for why there's a talent shortage and they get the blame for these things. When I had my accounting firm, when I implemented cloud technology, we were, you know, zero was big in, in the ANZ or the Australian New Zealand region. Cause it obviously came from New Zealand. It took 30 to 40% of work away. Like that wasn't offshoring. That was the cloud technology. And if you look at all of the technology we use today, that's taken jobs away because it's helped us become more efficient and effective. But we don't blame the talent shortage on the tech companies because that enables and helps us. The offshoring should be something that enables you to grow quicker. It should enable you to find endless amounts of capacity. There is no reason why an accounting firm should have a capacity problem because globally there is a lot of talent. The problem is people don't have a people strategy. And when they don't have a people strategy, they're not thinking like what you just said, well, what people do I need to develop? And there's a huge shortage. Like if you look at all the job boards across. Every country in the world senior accountants always at the top it's like why. And it's not developing people to be come say yes we're not fast tracking decrease but not teaching them how to lead and grow and develop teams and you know much like we've been advocating now for twelve years that. You need to develop your local time so that i have the capability to lead a global time because instead of doing the work that i'm gonna be leading a team of people doing the work. Now we're saying that involved with it to you know i believe in the future you gonna have. Any counselors and they gonna have a team of agents that are working with and for them different type of leadership but it's the same philosophy but the problem is a lot of firms haven't evolved. And then you've got. I think the challenge is that a lot of the bigger firms have built global times so the demand for taking every single person from a college hasn't been that i haven't needed as many that still taking them on. But the smaller firms are a lot on the big firms to do the work of training and developing people because they didn't have the capability. And that's where the real shortages now because small firms are saying there's no talent there you know there's no graduates coming through will you never took him anyway. You never wanted someone to be trying to then take that because no one's doing that we as an industry now need to do it and that's where. I think we need a bigger focus on our people and our more importantly is how do we fast track and develop their careers because. With global times it's not going away our growth shows that like we've grown twenty five percent nothing to four and a half thousand we're putting on a couple hundred people every month it show. Is needed unwanted. I am tech is evolving and growing in a rapid pace and it will grow at a more rapid pace so how do we evolve and develop and grow with that and. How do we grow out telling me so that we can really sell right there careers. Is on the way what i say it is the more we can accelerate the cruise guess what happens i get paid more. And this i know you do with the salary benchmarking that is. If people are getting paid well will attract good talent into the industry but you know where we're bringing a man and then i've got to stay in a junior role for three years because it's how we did it for the last hundred years. No one's gonna stick around and do taxes and get paid crap money but if we go look you come in and as a grad. And when in this period of time we're gonna have the time it takes you to get to that senior level. I'm gonna be like yep giddy up and you go what every year gonna be getting like a twenty to thirty percent increase if you do your part will do our part we're gonna accelerate. Yeah that's been a huge yeah that's been a huge kind of piece of the discussion of like okay so all these developments like what's gonna like how do people learn at that point and what's gonna happen to these other levels and i am kind of inclined to agree that it's just gonna have to be like an extreme fast tracking where like. You still have to do some prep probably to kind of know what's going on. Yeah but i could probably be twenty returns not seven hundred and then and then kind of moving on to the reviewing phase and then getting you in front of clients as soon as possible and for me like. You know the type of employee i was like that probably would have kept me at a firm so yeah no i agree with you that like you know listen this stuff is gonna happen one way or another you know if it's not offshoring it's gonna be AI or some new technology or whatever that might be. But for the folks who are especially concerned about you know outsourcing offshoring you know taking their jobs or whatever that is what are some of the kind of key skills that you think like someone who's on shore. You know working for a US firm can develop and can really focus on to kind of differentiate themselves and distinguish themselves as essential. Look there's always gonna be roles locally globally it doesn't matter where they are but i think what makes people stand out is i think that the captain of the future or the what accounts need to be strong leaders because i'm gonna be managing times they're gonna be managing mobile times local times. Agent team so not even real people in the future but they're gonna be look like i am so i think leadership is a strong one i think it's dedication to. Customer experience like really being customer focus like ultimately we're here to serve our clients and that's who pays our bills so really having strong communication and being an effective communicator. And then having strong leadership to be able to drive and help the team succeed i think they're probably the two biggest ones. Yeah yeah no i definitely agree with that yeah and then kind of my last question for you here but between teams who are getting you know an A plus level of collaboration and output from the offshore teams that they're working with and you know the teams who are you know they're getting by they're doing okay like what are some of the key differentiators like what should you be doing to get like the best degree of you know both output but also just integration from your team. We've seen the good bad and ugly we've seen the train crashes we've seen the things and we've seen the fans that just it's such a success like we've got one fan. Texas firm that have ten managers and half those managers are in the philippines now managing us. Like that be with us a long time and i think the main thing is. They are your team just happen to be in an office in another country so i treat it like your time. Train them like your team connect with them as humans so if you have a global time and you've never face to face met with them get on a plane and go and see him build that connection build that human connection go and understand their environment to where they work and i just don't want. Depending on your team size you should be visiting that office regularly so if you've got a. You know thirty people local and you've got ten in the global time you should be going twice a year not three times a year so trade it last just like you would another office within america. Or where to add whichever country you're in listening to this so you really need to just think of it is this is our team it just happens to be another office now. And you need to understand that culture intimately like for our clients and that's one of the benefits we teach them that we have all the different programs there's. Is little increases with each country like within the philippines there are cultural pleasing so they'll just say yes to you. Can you go and get do you understand what what i'm just showing you yes yes yes they'll never say no because it's called saving facts. So you need to understand how to manage that culture because otherwise. That team and we can go and not have no idea what you've just shown them but they say they have so you think they're good and then you come back at hours later and it's all wrong and you like this is just this is wrong this is just not working it's never gonna work it's all no because you didn't ask the right questions. Yeah i think you're gonna do it invest the time. Energy to make it a success because we've seen firms that have made an absolute success and it's critical and fundamental to their businesses and we've seen other accounting friends where it's a complete disaster it's the worst thing they've ever done in their life. And the only difference is the firms and their attitude to make it succeed or not and you know there's a reason why it works but it doesn't work for everyone if you don't invest the time and energy to make it successful. Yeah and i would say there are worse assignments then you know saying hey go to the philippines soak in the culture meet some cool people and it'll benefit the success of your team right that's good seven a half thousand islands. It just got rated the number one island in the world by a actual as an american or they just won for the number one beautiful island in the world so great place to visit cost effective and. What to be honest it's like mini america was an american territory for the 98 years old for you some amount of time so it's very. I travel the philippines and then i travel america it feels very similar in a lot of ways which is great interesting. Interesting way out thank you so much nick for coming on i appreciate you sharing this and i'll make sure i link all of your information in the in the podcast notes for anyone who's interested in getting in touch and i think thank you so much for taking the time and coming on the pod. Thanks for having me on it's been fun.