Madhur: Thaddeus, welcome to the show.

Thaddeus: Yeah, first of all, thank you for inviting us to your show and using your platform. TechnoGlobal team helps companies build and manage professional offshore teams in all their business needs, right? And that's what we do around the world.

Madhur: Okay. And how did TechnoGlobal come into being? I know we've discussed this. It's a really interesting story. Please share it with my listeners.

Thaddeus: Yeah, it's a great story. So our owners are Australian. They run an MSP in Melbourne, Australia. They still own that MSP. They've been running it for the last 30 years. The great thing about MSPs is if they have a problem, they'll look for a solution. If a solution is not available, they create the solution, right? So that's how Techno Global Team started. They were having trouble scaling their MSP in Melbourne. They created Techno Global Team for internal use only to help scale the business. They ended up in the Philippines. They selected the Philippines because it's the third-largest country in the world that speaks English. 80% of the population is fluent in English, and they graduate about 1.6 million college graduates every year. So real fertile ground where you have access to skilled labor that has a great command of the English language. And that's where our operations are based out of, in the Metro Manila area.

Madhur: How long have you been operational?

Thaddeus: Yeah, since 2011. We’ve been growing ever since. We're up to about 300 partners globally and close to a thousand seats as far as staffing.

Madhur: Gotcha. So it's a thousand people on the staff and 300 partners globally. What is a typical client profile in terms of the sector they belong to and their size?

Thaddeus: In the beginning, we focused on MSPs because our owners understand that business. They live that business every day. So that was their niche. Now we're branching out to different verticals. A typical client or partner is about 10 to 12 staff, with revenue probably $4 to $5 million. And don't get me wrong, we do have multi-billion dollar partners that we do business with around the world.

Madhur: That's really interesting. Because as many of us know, in the US itself, there are probably upwards of 50,000-60,000 MSPs. And quite a dense portion of that actually sits in exactly the bucket that you just described as a typical client profile. I wonder how many of them on a regular basis think about using TechnoGlobal or an alternative service provider like that to assist them with their day-to-day operations. So this podcast, I’m hoping, is going to shed some light on what you guys do and bring that message to them.

Thaddeus: Yeah, mostly level one and level two technical support. But the great companies that we partner with, they realize that not every job has to be done onshore, right? They can look at accounting, they could offshore to back-office jobs. We also provide digital marketing specialists, client service managers. So yes, we started out providing technical support. Now they're looking at the overall company structure and giving it a hard look, asking, “Does this job really have to be done onshore?”

Madhur: You know, so many firms that are in that bracket, one of their key challenges is to do sales and marketing effectively, to be able to grow to the next level. So I think the fact that you provide that resource is really interesting. I think it will be interesting to a lot of folks who are listening to this. But that leads me to the question around, you know, what are the main areas for value add from TechnoGlobal? Can you talk a little bit about what are some of the main things that clients get out of you?

Thaddeus: Absolutely. So they get very skilled labor that often they can't find locally, either because they're small and can't provide benefits, so nobody applies for their job, or they just can't find the skilled labor in their local area. What we do provide is, you know, 80% of our jobs are less than $30,000 a year all in. We save them financially, and it really helps their bottom line.

Madhur: OK. You know, the advantage of being able to find staff when you need to, as well as, you know, cost savings on staff that you do find with you, can be very substantial. Can you give us some idea for what the cost saving might be on a level one or level two staff on a percentage basis between finding that staff in the US or Europe versus finding it in the Philippines?

Thaddeus: Yeah, so in North America, level one staff could be anywhere from probably $60,000 to $80,000 a year all in. Our level one in the Philippines is less than $30,000 a year. So basically, you're paying for part-time help, but you're getting full-time service, dedicated 40 hours a week to your company. For the price of one staff member in North America, they could probably get two in the Philippines. And that helps their organization a lot.

Madhur: I mean, this is really incredible because for the scale of firm that we're talking about, making this kind of saving, even across five staff members, can have a very meaningful impact on your overall EBITDA margin. The value proposition is very simple, right? If you think about a company that is producing, let's say, $5 million in revenue, and let's say it is doing, you know, $1 million in EBITDA or even $500,000 in EBITDA, and it's hiring 10 people at the level one category or level two category, and you now say that the costs for this are of the order of $2-3 million, and we reduce that cost by 50%, that's 50% added to the bottom line for EBITDA. So your EBITDA number goes from $500,000 or $1 million to $1.5 to $2 million. And now suddenly you've transformed a firm that would have been below the scale level for many potential acquirers to one that is very much within the scale level of acquirers. And suddenly you've got a different game that you can now be in that you weren't in before. And I think that's really exciting.

Thaddeus: Yeah, it is. We deal a lot with partners that do acquire other MSPs, and they have the playbook, right? They know what to do. Their return on investment is a lot quicker because they would offshore a lot of those positions and get a quicker return on investment when they take over. Look, the partners that we deal with can't buy enough MSPs fast enough because they know the playbook and they know that they can get their return on investment pretty quick by offshoring.

Madhur: So this is something that if you're an MSP that is looking to position itself for a sale and you're looking for operational efficiency, you know, all else equal, right? This is something that you should really think about as a way to improve the margins on your firm. One question this raises, though, Thaddeus, is how long does it take to onboard people?

Thaddeus: We have a formal onboarding process. You sign a client service agreement, you commit to one year. We have our first onboarding meeting where I introduce the new partner to our recruitment team, which is one of the largest organizations at TechnoGlobal, and also our operations team because we help manage your team in the Philippines. It’s an extension of their team onshore. That whole process, after the initial onboarding, recruitment will have a deep dive conversation on exactly the type of person that you're looking for, the type of skill level that you're looking for. I always tell them you're never going to get 100% of what you're looking for. It's no different than if you hired somebody onshore—you probably get 70-80% of what you're looking for. The most important thing is you hire somebody with the right personality that you feel will be successful in your organization. That's why our partners are part of that interview process. They get to interview the person that they're going to hire.

Madhur: OK. And then once they go through that process, again, these guys are more scrutinized than hires in the United States. They have to go through an FBI background check, similar to an FBI background check, and they take a medical exam. We want to make sure that they're healthy enough to do the job that they're being hired for. And at that point, you know, working with my recruitment team, you'll come up with a compensation plan that's competitive in the Philippines. The partner has the sign-off on that. Once they sign off on that package, we offer it to the candidate and they start. So typically, it takes about eight weeks. And the reason why it takes about eight weeks is that in the Philippines, they’re required to give 30 days' notice. So that right there eats up about four weeks of the recruitment process. Again, we're very thorough. The reason why we're successful in connecting our partners with great candidates is they are part of that process. We do our best job in matching their requirements with candidates that we filter through. We probably get 20 to 15 resumes and we do all that heavy lifting where we will screen out candidates that just don't cut it, right?

Madhur: Which saves the MSP a lot of time. They'll get the best of the best by the time we hand them the three, four resumes that we feel are great candidates. I wonder whether the way somebody does this from the U.S. is that they leg into it. So they provide a CV to you. You go do the filtering, the initial screening. They do the interviewing process. They finally get somebody on board as one person to see how that experience pans out over time. And then I wonder whether they say, okay, well, now let's add a few more people. And guess what? Maybe we'll use the person we already onboarded as someone who might even train these other people or provide them with guidance because they're maybe in the same location to get them onboarded faster. Does that sound like a reasonable path?

Thaddeus: It's exactly right. In the beginning, when I present to prospects, they're a little nervous, right? They're doing business with a company based out in the middle of the Pacific Ocean, right? They have no clue unless they're a referral from another MSP. But that's exactly it. They go through our process, they understand that we have a structure and a process, and our goal is to have a successful candidate for you at the end of the day, ready to start working for you. And that's what happens. Within 60 days, they'll add more seats to their offshore team. And again, it's just getting through that first process and going through the whole experience so that they feel confident that this is the right route to take.

Madhur: Interesting. From a legal standpoint, while these staff members might be working full-time for the company here in the U.S., are they technically staff of the company in the U.S., or are they technically staff for TechnoGlobal?

Thaddeus: They're an employee of record for TechnoGlobal, but they're dedicated staff, 40 hours a week, for the partner.

Madhur: So for the partner, what they're seeing is a monthly fee paid out to TechnoGlobal, right?

Thaddeus: Yep, yeah. We’re a turnkey operation. You pay a monthly fee to us, and basically, it's a service fee, right? Unlike if you hired somebody locally, you don't have to worry about unemployment insurance, extra parking space, office rentals—we take care of all that. It's just a monthly service.

Madhur: So from the perspective of providing support and training to the staff that get onboarded for a client, what kind of support and training does TechnoGlobal provide?

Thaddeus: Yeah, we provide operational support for the partnership. As far as training, look, we're an offshore model. The first day they spend with TechnoGlobal Team, we teach them how to punch in, how to report, what happens if you call in sick, who do you call? We take care of that orientation part. The second day, we hand the staff to you. It's just like the first day working for you in New Jersey. What does that day look like? They're your employees. You're responsible to train them. You're responsible to provide the software that they need to do their jobs in that computer that's based in the Philippines that is an image copy of what you see onshore.

Madhur: I understand. So that makes sense because if you really want to have that seamless experience with them, then it makes sense that the MSP here would be training them as well. And like, as I was saying, maybe you train the first person, and then that person can play a bigger role in training the next set of people that you onboard. You said you provided operational support. Walk me through what that means.

Thaddeus: So operational support, we have a big operations team in Manila, and their job is to make sure, first of all, the employee shows up to work every day, they're comfortable, they have a good work environment, and it's an extension of the partner's operations. They have a person they can call, and they probably have a weekly or bi-weekly cadence with them just to see how their staff is doing. If they’re feeling that the system doesn't work correctly, they'll provide feedback. Again, we watch and make sure that the campaign is a success. And that's how we differentiate ourselves from other BPOs because we have that oversight.

Madhur: I want to talk a little bit about security and compliance because this is going to be a big one. Tell us, how does TechnoGlobal ensure data security and compliance standards that meet U.S. regulatory standards when you're providing offshoring IT services?

Thaddeus: First and foremost, just to get into our building, you need a passkey. To get into a production floor, there's biometrics to get into the building and our production floor. We're ISO 27001 certified, and that's a certification that we have to earn every year and pass a lot of tests. One great thing about working with multi-billion-dollar companies also is that we get pen-tested all the time. They want to make sure that their vendor is not going to be their weakest link. As far as security, the only person that sees any information from our partners is the person that they hire. The staff that they do hire signs an NDA for each organization. The computer is connected to your network via VLAN. It's a private connection. Having owners that are MSPs that have been running their MSP for over 30 years, we kind of got this security down pat as far as protecting your data. That's our number one priority too.

Madhur: Can you provide an example of some customized offshoring solutions that you were asked to solve and that you successfully were able to provide to a client?

Thaddeus: Absolutely. This is not going to be a sexy product. There's a franchisee that does carpet dry cleaning. They had multiple franchisees around Australia. Look, these guys, if they all had, you know, a call center and their individual franchisees, they'll never get the carpet dry cleaned, right? They're too busy answering their phones. So what they wanted was to develop a call center. And the great thing about having a call center in the Philippines is that it's less expensive, but the branding and the information that the customers get is uniform. It’s standardized, right? Because it's a central call center. So now the franchisees can just focus on cleaning carpets while we dispatch all the leads to them, right? And that's a customized thing. They approached us as far as, “Hey, could you help us find office space? Could you help us create this call center?” And that's what we do. That's part of the service that we do. We work with a lot of startups that say, “Look, we want to start our own call center in the Philippines. Could you help us out?” Because we have that expertise as far as real estate and Philippine labor laws, we provide the human resource support for them and also recruitment support. So that's kind of the other part of the business where we succeed.

Madhur: What are some of the common challenges that MSPs face when offshoring their services?

Thaddeus: Well, I could tell you based on my own personal experience. I'm Filipino too. There is a cultural difference between the Filipino and the U.S. As much as they are in line with North America and the U.S. market, there are certain cultural differences. Look, when I give my staff and my teammates instructions, they follow it to the T. The crazy thing is I always tell them, “Look, you've got latitude. If what I'm telling you or the instructions I'm giving you don't make any sense, you got to let me know.” And that’s interesting. It's just a cultural thing in Asia where they follow the instructions. And look, that's why we provide cultural training. The staff in the Philippines understands how the world works and how to respond to things. We also train a lot of the global companies that we deal with on how to manage their staff in the Philippines. So we kind of bridge that gap. It works out. I mean, everybody enjoys the cultural training. As much as they're really aligned to the U.S. culture, there are still cultural changes that you have to understand.

Madhur: You know, I'll share a story here because what you shared as feedback is very consistent with what I found with folks that I've worked with out of Pune in India. You give them a set of instructions, and they will follow them exactly. One of the advantages is that I ended up doing a lot of video recordings of little activities and made those available. They followed them to the T. And the nice thing is that once you have those video recordings, now you have them for the next person and the next person you're going to onboard. So I think it becomes a great leverage model as well.

Thaddeus: Yeah, I mean, that all works if you're a pilot, right? You got to follow the steps by steps and that's it. But when it comes to the type of business that we're in, you've got flexibility. And I always encourage feedback. Look, I don't have all the answers. That's why I hired you guys. You got to give me feedback if this stuff doesn't make sense to you or if you have a better way of doing it.

Madhur: I think that's also relevant. Like if you go from something that is very prescriptive to something more fluid, like a marketing person, for instance, and there could be other examples, but this would be one where you really want someone who could make judgments along the way as they're doing their work, and that becomes important.

Thaddeus: Absolutely.

Madhur: Future trends and innovations. I know we've talked a lot about the current state and how you're helping MSPs. What trends do you see in the offshoring landscape for MSPs, and how is TechnoGlobal positioning itself to stay ahead?

Thaddeus: That's an excellent question. We travel all over the world. We were in London, Dublin, all over the United States, Australia, and Singapore. What we're finding is, at least what I've seen, anytime there's an M&A session, it seems like that's the hottest topic in the community, right? It's always standing room only. People are in there. I love scanning the room to see which partners of ours are in there. Why is everybody so interested in mergers and acquisitions? What's going on in the MSP community? There’s going to be a lot of regulations coming down the pike. A lot of people have to be certified for things. The way I look at it, it’s just like when the healthcare industry had to go through the HIPAA times where now all these doctors are saying, “What? I have to digitize all my files?” It’s one of those things where people say, “I’m going to just go sell my practice and retire.” I think that's what's happening with the MSP community. There's going to be a lot of consolidations because a lot of these other MSPs, look, they built their companies to support their lifestyle. They’re not into it to make a ton of money. So when regulations and a lot of this stuff are coming down the pike, it’s only the bigger MSPs that are going to survive. We play both sides of the fence, right? We help these MSPs that are acquiring other MSPs by providing staff for them. And like I said in the beginning, they have the playbook, right? They know how to turn around an MSP and make it profitable. Not only do they get a big discount because they have so many license deals at a higher discount, but the number one expense is labor and overhead, right? And they figured out a formula to cut that in half, and that's offshoring.

Madhur: Yeah.

Thaddeus: Now, on the other side of the fence, if you're interested in selling or exiting, it's just like when you sell your house, right? You got to redo the kitchen. You got to redo your bathroom. You got to paint and do landscaping. That’s a two-year process before you're ready to sell. Or else you're not going to get that multiplier that you're expecting. We help them by providing staff and writing down a playbook or a handbook. Just like when you buy a McDonald's franchise, they give you the manual on how to run a McDonald's, right? MSPs don’t even have that in place because they’ve been doing it the way they’ve been doing it. So we provide that. We provide the accounting staff so that you have a pretty clean P&L ready to show to anyone interested in your business. The way I look at it, there's going to be a lot of consolidations in the MSP community because of the regulations that are coming down the pike and the requirements. A lot of people are probably going to start selling their MSPs. And again, we're here to support them and hopefully help them get a bigger multiplier when they sell because they're more structured and they can hand that playbook to the new owners and say, “Look, this is what we do.” That will help them exit the way they want to exit, and it also helps all those partners that want to buy those companies and make a profit by turning them around.

Madhur: You mentioned something about the fact that there's just going to be more regulation coming down the pike and more certifications required at the MSP level and at the employee level. Is TechnoGlobal providing or looking to provide certification services in the near future?

Thaddeus: We currently have that. We have Techno Academy. There’s such a high demand for technical support people that we have to build the widgets, and Techno Academy is our factory. We take students who have somewhat technical skills and set them up for success so that they're more marketable for the global market. As far as certifications, we partner with a lot of the vendors that offer certifications, and we teach it in Techno Academy so that they're prepared to go out there in the real world. We pay them to go to our schools because if we didn't pay them, they wouldn't go because they need to make a living. And again, once they graduate, they already have job placements. It’s just our way of filling the need that the world has for technical support. We have to build the widgets and provide the staff and talent that they need.

Madhur: So these are folks who might be working for you as part of some offshoring request from an MSP, and then on the side, they're also getting certified on certain skill sets that they can then use down the road. Did I get you right, Thaddeus?

Thaddeus: Absolutely. So there's two trains of thought. There are existing technical people working already for MSP campaigns that need Microsoft training, Microsoft security training. So we have a room where they can take those tests. Obviously, the partner pays for them to take the test and training. Also, at Techno Academy, we get them certified on certain vendor certifications so that they're prepared and have the skill sets to hit the ground running when they get hired.

Madhur: Interesting.

Thaddeus: Certain PSAs, security, backups—they get that education. Again, it's a competitive edge that we have versus other BPOs.

Madhur: That's really cool. That's interesting. Thaddeus, thank you so much for sharing what you guys are doing at TechnoGlobal with my audience. I have come across many instances where I've looked at a P&L statement for an MSP that's looking to potentially exit, looking for margin improvements, and I've wondered if they’ve thought about this option as a way to really improve operational efficiency. So I think this podcast really helps bring an option that they might not have considered to their table, and I’m very appreciative of that. Thank you.

Thaddeus: Well, we are very thankful for your invitation and being part of this platform. If there's anything else I could do to help, you know how to get a hold of me.

Madhur: Absolutely. You and I met at the Kaseya conference earlier this year, and I hope to bump into you soon at another one. I'm sure I will.

Thaddeus: Yeah, we'll be in Miami at DataCon Miami.

Madhur: Cool. Yeah, maybe we'll meet up there. Thanks, Thaddeus.

Thaddeus: Thank you so much. I appreciate your time. Thank you.