Learn how our Managed Operations model provides the perfect middle ground between outsourcing and incorporating.

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Joint Ventures

For many companies, outsourcing to a third party provider may not be the best solution. There can be a number of reasons for this:

  • Your company may be dealing with very sensitive data or highly sensitive processes that require a great deal of operational control and quality assurance. In this case, it may simply be too risky to outsource to a third party. Your clients may also not allow you to subcontract or outsource their work to a third party.
  • Your company may need your offshore component to be in your ownership. This can be the case for companies that are working towards an IPO or an M&A event and are looking to maximize their company value. There is more book value in owning an offshore operation as opposed to only having a services agreement with a service provider.

Our Virtual Captive service delivery model helps a great deal in solving problem #1 by enabling our clients to customize their offshore operation and enabling them to clearly set the modus operandi and control day-to-day operations. To solve problem #2, our client will actually need to own a corporate entity in the Philippines so that they can have their own employees and own assets and resources. They can do this by establishing their own wholly owned subsidiary or captive, but doing so requires a great deal of due diligence and large, long-term investments.

A joint venture with MicroSourcing is the perfect way to effectively address the challenges described above. The concept is simple: your company and MicroSourcing will start a joint venture in the Philippines which effectively creates a corporate entity in the Philippines that services your company exclusively and is largely in your ownership. Within the joint venture, your company can leverage all the local resources and expertise that MicroSourcing has built up to start operations swiftly and effectively, without any of the growing pains captives typically face. Joint ventures can be complicated deal structures and your company needs to decide that it wants to operate in the Philippines indefinitely. If your company wants to test the waters, you can still use our Project Outsourcing, Staff Leasing or Virtual Captive services first before you make a long-term commitment to a joint venture.

Advantages

Ownership

You will own the majority of a Philippine corporate entity, enabling you to add this offshore operation as an asset in your books and assuring that you have the control and ownership required to satisfy your clients and be compliant with their demands.

Risk Mitigation

Starting a corporation in an unfamiliar geography such as the Philippines can be a very risky endeavor. By partnering up with a strong local player like MicroSourcing, you can reduce your risk and leverage our years of local presence and expertise in the Philippines.

Cost Savings

Running your own wholly owned subsidiary will require great investments and it will not be cost-effective at least for the first few years. Within the joint venture, MicroSourcing can leverage its scale and assets to run at a much lower cost level.

Time to Market

Setting up your own wholly owned subsidiary will require a lot of due diligence and it takes a company an average of 6-9 months to establish a captive. By leveraging MicroSourcing's local presence and expertise, you can reduce this by 60% or more.

Setup Process

The deal structures of a joint venture are by far the most complicated when compared to our other service delivery models, especially since it entails the establishment of a new corporate entity in the Philippines and there are a lot of legal terms that need to be worked out between the joint venture partners. The setup process will consist of the following main steps:

  • Requirements Analysis
    The first step is to carefully analyze your requirements and clearly understand what you want to do in the Philippines and how.

  • Model Selection
    Based on the analysis, we can decide which service delivery model is best suited for your requirements. If your company needs to own and control the operation right from the get-go then a joint venture may be the only way to start. In other cases, it may be better to test the waters first through our Offshore Project Outsourcing, Staff Leasing or Virtual Captive services and work towards a joint venture after a successful proof of concept.

  • Mutual Due Diligence
    Setting up a joint venture is quite a big commitment and both MicroSourcing and our client have to be absolutely convinced that the other party is the right partner for this venture. This will require substantial due diligence from both sides.

  • Legal Framework
    Once the decision has been made to move forward with the joint venture, a substantial amount of legal work will have to be done to clearly structure the ownership of the joint venture and the responsibilities of each partner.

  • Incorporation
    With the legal framework in place, the actual incorporation work can start which will require registration at the Securities & Exchange Commission and all other relevant government agencies.

  • Operational Setup
    After incorporation, the setup process can largely follow the setup process of our Virtual Captive services which effectively puts all the talent, infrastructure, assets, and services in place to enable the day-to-day operations of the joint venture.

Pricing

Our Joint Venture service delivery model is very similar to our Virtual Captive service delivery model. The only big difference is that we will need to establish and operate a separate corporate entity to house the offshore organization in the Philippines. The pricing structure will still be transparent and consist of the following components:


Direct Personnel Costs - These are the total costs of the base salaries, taxes, and benefits of your staff. These costs will be openly shared with you and you can directly budget and control them.

Infrastructure Fees - These are the fees we charge for providing all necessary infrastructure and tools including office space, workstation hardware and software, servers and networking equipment, telecommunications, and other facilities.

Administration Fees - These are the costs for managing the joint venture corporate entity. Typically, MicroSourcing will manage the joint venture together with a third party legal and accounting firm in the Philippines.

Services Fees - These are the fees we charge for providing management and support services. These typically include operations management, IT and technical support, talent acquisition, human resources management, finance and accounting, legal support, facility management, security, and client services.

All these costs will depend on your exact requirements and the resources we will provide to the joint venture. In general, you can expect to save at least 70% on talent and service/overhead costs. Infrastructure fees will generally be 40% lower except for telecommunications, which is typically more expensive in the Philippines than in most Western countries.