Outsourcing with a mission, and a conscience

Mention “outsourcing,” and most people tend to react with anger, or alarm — all they hear is the giant sucking sound of once-proud American jobs, fleeing across the ocean to parts unknown.

But a Grand Rapids-based technology company that specializes in photo editing services hopes to change that with a new approach to offshore outsourcing (or “offshoring”). Rather than scurrying jobs to remote locations to save on wages, the company’s founders say their mission is to invest in their employees and foster leadership in the developing community where they conduct their offshore services — all while helping professional photographers get rid of their more tedious editing tasks and invest more time into growing their businesses.

PhotoUp is a local startup that moved from Anchorage, Alaska to Grand Rapids in 2013. They provide photo editing services for professional real estate photographers via extensively-trained editors working in the Philippines, where they say their employees receive wages, training and personal development opportunities that register far above average for entry-level employees in the country, even among college graduates.

Rather than “outsourcing” or “offshoring,” they refer to their operations model as “impact sourcing,” a relatively new label that the philanthropic Rockefeller Foundation defines as “employment for high potential but disadvantaged people in the services sector.”

PhotoUp and GR Current also recently announced PhotoUp’s acceptance into Xcelerate, a six-month accelerator program that uses funding from the Michigan Economic Development Corporation (MEDC) and the Local Development Finance Authority (LDFA). Xcelerate includes $20,000 in funding, an intern, a technology package, legal and accounting services, and access to local business leaders and potential investors.

PhotoUp CEO Chris Palmer, who holds an MBA from Colorado State University, previously worked for Unbound International, a global-development nonprofit in Kansas City. At Unbound, Palmer traveled to work with scholarship students around the world. He eventually journeyed to the Philippines, where Unbound provided scholarships to over 5,000 students at the time.

There, Palmer says, he began to realize that education was only half the battle. Even if the scholarship students in the Philippines completed their degrees, there simply weren’t any good jobs waiting for them upon graduation.

“One of the students asked me, ‘Are there any jobs in the U.S.?’” Palmer says. “That kind of made me ask, ‘Why is this question happening? We’re trying to get you jobs in your own country.’”

The employment picture in the Philippines has long been grim thanks to a variety of factors, including widespread government corruption and poor infrastructure in the country. According to 2012 figures reported by Al Jazeera, nearly 4,000 workers leave the Philippines each day, and about 10 to 11 percent of the country’s population is living or working abroad at any given time. Additionally, remittances — money sent back to friends and relatives from overseas workers — make up about 10 percent of the Philippines’ GDP, according to World Bank estimates.

Workers in the Philippines also suffer from high turnover due to a quirk of labor law in the Philippines, which requires employers to hire workers in as regular employees after a six-month contract of temporary employment. The law also makes hired-in workers difficult to terminate, so employers frequently work around the law by simply hiring and firing a new crop of employees every five months.

Although Philippines citizens often travel abroad in search of steady work and better wages, they often face numerous pitfalls along the way, including dangerous travel conditions, human trafficking, visa challenges, illegal recruitment, job scams, underemployment, exploitative conditions and low pay.

“The Philippines has been kind of the source of this giant exodus of talent,” Palmer says. “They speak English, they’re hardworking and creative, and they go all over the world. But they have this culture of going abroad, because the opportunities they can find aren’t consistent. They have these overseas working contracts, and people go work in Qatar or the U.S. If they try and stay in the country, they end up as a construction worker. It’s kind of like modern day slavery.”

As Palmer returned home and finished graduate school, the exchange with the student stayed on his mind and he continued to brainstorm ways to address the employment situation in the Philippines. Near the end of his program, he met PhotoUp co-founder Kristian Pettyjohn, who had started the company in Alaska as a photo-managing software platform and service for quick, professional photo editing, with the help of a real estate photographer, Dave Davis.

Pettyjohn and Palmer immediately clicked, and Palmer saw an opportunity for PhotoUp to utilize some of the many talented, underemployed young people he had met in the Philippines. Pettyjohn agreed with his vision, and brought Palmer on as CEO of PhotoUp to incorporate his background in international development, while Pettyjohn became the company’s chief technology officer.

Palmer, who grew up in Grand Rapids, had continued to follow West Michigan’s economy and startup scene while living in Colorado, and decided to return here when the PhotoUp team gave him input as to where the company’s headquarters might reside. He moved PhotoUp’s office to The Factory, where the company stayed for 10 months before moving to GR Current in 2014.

According to Palmer, his respect for leaders and mentors in the local startup scene and the sense of community he saw among the technology companies here factored into his decision to move PhotoUp to Grand Rapids.

“We know enough about our company to know that sometimes we need to go find some other people,” Palmer says. “Here in G.R., we know we have a community of people that are rooting for us. And to have those people on your team to advise and counsel you has been super beneficial.”

Today, PhotoUp employs four full-time team members in the United States — Palmer, Pettyjohn, and Devon Higgins, and Dave Stark, who is based in Canada — and more than 70 full-time workers in their office in Cebu, Philippines. They offer personalized, quick-turnaround photo editing services to real estate photographers at different membership plans ranging from $300 to $1700 per month, and hope to expand their client base to wedding, portrait and other types of photographers in the near future.

The PhotoUp software itself, says Pettyjohn, was designed to save time for high-volume real estate photographers by providing batch-uploading services with superior tools for organizing pictures by client and property, plus additional features like compatibility for high-dynamic-range (HDR) shooting.

Pettyjohn is careful to stress that PhotoUp is a technology company, first and foremost; they hang their hat not on customers wanting to help out in the Philippines, but on finding their software and website experience the quickest and most intuitive option on the market.

“Our goal is that we want you in and out of our system in 10 to 15 minutes,” Pettyjohn says. “The less time you spend using our software, the better. The point is to free up your time to do other things.”

Besides the uploading features, new PhotoUp members create a profile that allows the editing team in the Philippines to learn that member’s editing style and preferences. After the new member approves sample pictures, their account “goes live” and they can upload pictures for editing, with turnaround times available as low as 12 hours.

In 2016, PhotoUp also plans to debut a new software product, currently called “Motubo,” which means "to grow” in the local Cebuano language. The new offering will be a “sub-brand” within PhotoUp, Pettyjohn says, and will offer tools and features that will help professional photographers manage, organize and grow their business more effectively.

Pettyjohn readily shares information on PhotoUp’s compensation and benefits for employees in the Philippines. PhotoUp employees in the Cebu office, he says, receive total compensation equal to about three-to-six times the daily minimum wage for the area. Newly hired photo editors start at wages around two-and-a-half times the daily minimum, and employees receive regular pay raises after training. PhotoUp employees work five seven-hour days a week, and work an additional sixth day one week a month; the standard, non-overtime workweek in the Philippines is 48 hours.

PhotoUp also offers a savings plan for employees who are hired in after six months, in which PhotoUp donates an amount equal to 5 percent of their pay to an employee savings account, earmarked for education, personal advancement and emergency expenditures. They also match up to another 2.5 percent of employee pay contributed into the account. In return, employees agree to participate in PhotoUp’s monthly community development projects, in which the company partners with a local community service organization to perform volunteer work.

Although Pettyjohn says that the company isn’t yet able to offer a company-sponsored health care plan to most workers, he says the company hopes to be able to change that in the future. The Philippines also has a national government-sponsored health insurance program, the National Health Insurance Program (NHIP), and PhotoUp is required by law to pay for 50 percent of each enrolled employee’s total monthly premium.

Despite the company’s transparency about their operations, Palmer admits that even an ethical form of outsourcing can be a tough sell, especially in Michigan, where the loss of industrial jobs has weighed on residents’ minds for decades.

“I think from my perspective, even trying to explain it to people in West Michigan, they’re immediately like, ‘Oh, you’re outsourcing jobs,’” Palmer says. “In a globalized world, we have an incredible amount of talent. Every decision we make is impacting someone in another part of the globe. The idea that you can partner with someone with creative talent around the world is a good thing, as long as you do it in a responsible way.”

PhotoUp CTO Kristian Pettyjohn also notes that since real estate photo editing isn’t a lucrative service industry in the U.S., it provides an ideal area to experiment with impact sourcing.

“We’re not taking jobs away; [these] jobs can’t exist [in the U.S.] because it’s too low-margin of a business,” he says. “Instead, we’re helping grow the economy here [in the Philippines] and creating jobs for people that otherwise wouldn’t have them.”

On the Philippines side of PhotoUp, a workday doesn’t differ too much from employment at many West Michigan startup tech companies, according to Ossie Lozano, PhotoUp’s director of operations and culture in the Philippines. Lozano, an amateur photographer from the Philippines who worked for Pettyjohn at a previous web-design venture, says the offices there include recreation areas, games available and lounges where employees can socialize on breaks.

“It’s pretty fun,” Lozano says. “You’ll find some of [our editors] lounging a little bit before their shift, playing Xbox or ping pong. It’s pretty relaxed, pretty chill, but when it’s time for work we do encourage people to be focused on the task at hand. On their breaks, they play just as hard as they work.”

Although he describes the culture at PhotoUp as laid-back, Lozano says that the company takes seriously its charge of mentoring and developing their photo editors, almost all of whom are under 30. Lozano and others on the office’s leadership team generally expect that most editors will move into longer-term careers or pursue higher education after a year or two at PhotoUp, so they have a short window to impart wisdom on how to work productively, manage finances, undertake professional development, and escape the vicious cycles that have left the Philippines so devoid of talented, young, professionals.

“A lot of our employees are really young, and we try to coach them in making good decisions, not just at work,” Lozano says. “We try to create leaders out of the people we hire. What we’re looking to accomplish long-term is that we want to create a generation of leaders, a generation where we would have smart, sensible leaders — people far different from the leaders we are used to in this country.”

CEO Chris Palmer admits that housing such a big portion of his workforce overseas has created challenges at times; he says he dislikes remote teams and prefers face-to-face interaction by nature. However, he says he and Pettyjohn have managed to establish a close relationship with their leadership team in the Philippines through constant Skype sessions, weekly leadership meetings and especially in-person visits, as often as schedules allow.

“Someone told me a long time ago, and I’m a big believer in it: Never underestimate the power of your presence,” Palmer says. “You can’t just do Skype calls. You have to go there and meet with the team; you have to sing karaoke with the team. So sometimes you find yourself in a karaoke cafe, singing ‘Total Eclipse of the Heart’ with the leadership team. And that’s what creating a team is about sometimes, coming together from these different corners of the world to just have a shared experience.”

Palmer says that in the future, the company hopes they may be able to expand into other communities in the developing world. The software platform that Kristian Pettyjohn created, he says, was designed to scale up to 10,000 worldwide users, so they have no qualms about embracing growth and expansion if they find the right opportunity.

In the meantime, he says, he hopes the company will make an impact not just in the Philippines, but also in Grand Rapids, where he hopes other businesses will follow PhotoUp’s progress and hopefully embrace their vision of profit and social mission, walking hand-in-hand into the future.

“My hope is that the community embraces this idea of social enterprise, of having an impact while making a profit, and that this can be a win-win for a lot of people,” Palmer says. “I think giving business a better name, a new face, is something I want to be a part of, and I see the potential for that in Grand Rapids. We have the infrastructure, the community and the potential to do it right here.”

Steven Thomas Kent is the editor at Roadbelly magazine and a high-tech, high-growth features writer at Rapid Growth Media. You can reach him on Twitter @steventkent or e-mail him at [email protected] for story tips and feedback. His stories are made possible by support from Emerge West Michigan.

Photography by Adam Bird