James Kudla | The MSP Staffing Model That's Changing the Game

[00:00:09] Hey everyone, welcome to the latest installment of MSP Business School. As always, I'm Brian Doyle here with you to kind of navigate through this conversation. But today with me, I've got another former MSP, so that's always a great conversation. You know, folks that understand our industry, when they've turned over to the dark side of being vendors, it's always a good thing. I want to welcome to the show today, James Kudla from, I'm going to say it right, Calutasens.

[00:00:40] Very good, thank you. Nice to meet you, Brian. Thank you for having me on the show and for the introduction. And the name of the company that I own now is, we call it Calutasen, but the actual pronunciation is Calutasen. Yeah, I said that right after, I said I went with the original and not the right one. But you nailed it, so you actually did the correct Tagalog pronunciation of Calutasen, which means solution in Filipino or Tagalog. But yeah, thanks for having me. No, I'm excited to have you here.

[00:01:09] You know, one of the things we like to do is, for those that are not familiar with you, tell a little bit about your backstory and how you navigated your way into the world of MSP. So talk a little bit about, you know, where you started and how you ended up where you are today. Yeah, sure. So I went to college. I actually went to school for mechanical engineering and, you know, I got a four-year degree, BS in mechanical engineering. And, you know, as a fresh graduate, I'm from western New York, Buffalo area.

[00:01:38] I worked for General Motors, and it was a really cool job. You know, as a pretty young guy, I was designing HVAC systems for their – they called it CLCD, which was Cadillac Luxury Car Division. Nice. So we're, you know, heating, air conditioning, taking road trips and, you know, designing, you know, heaters and air conditioners for Cadillacs.

[00:02:01] And then I actually worked on their first electric vehicle, the GM EV1, and helped them design HVAC for that. And so somewhere around the mid-'90s, I transitioned, and I moved from Buffalo. I actually ended up moving downstate to New York City area. And when I did that, I had a friend in college who was – you know, at the time I went to college, there was no such thing as networking and that sort of thing. He went to school for programming.

[00:02:31] So he was a degree programmer. And he said, hey, you really got to get into this computer thing. It's awesome. I said, yeah, this sounds great. And he got me a job at a company at a VAR in New York City. And I ported my engineering degree over to technology, and it was fantastic. I mean, it just ported very well. It was, you know, very amenable to, you know, that change. So I ended up getting my MCSE, my CCNA, my CCNP. I moved on from that VAR.

[00:03:00] And when I was working with the VAR, I worked with a bunch of Fortune 500 companies. And then I went over to a couple of dot-com companies and built out some infrastructures and didn't make my millions. And, you know, somewhere around 2000 – you know, early 2000s-ish or, you know, 2002, something like that, me and my wife, we started an IT company. So she came from a business background, her family-owned businesses.

[00:03:28] And, you know, I had the technology background. We said, let's do this. So, you know, spent a couple thousand dollars on computers and a version of QuickBooks, and, you know, we were in business. And I think that a lot of us in this space, we started as break-fix and hourly and that sort of thing. We hired and we grew pretty quickly right in the beginning. We had, you know, staff early on, and, you know, we were delegating or, you know, running a business, or at least we thought.

[00:03:57] You know, certainly learned a lot along the way, didn't know anything, just decided we were going to be in business. But somewhere along the way, discovered that there's more to, you know, the break-fix, but there's something better than the break-fix model in the form of managed services. And I was fortunate enough to join some peer groups, specifically True Methods, and I was in Winner's Circle for a very long time.

[00:04:22] And I was part of Robin Robin's technology marketing toolkit and met wonderful people and learned so much about business and service delivery and pricing and packaging and did that for over 20 years. So we ran our MSP that, you know, started as the break-fix shop and transitioned to the MSP for over 20 years. And we built it to about $6 million in revenue and about 25 people.

[00:04:50] And we exited to a company in your neighborhood in West Hartford around 2021. And, yeah, so that was the end of my MSP. Well, I stayed on and worked for them for a little bit after they purchased us, but then wanted to make a change and wanted to get out of the MSP, you know, the day-to-day operations of an MSP.

[00:05:12] But when we had our MSP, one of the things that we learned, one of the secrets that we learned, a good way to run your MSP is to use outsourced labor. And we had tried a couple different regions. We had tried Eastern Europe and South America and India, and none of them were a fit for us. And we arrived on the Philippines.

[00:05:36] When I was in this True Methods group, there was – this was pre-M&A days, and there were some pretty high rollers in there. There were $10 million, $15 million MSPs. And I was in a group of about 15, you know, world-class MSPs. And every single one of them was outsourcing, and they all outsourced to the Philippines. So I said, well, I'm going to try the Philippines. And I did, and it was a home run.

[00:05:59] And we were able to find incredible talent, incredible dedication, incredible language skills, and that worked really well in our business. After we sold the Compass MSP, they kept on that talent, and they actually expanded the Philippine footprint. And, you know, realizing that I didn't want to be in the MSP space anymore, I wanted to do something different, yet tangential, we said, hey, I got a great solution here.

[00:06:22] And it's something that can do really good things for MSPs, and it's a nice way to give back to the MSP community. And I love business, too. So I wanted to start another business. And so here we are. Me and my wife started it again. We've been doing this for just over two years. And, yeah, we're having tremendous success. I think we're bringing a ton of value.

[00:06:42] We're growing careers and creating opportunities in the Philippines, solving problems for MSPs in North America, and, yeah, having fun building and owning a business again. So, you know, a lot to unpack there in what you shared. You know, again, it's always great to hear another story of another accidental entrepreneur, if you will, somebody that kind of went out there. And took the risk without really the plan. I think most of us fell into that category in this side of the industry.

[00:07:12] But it is the lessons that we learn along the way that often shape what we do post-MSP. And, you know, as most of us that have fallen into the vendor community, it's usually solving a problem that we had or finding a way to extend a solution that we implemented ourselves, right? And that becomes our next chapter. And staffing is challenging, right?

[00:07:34] As a whole in the MSP space, we need both technical resources, selling resources, administrative resources. And for a lot of the younger MSPs, they just don't have enough capital yet to really be able to staff all those people that they need. Maybe share with us a little bit about, you know, what the climate is like working with the, you know, working with the Philippines and how, you know, that the what the some of the advantages are of doing that.

[00:08:04] Yeah, sure. So just to give a little little backstory there. So when we had our MSP, we didn't. It's not like we decided, OK, today we're going to outsource. Let's let's do it. You know, and it was it was more reactive, I think, than a strategy, because we had our MSP. We would place ads when we were in New York metro area and we would place ads, say double two position opened up.

[00:08:29] So. As an MSP, capacity is a dirty word. You can't have, you know, five guys sitting around waiting, you know, for the next ticket to come in. So say for whatever reason you have turnover or you either you bring in a new client and the volume of work goes up or you have turnover in your staff. You know that the volume of work is there. You need to get it done. So and we would place an ad and we wouldn't get a ton of applicants.

[00:08:55] So either not enough or they're underqualified or they were asking monies that were disproportionate to the skills that they had. So we couldn't fill these roles. But, you know, you're feeling these pressures every single day and your team will rally behind you just for so long. You know, but you can't you can't sprint a marathon. Right. Yeah. You've got to toe the line very clearly or burnout happens, dissatisfaction happens and culture suffers. There's no doubt. Without question. So we said, all right, we got to do something here.

[00:09:24] And that's when we started looking into the Philippines. And I would say that, you know, so to your earlier question in regards to what's it what's it like, you know, in terms of working with the teams over there. I think it's first of all, it's fantastic. We're having great success. If we were having this conversation six, seven years ago, I would say it wasn't as good as it is today. I think COVID changed a lot of that. We had we were working with the Philippines pre-COVID.

[00:09:52] And when we first started working with the Philippines, we had this notion that, well, we don't know these people. They're halfway across the world. I want somebody that's going to be sitting in an office and somebody that can watch what they're doing and that sort of thing. And I think there is merit to that. And I understand why people feel that way. I certainly felt that way. So we aligned ourself with a partner that was able to deliver that. And we had, you know, a couple guys that were working in an office. Things were going well. COVID came and went. They sent everybody home. We noticed no difference in productivity.

[00:10:22] That's for sure. And then COVID ended. And they said, do you want your team to go back to the office? And we said, no, it doesn't really make a difference. It seems to be working okay. So anyways, I think what happened since COVID came, Philippines has significantly improved their infrastructure in terms of power and Internet and redundancy and just the culture of working from home. And it's significantly better.

[00:10:47] So seven, eight years ago, whatever it would be, I think you would experience a few more power events or Internet outages or that sort of thing. Those are pretty much gone. There's always going to be events that that could happen. They're not fully eliminated as they would be in the United States either. But that's significantly better. Something that's, I think, unique about the Philippines, it's the native language of business in the Philippines. I just read something today.

[00:11:17] There's 130 languages, not dialects, 130 languages in the Philippines. The most common one is English. So families that marry into each other don't necessarily communicate in their native tongue. I guess they communicate in English. So and obviously the world is a much smaller place with TikTok and YouTube and streaming.

[00:11:40] And so Filipinas are consuming a lot of American streaming and movies and videos and that sort of thing. So the language skills are there. We're also in a couple generations, but, you know, a decade of these folks working into MSPs. And what we used to say is you're not special because you work in an MSP. We like to think so, although it takes a special person to work in an MSP, I think.

[00:12:08] So we used to have difficulty. And this is, you know, U.S. or Filipino, it doesn't matter. If you would take somebody that didn't work in an MSP and you're trying to get them up and running, the lead time to get somebody that's working for like a big company or internal for one team aren't as productive or as efficient as somebody that's worked for an MSP. The folks that we're finding now have, you know, five, 10 years of MSP experience. They know RMMs. They know PSA.

[00:12:36] They know Microsoft 365, Azure, Intune, AWS, you know, firewalls, VPNs, MFA. They know all of these things. So all of those factors, they're really producing incredible bench, incredible benches, incredible teams for MSPs. And I think something that's unique about us or maybe an advantage that we have.

[00:13:00] But look, this is probably an overstatement, but I've interviewed thousands of people, ran an MSP in the trenches for 20 years. So when I'm talking to MSP owners, sometimes the feedback that I get is, oh, my gosh, it's like, you know, all of my problems. I'm like, I do. You know, maybe the names have changed a little bit, but I know them. I know what's important. I know that the skill set that you're looking for, both from a technical standpoint and from a soft skills standpoint, that's going to make them successful in an MSP.

[00:13:30] And with our new company, Coludison, we've built an application and screening process that finds the best and most talented engineers and techs to bring them to MSPs. So, you know, one of the things that I've come to realize about the Philippines and outsourcing is it's become probably almost the primary industry over there. So another thing that's quite interesting is, you know, you talked about the English. They work on our hours.

[00:13:58] So because there's so many in their culture working on those hours, it's actually become a community-based type thing. They're able to have their social lives, even though they've kind of flipped their day and night upside down. And it's really become, you know, very organized and structured in how they're doing things out there as well. So, you know, a lot of folks think it's just hiring a random person out in the Philippines.

[00:14:21] But we've seen, and I'm not sure if this is kind of the arrangements you've entered into, but there's actually consortiums and groups and organizations that are really structuring, kind of managing the day-to-day of those staffers, giving them a home to kind of call their home. And then they're being farmed out and obviously working with different groups. You know, what have you seen out there? I mean, am I spot on with that statement or are there some different quirks that you're seeing that I'm not aware of? No, you're spot on.

[00:14:50] And I would say in, obviously, I'm going to make this number up. 95% of the cases, you're accurate. I could think of one instance where, and this was when I had my MSP, I could think of one instance where we employed a woman from the Philippines and she just said that this isn't working for me. I'm working the eight, they're 12 hours. I'm on the East Coast. So the Philippines is 12 hours off. So I'm working the 8 p.m. to the 5 a.m. shift.

[00:15:20] And she said, this isn't working for me. It's not a healthy lifestyle for me. And, you know, we ended up parting ways. But we've employed, you know, hundreds of folks from the Philippines. And we haven't seen that happen again. So we went over, we had never, me and my wife had never been to the Philippines before. So we went in April. And it was really cool. So, and it was interesting to see how, you know, your day.

[00:15:48] We were essentially getting up at, you know, five o'clock in the morning, having just five o'clock in the evening. Right. Here. So we're having dinner for breakfast. Right. Going to work. Working the day. And it was kind of cool because we stayed in Manila. And it was a very much international hotel. So, you know, taking a lunch break and going to the gym at three o'clock in the morning. And it was packed.

[00:16:17] Which was really funny. It's amazing. I think, you know, day is night out there, as they say. Yeah, it really is. So then, you know, maybe you go back, you finish your day, and then you go have breakfast, and then you go to bed. Yeah. So it was kind of cool. I have to say, as an American going to the Philippines, it took some adjusting. That's for sure. But we met our team. We met the contractors that are working for us over there. And, you know, I guess it's like anything else.

[00:16:47] You establish a cadence. Right. You know, when your kids are going to school, when they're coming home, when your spouse works, and you build your life around that. So, you know, their Monday is really our Sunday. You know, so it just kind of shifts a bit of a day there. Some of the MSPs that we're working with, they have, you know, they're working. Our team is working the second shift, or they're working the weekend. And they're very flexible. Filipinos are very flexible. They're resilient.

[00:17:17] They've been trained. It's part of their culture, you know, to kind of work within this framework. And so for the Filipinos, too, there's a tremendous upside. And I feel good about this because I really feel like we're creating opportunities for folks over there. We work with great MSPs that really want to invest in their team, give them growth opportunities. We pay for training. We pay for certifications. certifications. So we're helping building their careers.

[00:17:42] But the other thing, too, is that in the interviews that we're having and the folks that we're working with, the mass transit system doesn't exist like it does in the United States, that's for sure. And we've heard of, you know, these horrific stories of commutes of two, three hours each way, you know, and they're riding, you know, motorcycles in the rain. And, you know, so they don't have to do that anymore.

[00:18:06] So if they have to adjust their schedules and they can spend more time with their family and they don't have to commute to an office, you know, five, six hours a day, you know, round trip, it's, yeah, it's a bit of a price because they're working in the evening. But there's an upside for them, too. So it's kind of a nice arrangement. It's working well. So we're heading towards the end of our discussion today and our time today. I wanted to see if you have any closing thoughts or anything else you wanted to share with the audience before we wrap up. Yeah, sure.

[00:18:36] Thank you. So if you're at MSP and I know your challenges, right, or I can assume I know your challenges, it's early morning coverage. It's after hours coverage, volume of tickets, response time, getting your documentation done, rising costs of all your tool sets. Insurance, rent, whatever it would be. And obviously margins in your MSP.

[00:19:02] Or if you have your level twos, your level threes, your advanced people doing maybe more transactional work instead of advancing or focusing on advancing your MSP. You have some burnout. You have some open roles that you can't fill. Give us a call. I would love to have a conversation. Obviously, there's no commitment. I'd love to have a conversation with you, tell you how it works, help you understand what the structure would look like, what the cost fee would be.

[00:19:29] By the way, cost savings are up to 70% when you outsource to the Philippines. And what a nice ecosystem I think we're creating, creating opportunities in the Philippines, solving problems for folks in the – for MSPs in the United States. And, yeah, we're loving it. We're having a good time running the business. So love to have a conversation.

[00:19:53] So listeners, we'll be putting James' LinkedIn link into our show notes both on YouTube and anywhere that you download your podcasts, of course, as well. We'll also put in the website to go to Kalyutasen. Did I say it right this time? Yes, it did. No, Kalyutasen. Excuse me. I will get this right. But you can find James over there as well.

[00:20:16] And I'd say if you're looking at staffing and you're having some challenges finding some folks or you've got some gaps that you think you're looking to fill, reach out. The Philippines is a great resource for being able to find those folks. They work on your time. And, you know, and they speak great English. And those are some differences versus other regions where outsourcing is quite prevalent. So, you know, I highly suggest that you give James a call. So, James, thank you so much for joining me today.

[00:20:43] Really appreciate the time and the information you shared with us. And, listener, we'll see you all again next week. Thanks for having me as a guest and spending some time with me. It was great. Take care. Bye.