PROPOSAL FOR AN INTERNATIONAL TYPING AND DATA ENTRY SERVICE

KEN TAYLOR

10th AUGUST 1988


INDEX

1. Proposal In Brief

1.1 What Business Am I In?

1.2 What Services Do I Provide?

1.3 How Will The Business Provide These Services

2. Market Research

2.1 The Typing Market

2.2 Cost of A Typist

2. 3 Typing And Data Entry Service Charges

2.4 Type of Work

2.5 Source of Copy

2.6 Computer Usage In Small Business

2.7 Market Region

2.8 Providers or office Services

3 Marketing Plan

3.1 Natural Advantages

3. 2 Natural Disadvantages

3. 3 Constraints

3. 4 Pricing Structure And Services

3.5 Supply of Equipment

4 Getting Started

4.1 Form Association With Existing Service

4.2 Develop a Microfiche Based Communications System

4.3 Open The Philippines Office

4.4 Commence Satellite Communications

5 Organisation And Facilities

5.1 Organisation Size

5.2 Organisation Structure

5. 3 Equipment

5.4 Communications Facility

6 Financial Model

6.1 Capital Costs In The Philippines

6.2 Expenses In The Philippines

6.3 Capital Costs In Australia

6. 4 Expenses In Australia

6.5 Software Costs

6.6 Other Variables

7 Bibliography



1. Proposal In Brief

1.1 What Business Am I In?

I am in the office services business.

1.2 What Services Do I Provide?

Primarily typing and data entry but also machine reading of typed documents. After initial establishment additional services will be a foreign language interpreter service and a publishing service to perform the typesetting and artwork to produce camera ready copy (i.e. in a form which can be used directly by a printer) using desktop publishing techniques.

1.3 How Will The Business Provide These Services

Customers will forward typing or data entry work by facsimile, or by dictation to a tape recorder over the phone. The work will be forwarded to an office in the Philippines electronically where it will be keyed into word processors. The finished product will be forwarded back to Australia electronically and then forwarded to the customer by post, as a fax image or as an electronic file direct to a customers word processor where it can be printed or modified by the customer. Customers will need to have at least a facsimile machine and ideally a computer and communications equipment also. Work will be done for principals who are prepared to accept delivery by post or facsimile or who have the equipment for a full service but it is envisaged most work will be done on a subcontract basis for other typing services and data entry services.


2. Market Research

2.1 The Typing Market

The May 1983 Labour Force Survey (Cat No. 6203.0) by the ABS suggests an Australian typing workforce of 286,400. The percentage distribution by state is given in table 1.

The percentage distribution by industry is given in table 2. The concentration of typists in some industries is considerably greater than most groups of employees. Up until 1983 the number of typists was remaining fairly static but the percentage working part time was increasing standing at 22.1% in 1981 . Between May 1983 and May 1988 the number of typists increased by almost 100,000 according to the Labour Force Survey. Between 1976 and 1981 there was an increase in concentration in the more heavily populated states. In NSW demand increased by 11.2% . The market is over supplied but there are high wastage rates in the 25-34 year old age group and little competition from older women reentering the workforce


The data from table 2 would suggest non government typists to be about 61% of all typists which indicates total numbers in NSW of 78, 300. Assuming 2/3 to be in Sydney gives a total number of 52,500. This indicates the 40 typists required for optimum functioning of the business represent 0.08% of the typing market.


2.2 Cost of A Typist

From the 1981 Census of Population And Housing, typists earn an average of 111% of the average female weekly wage. The average weekly ordinary time wage for full time females, employed privately in NSW as at 19/2/88 was $404.30 which suggests average weekly ordinary time earnings for typists to be $448.88. For 38 hours this is $11. 81 per hour. Overheads of 1/3 would take the employment cost to $15.70 an hour and a productivity of 75% would increase the cost to $20.94 per hour worked.

2. 3 Typing And Data Entry Service Charges

Typing services generally charge by the hour and data entry services by the thousand keystrokes. A random survey of typing services revealed the charges in table 3.

For data entry Acu-Punch at 615 Princes highway Rockdale quote $1.80 per thousand keystrokes for work done in Australia and $0.95 - $1.05 per thousand keystrokes for work done in Malaysia. Work is generally forwarded as microfilm at a cost from 2 cents per frame plus by DHL within 48 hours. Using data from the financial model (see heading Financial Model, Other Variables, Pages Per Hour) for time required for typing reports and keystroke density from table 4 assuming reports with 1.5 line spacing and half standard elite/ half standard pica ie. keystroke density of square inch these charges become $25.30 per hour for data entry done in Australia and $13. 30 - $14. 70 for work done overseas. These estimates are not exact.



2.4 Type of Work

The percentage distribution of tasks is shown in table 5.

A subjective assessment of table 5 suggests letters and memos to represent about 82% of all work and reports and tables about 16%. As short jobs i.e. typing and memos represent a fair proportion of the potential market and a slow turn around would make the use of the service impractical it will be necessary to give a higher priority to short jobs when forwarding to the Philippines. A single space letter has an estimated maximum text area of 28.6 square inches see heading Financial Model, Other Variables, Pages per hour). Assuming half are done using standard elite and half using standard pica there are 66 keystrokes per square inch. This gives a maximum number of keystrokes for a single page letter of 1888 which using a standard word length of 5 keystrokes gives 377 words per page. The data on words in message for correspondence typing table 6 suggests at least 90% of letters would not be longer than one page. Assuming a 3:1 handwritten to typewritten compression it should only be necessary to give priority to three page incoming jobs to make the service practical for 90% of letters and memos.


2.5 Source of Copy

Two surveys on the source of copy are given in table 7.

A subjective assessment would suggest that for reports, 65% are entirely handwritten and 30% corrected drafts and for letters 44% are handwritten, 10% corrected drafts, 20% dictation and 20% self composed. A telephone dictation service that automatically forwards dictated work to the Philippines would be offered to satisfy the 20% who like to dictate reports.


2.6 Computer Usage In Small Business

For a business to use the proposed service it will need to have a facsimile machine and if fax quality output is not of good enough, word processing and communication equipment. Small business is defined by the ABS to be that which employs less than 20 people for retail and service industries, and less than 100 for manufacturing. In January 1987 14.2% of small business in S. A. used a computer. A further 14.9% indicated an intention to purchase a machine within 2 years. 50% of all computer users used their machines for word processing.

The industries which have both a large proportion of typists and a large percentage of word processor machines are finance and business services and wholesale trade. Interestingly the survey asked a question regarding communication packages and did not get enough positive responses for a statistically significant result suggesting that an absence of communications equipment may present significant problems in marketing to principals. Assuming SA to be representative of NSW, combining the figures from tables 8 and 2 and the total number of typists in Sydney gives all typists by industry with word processors in table 9.


Most of the community services typists are probably government employees, hence a large portion of this market would be closed. If 1/4 of the community services market is available, this suggests a total market of 3600 typists. The survey of intentions indicated the number of businesses with computers will approximately double over the next 2 years.

2.7 Market Region

The service is provided via telephone therefore the area to which it can be offered is limited only by the distance at which telephone charges become too high. Transmitting the completed work as an ASCII file requires only about 1/20 of the time necessary to transmit a fax image. Therefore the vast majority of communication costs are associated with transmitting facsimiles. These costs will appear on the customers telephone bill. Using the estimated 5 typed pages per hour of work, compression from handwritten to type written of 3:1 and a 1 minute transmission time per page gives a communication overhead per hour of work of 15 X telephone cost per minute. Applying Telecom charges yields the result in table 10.


High speed facsimile could reduce these amounts by up to 75%. If it's necessary to deliver completed work as a fax image these overheads are increased by a third, the extra being payable by me. Given a usual hourly charge of $20-$25 and my proposed charge of $12.50 the communication overhead under 50km is not great and that up to 85 km probably acceptable providing the finished product is not delivered as a fax image. Therefore the region to which I will market is up to 85km from Sydney. Beyond the 50km region the marketing effort will be directed to typing and data entry services who can accept electronic file delivery though work for principals will not be refused. The limits of the community call region is the 02 boundary in figure 1. The 50km and 85km region can be seen in figure 2.



The region to 85km includes Wollongong in the south just excludes Katoomba in the west and goes north to about Morriset but excludes Newcastle.

2.8 Providers or office Services

Providers and potential providers of office services can be broken into the following categories:

1. Serviced offices.

2. Word Processing.

3. Typing

4. Data Entry.

5. Printers.

6. Typesetting.

7. News Agents.

8. Stationers.

These categories relate to my service as follows: -

Serviced offices represent good potential customers as the volume of work is likely to be high. This makes the effort and expense of introducing the full service worthwhile and frees staff for other tasks.



Estimating the average service to consist of 3 people gives total numbers of 912. The 40 required for optimum functioning of my service represents 4.4% of this number.

The number of printers is huge and only a very small percentage would have to be persuaded to become agents to generate considerable business. There are ? stationers some of which already offer typing or word processing and ? newsagents. Again only a small percentage of either of these groups would have to become agents to generate considerable business


3 Marketing Plan

The business, being different from anything currently offered has some natural advantages and disadvantages and to be successful must operate within certain constraints. The marketing plan must be directed to minimise the disadvantages, maximise the advantages and produce a result within the constraints.

3.1 Natural Advantages

The principal advantage is the labour cost which is about one tenth of the Australian cost for a typist. This is best exploited by undercutting the opposition, yet offering a quality service by employing skilled typists and not overloading them with work. As well effort should be directed towards trying to attract high labour content work e. g. interpreting.

3. 2 Natural Disadvantages

The principal disadvantage is the lack of face to face contact and the difficulties of telephone communication. Regular customers would not need to communicate as often hence this difficulty can be minimised by subcontracting to existing typing services. During the establishment phase when the communications load is low free voice communication would be offered. This could be a phone number that automatically becomes available when the communications load is low but gives an engaged signal when the load is high.

3. 3 Constraints

Due to the high fixed costs it is necessary to get a lot of work fast. Transmission delays make it necessary to get a high proportion of data entry work (up to 2/3) or typing work where a slower turnaround is acceptable. As a partner is necessary this may best be achieved by combining with an existing data entry service. Typing is preferable, where possible, as it is likely to have a lower communications load per hour of work than much of the data entry work and is higher value added.


3. 4 Pricing Structure And Services

Several data entry companies already offer an overseas service. A higher price than they charge is likely to make the service unattractive but the price is already low and therefore difficult to undercut so a similar price will be charged with the marketing emphasis on a faster turnaround. This probably means a rate of only $10 to $11 per hour. When operating at full capacity approximately half of the work can be done overnight, the other half being done over the weekend. This is the marketing advantage over existing services.

The typing service will have 3 charging rates, one for high volume work aimed mainly at subcontracting to existing typing services, one for low volume retail work and another for higher volume retail work. For the subcontracting work advertising and administrative costs will be low and customers will be highly price conscious as lower price will be the principal marketing advantage. The price must be set lower than the usual subcontracting price, say $14.00 per hour. The low volume work is likely to have a fair percentage of bad debts, high promotional costs and high administrative overheads. The competition is existing typing services so the aim is to slightly undercut their rates therefore the price would be set to $20.00 per hour about $5.00 lower than most other services. The medium volume work will be aimed at those who might consider using us rather than employing a part or full time typist or whose current typist is overloaded. Bad debts are likely to be low, promotional costs high and administrative costs midway between the other categories. The volume at which the discount cuts in will be set at one quarter of the time of a typist averaged over the monthly billing period and must be significantly lower than the cost of an employee therefore set at $17.00 per hour.

3.5 Supply of Equipment

A number of customers will not have all of the equipment necessary. They may require a fax machine, a computer and peripherals, W.P. Software or a modem. Prior to commencement a relationship will be established with suppliers for this equipment. The fax machine and computer will be offered on a rental, lease or outright purchase basis. The software and modem will be offered for purchase. A price will be negotiated which undercuts retail and enables some commision. The principal purpose is to enable customers to easily obtain the equipment necessary to use the service but some income should also be generated.



4 Getting Started

In an effort to start gradually the following sequence will be adopted.

4.1 Form Association With Existing Service

The exact form of the association will depend on the existing operator who will have enough overseas work to support at least 5 data entry operators which on the estimated hourly rate of $14.00, 44 hours per week and 75% chargeable hours represents a turnover of $9250.00 per 4 weeks. The partner should have an entrepreneurial flair for marketing.

4.2 Develop a Microfiche Based Communications System

The purpose is to absolutely minimise the time taken for data transfer between the data entry operator and the customer. This should open new markets and allow an increased market share to be achieved by offering a turn around of 24 - 48 hours. The new market is subcontracting to existing typing services on long jobs at low cost. The increased market share should come from other data entry operators offering an overseas service and some work that was formerly done locally.

Customers will fax in work which will be printed directly to a microfiche printer in the airport office of a courier company allowing deadlines up to very close to plane departures say 1 hour before. After 5 hours in the air and 2 to the Philippines office the operator can begin working a minimum of 8 hours and a maximum of 2 hours after the customer has forwarded the data. After keying the data is returned to the Australian office and then by phone disk or tape to the customer within minutes of keying if sent to the customer by phone. Assuming a data entry operator can produce the equivalent of 5 typed pages per hour and each of these requires six pages of raw data, 10 operators in 8 hours require 2400 pages of raw data which assuming this arrives over an 8 hour period at 1 minute per page and an engaged response is desired no more than one time in 20 a Poisson Distribution suggests 10 incoming fax lines are required (see Financial Model, Other Variables, Fax Lines). A system as shown in figure 3 would require in the order of A$50 000 or hardware and considerable software development Probably requiring 3 - 6 months.


4.3 Open The Philippines Office

The Philippines office is opened and the work directed from the previous overseas service to the new office. Shortly after opening a marketing campaign is established to take advantage of the fast turnaround. As soon as the project is established a project is commenced to prepare the equipment for satellite data transmission. This will be done in the Philippines due to lower costs. At this stage some sub contract typing work will be secured. The slow turn around will make this a problem but longer jobs should be practical. Perhaps the low rate could attract work from students.

4.4 Commence Satellite Communications

This will be started when the volume of work approaches that sufficient to make the service economic i.e. enough for about 20 operators. A marketing effort will be made prior to commencement to establish agents for the typing service. This will include the following: Three weeks prior to start up advertisements will be placed in the classifieds under headings like "business opportunities. They will state "XYZ Typing is starting a new service. We are seeking subcontract work from typing and word processing services. We operate 7 days a week, 24 hours a day employ top class W.P. operators and charge only $14,00 per hour. You fax the work to us and have it returned electronically direct to your W. P. Please


contact ABC on Ph. 123 4567 at XYZ Services 1 Here St. Wherever." All enquirers will be asked for postal address, fax number, fax machine, computer used for H.P., which H.P. package is used and whether they have a modem. A fine mode computer generated fax will be forwarded with a further explanation of the service and stressing the quality of the work delivered by fax, and the possibility of photocopying even onto a letterhead for a quality plain paper product. A letter will be forwarded containing full details of the service prices and terms. A disk for the customers machine will be forwarded containing communications software, a copy of PC Write and prices and purchasing arrangements for a fax, a computer, W. P. Software, or a modem if the customer needs any of these items. An accompanying letter will advise that to take advantage of the service all they need to do is fax in some work..


5 Organisation And Facilities

5.1 Organisation Size

The phone line rental on a leased basis costs $0.28 per minute and on a casual basis costs $2.10 per minute which is too high for the service to ever be economic. Therefore it

necessary to lease a satellite link which costs approximately $400.00 per day 365 days per year. This communications link defines the size of the business which must be large enough to cover this and other fixed costs yet not so large as to exceed the communications capacity of a single link. Using the data from the financial model a communications link can support up to 113 typists assuming 80 minutes per day are used for speech. However this is impractical as transmission delays from the time the work is faxed in until the time it is received by the typist of up to 64 hours would occur.


Figure 3 shows this delay period plotted against the number of typists, based on the assumptions in the financial model and assuming transmission is made on a first in, first transmitted basis up to 20 typists no delay is experienced. At 36 typists the maximum delay becomes 3 hours and would mean that any work submitted by the after 2.45 pm would not be received by the typist until almost 5.00 pm and would therefore not be returned on the same working day. This is probably acceptable for initial work but is a long time to wait for corrections. Short jobs will be given priority and an additional charge priority service will also be offered to minimise this problem but delays start to become a major drawback with over 36 typists. However with 36 typists only 1/3 of the capacity of the communications availability is used therefore it is important that low priority work be obtained also. This will probably take the form mainly of data entry work.

5.2 Organisation Structure

Because of the much lower labour costs as much of the organisation as possible must be located in the Philippines. Probably the best structure is seperate companies in Australia and the Philippines with the Philippines company billing the Australian company for it's services.

The ideal for Australia is a partner with an existing data entry business who will concentrate on marketing the service. The invoicing will be managed by a factoring firm, an accountancy firm will provide taxation and other advice from records maintained in the Philippines. This would allow an Australian staff of just one though two would probably be better during the establishment phase. Work to be delivered by mail can be forwarded electronically to a subcontractor who will laser print and post it.

The Philippines will have a full time accountant to prepare financial reports, cash flow forecasts etc. and a systems analyst or programmer to maintain and improve the software. The typists will work in teams of 8 with a supervisor for each group. The office will operate for 3 shifts and seven days to offer a 24 hour service and to minimise capital outlays. It is important for typing, though not data entry that a customer establishes a relationship with a particular typist and wherever possible all work for that customer is done by their typist. This can only be achieved 9 unchanging shifts. The usual working arrangement in the Philippines is 8 hours for 5 days plus 4 hours Saturday. Therefore a suitable roster could be that in table 12.



This requires 28 typists and 3 supervisors. At start up there will be no team 2 and teams 3 and 4 will be half strength. Additional typists will be ready to start as business increases. The startup employees will be 1 accountant, 1 programmer/analyst 2 supervisors also typing part time and 14 typists. As far as possible each team will remain a separate entity.

5. 3 Equipment

An Australian based PC is required to store and forward incoming work and to receive and forward finished work. In addition other items required in Australia are a portable fax for demonstrations and marketing, communication equipment to facilitate data and voice communications with the Philippines and a mobile phone. The Philippines requires an office with some security capable of housing 40 people, office furniture, a generator for power failures, and initially at least 10 PCs connected in a local area network. One PC will handle communication, printing all incoming work on the laser printer. 8 PCs will be used by the typists and one used by the programmer and accountant. The Australian based PC will need to be able to handle up to 20 phone lines or incoming work. The software and hardware to do this does not exist and will have to be developed.

5.4 Communications Facility

The communications facility is central to the business. Communications will represent about 1/4 of the total costs of the business and must function smoothly to enable the business to operate. A telephone link via satellite must be leased at a cost of approximately A$ 407 per day. Across this


link must pass voice communications, ASCII files. A CCITT Group III standard mode facsimile image has 8 pixels per mm ( 203 dpi) horizontally and 3.85 lines per mm (98 dpi) vertically. This corresponds to about 2 x 10 pixels in an A4 page. A typical fine line mode (7.7 lines per mm) page can be compressed using 2 dimensional run length coding to 300,000 bits. Assuming standard mode at half the vertical resolution can be compressed to the same degree a document can be represented by 150,000 bits. This is approximately in agreement with Cannon brochures which claim to be able to transmit a standard A4 test chart in 12 seconds at 9600 baud which is a transmission volume of 115, 200 bits. The satellite line is guaranteed as good for 9600 bps transmission. A Trailblazer modem can transmit at up to 18,000 bps, therefore estimate that a 50% improvement on the 9600 bps can be achieved to yield a transfer rate of 14400 bps. This gives a transmission time per page of 10.4 secs or a capacity of 346 pages per hour (8308 pages per day). A communications overhead of say 10% reduces this to 311 pages per hour (7477 pages per day). When in character coding form a page of 40 lines with 80, 8 bit characters per line and 6400 bits for formatting and control has 32,0 bits of information which can be compressed to 16,000 or approximately 10.6% of a facsimile image.

Due to the high cost and limited capacity of the communications link it's use must be optimised. To achieve this the following must be possible: -

1. Direct dialling from Australia to the Philippines and vice versa so that a number can be dialled which will interrupt any data traffic on the link and enable a number to then be dialled in Australia or the Philippines

2. Low priority direct dialling. In this case a number would be dialled and the data traffic interrupted if the backlog is below some specified level otherwise an engaged signal is heard.

3. Store and forward facsimile transmission. Up to 20 phone lines should be available at one end only for incoming facsimiles. These fax images must be reconstructed, two dimensionally recoded, some data added including transmission time, sorted into a priority order based on waiting time and number of pages and forwarded when space is available.

4. Receive over satellite link compressed ASCII files, reconstruct and forward as fax images to specified numbers or as ASCII files to Keylink. Based on the number of fax lines required as determined by the financial model, 15 fax lines would be sufficient for 25 typists.


6 Financial Model

The proposal has been modelled with a spreadsheet to produce profit and loss, cash flow and balance sheet forecasts for the first 12 months of operation.

The assumptions used have been broken down to those associated with : - capital costs in the Philippines expenses in the Philippines capital costs in Australia expenses in Australia software costs other variables.

6.1 Capital Costs In The Philippines

6.2 Expenses In The Philippines

6.3 Capital Costs In Australia


6. 4 Expenses In Australia

6.5 Software Costs

6.6 Other Variables



should be 25 mm and margins at the top and bottom 25 mm.This gives a width of 150mm and a length of 247mm which forms a total area of 370 cm or 57.4 in Area of letters: Up to 200 words, a 50 space line is used and above 200 words 60 space Elite 12 pitch has 100 characters per A4 page and pica 10 pitch has 82 characters therefore assume an average width of 91 characters. From data in table 4 about 15% of letters are over 200 words therefore average characters per line = 50 x 0.85 + 60 X 0.15 = 51.5 This gives a total width of 51.5/91 x 210 * 119mm There are 70 single spaced lines per A4 page. Letters are generally typed in single spacing. A subjective appraisal of the letter format suggests an average 26 lines are unavailable for the body of the letter for a one page letter. This gives a length of (70 - 260/70 x 247 = 155mm and a total area of 184 cm or 28.6in. Pages per hour for reports: Reports typed at 1 1/2 line spacing require 0.23 minutes per square inch assuming half are at 10 pitch and half are at 12 pitch using the data for electric typewriters without tables. This gives an average output per hour for reports of 60/(57.4 x 0.23) = 4.5 pages. Pages per hour for letters: Letters typed at single line spacing require 0.39 minutes per square inch assuming half are at 10 pitch and half at 12 pitch This gives an average output per hour for letters of 60/(28.6 X 0.39) = 5.4. Total pages per hour: The total output per hour depends on the proportions of letters and reports. In section "2. 2 Type or Reports", the market was estimated to be 82% letters and memos and 16% reports however a typing service is likely to receive a higher proportion of longer jobs. Therefore assume 50% of all work to be reports. This gives a total output of 5.4 x 0.5 + 4.5 X 0.5 = 5.0 pages per hour. The variable pages per hour is used mainly for calculating the facsimile communications load.



7 Bibliography

1. Research Report: An Analysis Of The Australian Labour

Market For Typists Stenographers And Secretaries, NSW TAFE November 1983, pg 15

2. Op cit pg 24

3. Op Cit pg 35

4. Op Cit Table 23. pg 34

5. Op Cit pg 52

6. Op Cit pg 67

7. Average Weekly Earnings, ABS, July 1988

8. Leonard J. West, Acquisition of Typewriting skills, Second Edition, Pg 202

9. Op Cit pg 204

10. Op Cit pg 205

11. ABS, Computing Needs or Small Business, South Australia, January 1987, (8101.4)

12. Work Measurement in Typewriting, W. H. Burke and J. Maxim Watts, Pitman Pg 110.

13. Apollo Concept in Electronic Document Delivery by Sattelite April 83, State Library N384.3 1

14. Op Cit Table 1 pg 42.

15. Typewriting For A Keyboard Career, Complete Course, Joan Fielding etc., McGraw Hill 1982, Pg 30.

16. Op Cit pg 349.

17. Op Cit pg 80

18 Op Çit pg 30

19 Op cit pg 83.


20. Work Measurement In Typewriting, W. W. Burke and J. Maxim Watts, Pitman 1968.