Within our industry, the outsourcing possibilities are endless; paraplanning, compliance, fund management in addition to normal business functions such as HR and marketing.

    It is becoming increasingly more popular too; a recent study by the National Outsourcing Association looked at the predicted trends up to 2020.

    Out of all participants surveyed, 70% of those said they plan to increase their use of outsourcing over the next 5 years, with 35% saying they plan to increase it significantly. So if you already outsource part of your business process or look to do so in future we’ve detailed the 5 key drivers that are essential to a successful partnership.

    Determine why you are outsourcing

    Firstly establish why you are looking to outsource. The key here is to be sure you are outsourcing the right things for the right reasons. Do not simply identify an issue in your business and attempt to outsource it.

    Outsourcing successfully can provide capacity and ideas, but the partners you elect to appoint do not know the nuances of your business sufficiently to be able to fix any problems on your behalf.

    You should enter any outsourcing agreement with a spirit of partnership, recognising that they are only part of the solution. Remember, they are there to add value. They cannot fix the things that are broken, unless it is their mandate and time will be dedicated on both sides to coming up with appropriate solutions.

    Be clear on what you are hoping to achieve

    You should then be clear on what exactly you are looking to outsource. For example, rather than just a general heading of ‘compliance’, define precisely which areas of your compliance procedure you would like to outsource.

    Ensure you have clearly defined metrics for what you are expecting from the outsourced arrangement. Is it a return on investment (ROI is often used when outsourcing a marketing function) or a saving of time? (e.g. outsourcing your paraplanning). These metrics will not be achieved immediately as relationships take time to build and nurture. Therefore any justification for outsourcing needs to have a longer-term focus.

    Define what you want to achieve and, ideally, when you will achieve it by.

    Select who your outsource partners will be

    The third step then is to decide whom to outsource to. Begin by looking at your own business and consider the cultural aspects. Identify what does and doesn’t work for you. For example, if your company is heavily into IT and constantly looking to work with the newest software, a key criteria is that your outsource partner is just as comfortable with this.

    Create a list of potential firms and then obtain information from each of them in order to define your shortlist.

    Armed with your shortlist, consider things such as:

    » Qualifications, if relevant to the process you are outsourcing

    » Charges. As with everything in life, cheapest is rarely best!

    » How important face to face time is to you and whether this is something they can facilitate

    » How they will handle the security of your information and that of your clients

    » Your preferred methods of working or communicating, and whether they can accommodate this

    Ideally this should be a two way process; an experienced outsource company will also be looking to Fact Find you, to ensure your company is a good fit for them.

    Agree the ‘how’

    The last stage in the process is to agree the how. This means discussing with your selected provider how the service will work. Make sure you are realistic here, and bear in mind that this is a fit between two companies and has to work for both parties.

    The items agreed in your ‘how’ should be flexible. In our experience, in business, nothing ever goes to plan!

    It should also be future focused, in the sense of factoring in both your current needs and those for your expected business in 1 year, 3 or 5 years’ time. Ensure you know where your company is heading and check that the outsourced provider can be with you over the long term.

    Ensure pricing is discussed thoroughly. It must be clear and unambiguous. As a business owner you should be able to identify exactly what the costs will be, so there are no hidden surprises.

    While you hope this will be a long and happy partnership, make sure you have a well-defined exit strategy in the event that you wish to change providers. Even if the service is incredible, your own business may change in such a way that you no longer require the outsourced support.

    A final, but essential, part of the ‘how’ is to put in place a service level agreement (SLA). Most outsource providers will have SLAs already, which will confirm exactly what they aim to deliver and when. Make sure both parties are clear on this, that it fits with your business requirements and importantly, what will happen if SLAs are not hit.

    Regularly review your relationships

    You have now worked out why you want to outsource, what you would like to outsource, who you will outsource it to, and how you expect it work. The final piece in the puzzle is to keep the outsource relationship under review.

    This is about managing the ongoing relationship and should include periodic reviews. During these meetings you can discuss the SLAs, ensuring they are being met, as well the future plans for your business and how your outsourcing partner can help support any planned growth.

    Always remember your outsource provider should act as a true partner; a firm that will work with your company to help achieve your aims and support your clients.

    If you have 3 minutes spare, and would like the chance to win a bottle of champagne, we would really appreciate you completing this survey to help us find out a bit more about outsourcing within financial services.

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