Alternative Outsourcing Options

For many the immediate reaction when it comes to the subject of outsourcing focuses on application processing, general customer servicing or specialist debt management activities.
While these activities have been the mainstay for outsource providers since the mid-eighties, there are now clear indications that many organisations are considering outsourcing as a viable option for a range of core and support functions.

Looking outside the financial services sector utilisation of outsourcing has resulted in the creation of virtual organisations leaving behind a core “soul” of a business. Whilst not suggesting the avocation of such models for the lending community, a wider consideration of outsourced options should be evaluated in these times of market stagnation. Passing to an outsourcer certain non-core activities is now striking a chord for many lenders looking to decrease management expense ratios.

As an example, non-core activity outsourcing could relate to document management and mail handling. There could be requirements to scan, index and distribute, also provide early identification of any complaints where dedicated procedures will be deployed.

With in-built processes deployed to accommodate prioritisations dependent upon nature of activity or stage in process. It would be expected that the outsourcer met specific service standards, and have in place practised methods of handling valuable items, or dealing with matters deemed to have a security risk.

Leading outsourcers have capability to meet clients’ requirements irrespective of organisational size, be it handling multi-brand/multi-site operations; or providing complex infrastructure that could not be cost justified by smaller organisations. Passing to an outsourcer handling a number of clients facing similar difficulties and challenges appears to be an obvious answer.
For many, considering the utilisation of an outsourcer would be a fundamental change in strategy and a departure from established business principles. Any decisioning process will have to consider the merits of either “making” or “buying” the activity – with “making” relating to either doing or undertaking the activity.

Putting aside financial advantages; a key argument in the context of “buying” being that outsourcing clients are able to concentrate on key elements of their business.
With a need to satisfy the growing demands of customers, outsource clients may wish to focus specific product/service differentiation. With a smaller market, it is appreciated that greater attention to detail with specifically trained staff can reap rewards, and there are benefits in removing the burdens and distractions of non-core activities.

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