To outsource or not to outsource

Given today’s climate, business leaders actively seek solutions to reduce total expenses while maintaining their competitiveness in the post-lockdown market. To achieve this, we suggest analysing your organisational structure and where, how, and by whom specific tasks are carried out, as these all significantly impact the company’s profitability and productivity.

Although outsourcing is an expense, it can help you develop your business and save money in the long run.

Freeing up time is one of the key advantages of outsourcing for business owners and leaders. Instead of spending all those hours doing or managing mundane, repetitive, or even specialist jobs, you can now concentrate on improving and evolving your firm to meet the demands of the new economic environment.

According to recent research by YouGov, outsourcing has become a typical solution to these problems, with 70% of B2B decision-makers reporting that they have delegated important tasks to outside parties. Only 25% of respondents claim to have never done any outsourcing in any department of their organisation.🤯

So, what is outsourcing? 🤔

In the corporate world, outsourcing often refers to the engagement of an outside freelancing agent or contractor to partially or entirely carry out an activity that was previously done in-house. The majority of the time, outsourcing is seen as a cost-cutting option, either to provide additional support when a business doesn’t need to hire a full-time employee or to lighten the load on employees so that their efforts can be directed elsewhere.

Why should you consider outsourcing? 🤨

If you haven’t made this leap already, it’s normal to be hesitant or concerned about entering the world of outsourcing. Still, it’s essential to keep in mind that by contracting out some of the tasks in your firm, you may start transforming your business to be much more effective and productive. We often hear great stories of our clients emphasising how helpful outsourcing has been in tightening up their in-house processes and making them more efficient.

Or perhaps some of your workload is uneven, or there isn’t enough of it to justify a full-time hire, or you are looking to de-hassle your in-house team by outsourcing one of their existing tasks so that they can focus on what they do best. Variable contract choices, such as fixed-fee, pay-as-you-go, and a dedicated resource model, make it possible and affordable to increase capacity generally or at times of peak demand.

And why only consider short-term? Consider the kind of long-term relationship you want to establish with the companies providing your outsourcing services. By taking the necessary actions to develop close working relationships with the experts in their respective fields working with your organisation, you are creating a more resilient business model. Ideally, you want the same individuals to work on your projects or tasks over the long-term, so that they can better understand your needs and those of your clients.

You might want to try this guide to see if it helps you decide if outsourcing is for you. Created by Dominika Sieradzka-MacCuirc in collaboration with Richard Allum, the Managing Director of the Paraplanners, this guide will help you see the many factors that need to be taken into account when deciding if outsourcing is the right step for your business at this point. 🤩

What could a business outsource? 😲

There are no constraints on what can be outsourced due to the wide availability of specialist firms, independent contractors and freelancers and the expertise they offer.

As long as you can find the right fit for your firm, there is virtually no limit to the kind of activities you may outsource.

You can outsource specific business functions such as IT, marketing, bookkeeping & accounts, compliance (which most firms do) or parts of the financial planning process such as paraplanning, administration or investment management.

The following are some basic suggestions for jobs you may simply outsource to help your business expand and potentially save money.

Paraplanning ✍️

As many of you will know, recruitment in the current climate is a challenge! A good paraplanner is priceless, therefore, it should come as no surprise that you need to be prepared to battle tooth and nail to find one at present.

So why not consider outsourcing paraplanning?

With outsourcing, you can access a much wider talent pool of individuals with excellent qualifications, vast experience and knowledge and potentially avoid or delay the need for recruitment. By doing this, you will be freeing the time of your Advisers and ensuring that you have ongoing access to experts (assuming you do your due diligence correctly). Or you will be increasing the capacity of your existing in-house paraplanning team, which is of particular importance for smaller teams.

Outsourced paraplanning can at times meet with resistance from Advisers who worry that the relationship won’t be the same as it would be with an internal hire. And it’s true, it won’t be. For example, it won’t be possible to bring your outsourced paraplanner to client meetings or just mention what you want them to do in passing while making a cup of tea. However, is it all bad? It’s likely to enforce more structure and improve your processes, which will benefit your business in the long-run. As for running ‘covered meetings’, there will be other solutions, such as your Client Relationship Manager attending the meeting.

Fee, income and account reconciliations 💷

Businesses of all sizes must maintain control of their finances. Account reconciliation is the process of verifying that the records reflect what actually occurred by comparing recorded transactions to monthly account records, such as bank or credit card bills.

Despite the expense, outsourcing fee, income and account reconciliations can pay for itself given the money you’ll be saving by discovering and rectifying discrepancies quickly and efficiently. Once completely automated, integrated reconciliation software can handle workflow for period-end close, reporting and analytics, transaction matching, exception management, and data translation and enrichment.

Administration Support 🤝

Outsourced administration support can help businesses improve their processes, increase efficiency, and create cost-effectiveness. In addition to offering best practice advice, the administration outsourcing partners can assist with tasks such as new business processing, booking client meetings, preparing review packs, general client administration, data harvesting (issuing & chasing of Letters of Authority, gathering data), task management, and lots more.

For most business owners or advisors, administration support tasks like platform administration or product provider liaison aren’t jobs they love to do, and generally aren’t their area of expertise. Similarly, the time of the Paraplanners is best spent elsewhere. So why not outsource to someone who loves to do it to ensure best allocation of resources; their time, skills and expertise?

Warning! ⚠️

If you are considering outsourcing any part of the financial planning process, be aware that you will be sharing a lot of client data with your outsourced partner, so you need to ensure that their data and device security policies, ways of communicating with you and processing data meet your own data processing and security requirements.

Possible cons of outsourcing 🚫

Despite the many advantages of outsourcing, you shouldn’t proceed until you weigh them against any potential drawbacks:

Quality, SLAs & Timescales ✅

Despite all the advantages of outsourcing, it only works well if you get the quality you want, delivered in a timely manner, and at the price you can afford. Anything less will leave you disappointed. And if you decide to outsource to avoid managing performance issues, it will of course lessen the load, but it doesn’t mean that you will avoid having challenging conversations at times. This is not to argue that you cannot successfully outsource specific tasks, but you must first establish the standard of quality before you initiate this partnership.

The term “service-level agreement” (SLA) refers to a legal agreement between a service provider and its clients that outlines the services they will deliver and the service standards they must uphold.

Having an SLA is imperative when working with any outsourced firm. An SLA safeguards both your business and the outsourcing service provider by establishing the conditions and rules necessary for both parties to cooperate effectively and adhere to expectations. A well-written SLA enables everyone to understand their roles, concentrate on main goals, analyse Key Performance Indicators (KPIs), and monitor team progress. Prior to signing an SLA, careful consideration is necessary.

It is crucial to define how you are going to manage and monitor outsourced work before you start. Create and agree on deadlines for important tasks or projects, explain to the outsourcing firm how performance will be measured, and the performance standards you anticipate from your outsourced team. Inquire about the outsourcing company’s recommended methods for task management, case handling and communication. Similarly, ensure that you understand what will be needed and expected of you as a client.

Putting in the work at the outset can save you a lot of hassle and disappointments down the line.

Company culture 👥

It’s easy to concentrate on the advantages of outsourcing without taking into account how it might affect your team as a whole. If you have a great team and a productive workplace culture it’s important to maintain it that way. The following are some examples of how outsourcing may hurt your company’s culture if you don’t communicate your plans with your existing team: