Blog: Should you be outsourcing?

Business consultant Steve Billingham weighs up the pros (mainly) and cons of outsourcing.

The one thing all advisers tell us they need more of (after quality clients) is time. There is no doubt that time pressures are increasing on advisers, particularly where the advisers are also the business owners.

At a recent conference I came across some research suggesting that, on average, advisers only spend about 37% of their time with their clients. This may be a broad generalisation, but pretty I would suggest it is fairly typical.

In fact, it is probably an average that has been distorted by advisers who don’t carry the additional responsibilities that ownership brings.

Maybe there are tasks that you could delegate to other people in the business, but what if they lack the capability to get the job done to the required standards? That is where outsourcing can be the answer.

For a financial planning business there is a range of services that could potentially be outsourced, from regulatory compliance and investment management to accounting and marketing.

But what are the advantages?

Outsourcing has many advantages as it allows the business to focus on its core processes and strengths, yet access the other services it needs in a carefully-controlled way. Done well it will:

●    Reduce fixed costs (which may well help your Capital Adequacy situation)
●    Allow you and the business to focus on client contact
●    Streamline business operations
●    Provide access to professional skills that the business doesn’t have
●    Improve quality and reliability
●    Free up resources for more important work
●    Free up cash flow
●    Provide more flexibility

Keys to success

To get an outsourced relationship to work well, it will take time and effort to find the right supplier and build a working relationship.

There are four important points to remember.

1. Define your core strengths

Which parts of your proposition can only you and your team reliably provide? There may well be parts of the financial planning process that you do not need to be personally involved in. Rigorously challenge your own beliefs about what you (and only you) can do within the company.

2. Don’t rush

The advantages of outsourcing will obviously depend on what service/process you are trying to outsource, the type of business that you run and the quality of the supplier that you partner with. Therefore it is worth taking some time to do your homework and trial the services you are using to ensure that they are what you are looking for. Careful due diligence is critical.

3. Remember, it is a partnership

Don’t expect that you can abdicate all responsibility for success to the supplier you choose. Consider this a partnership rather than an outsourcing contract, where both parties must contribute 50/50 to its success.

If something goes wrong in the relationship, get in touch and provide feedback as soon as you can. Better still, get your supplier to visit your premises to understand the problem more deeply if you believe that will help.

A good outsourcing service provider will be prepared to visit your office to find out about you, your business, the type of clients you work with and your strategic and operational goals to help them judge their ability to provide the support and service you need.

4. Communicate regularly

Ensure you set up a regular two-way feedback loop to facilitate the discussion of operational issues and ensure that you are getting the level of quality and service you need.

Steve Billingham is owner and director of Steve Billingham Consulting