Wealth managers that still operate IT services in-house need to give serious consideration to outsourcing or co-sourcing some of that work. The concept of every task being executed properly only if done in-house is a rather limiting perspective, especially in the modern workplace environment.
There are equally as many benefits to outsourcing or co-sourcing as there are pitfalls to maintaining all business systems in-house. Companies stand to recover a lot of value after delegating certain work to outside parties, including access to the most up-to-date technology and expertise from around the globe for a fraction of the in-house cost.
Consider the increased attention that your bottom line would receive if it wasn’t being expensed on technical and administrative issues. Outsourcing or co-sourcing allows firms to focus more on planning for their clients without compensating effort in other departments.
Eliminate In-House Risks
First understand the risks that are eliminated from a company’s responsibility. Most of these are potential staffing and system shortfalls.
Staff Size and Expertise
In human resources, there are two all-too-common staffing risks: staff size and subject-matter expertise. An undersized staff inherently lacks expertise, as there simply aren’t enough experts to withstand interruptions. If the one or two IT experts in the department are absent, the systems are vulnerable to failing.
Studies show that most companies have an in-house staff size that simply isn’t large enough to endure the several layers of software technology with confidence on a consistent basis. From terminations and resignations to temporary interruptions such as sickness or leaves of absence, losing just one staff member can throw businesses into flux.
Another common issue we see are businesses delegating too many responsibilities to their employees. Why are some financial planners also responsible for tech troubleshooting, CRM, and recordkeeping? It is truthfully outside of their scope of expertise. Let team members put focus toward what they do best.
Scalability
The staffing risks are also critical with regard to scaling. Growing a business requires greater IT capability and will naturally require continued hiring, onboarding, and training of additional IT staff members. That’s potentially a lot of time and money to allocate to new employees that may or may not work with a company for the long haul. These are wasted resources.
Outsourcing or co-sourcing allows IT systems to always receive optimal attention, no matter what phase of growth a business is in. An ideal outsourced partner is responsible for, and adept at, maintaining a staff size appropriate to accommodate the firm’s needs. And each member of that outsourced staff will be a subject-matter expert.
Technology
Also consider the ever-growing landscape of technology. Year over year, software is becoming more advanced and equally more expensive. Firms are either spending money on the latest tools or using outdated tech. Neither are optimal for growing revenue.
Firms can easily guarantee access to the most up-to-date software available on the market through outsourcing or co-sourcing. Never worry about a client complaining about user interface or employees spending extraneous time wrestling through several old financial planning systems.
Cost
The all-encompassing in-house risk each of the above attributes share is cost. That cost is equal parts time and money.
In order to expand staff size there’s more cost associated with hiring, onboarding and training. If the size of a firm’s client book is expanding, there’s more cost associated with servicing those clients. If there’s a need for higher-level expertise on the staff, there’s more cost associated with paying experts a higher salary. If there’s a need for better tech, there’s more cost associated with installing, onboarding and servicing that software.
What many businesses may not realize is that outsourcing and co-sourcing is actually significantly discounted as to the cost to run IT in-house. All of the different expenses are simply wrapped into a fee that is paid to the third party. And all of that extra time is recovered, to use accordingly.
And as businesses scale up or down, the cost of outsourcing or co-sourcing remains comparable.
Up Next – Leveraging the Advantages of Outsourcing: from expanded expertise, to minimizing the impact of unexpected staffing disruptions, to providing consistency in your day-to-day operations.