On the latest episode of The ifa Show, senior consultant at Elixir Consulting and GSD Lab founder Lana Clark discussed the benefits of outsourcing and the importance of getting business processes right before doing so.
“One of the biggest things about outsourcing is that you’ve got to be really clear on what it is you do first,” Clark said.
“Many businesses go, ‘Oh, let’s just throw that out to an outsourcer’. Well, unless you’ve got your process sorted and [know] your business really well, outsourcing could be a bit, let’s not say a disaster, but it could be a bit tricky for you in the beginning.
“I would advocate and recommend that any business who’s thinking about outsourcing, make sure that you’ve got your process down really well first.”
Advice firms should have “bulletproof” processes in place prior to outsourcing services, she added, and make sure that there is a clear point of contact with the outsourcing provider to make troubleshooting issues easier if and when they arise.
Clark explained that there are two primary ways to outsource, and firms can do either or both depending on their needs.
“The first one is outsourcing by tasks. Typically, paraplanning traditionally is outsourced by tasks or by piece. You send a plan off to an outsourced paraplanner, they send you back your plan and off you go,” she said.
The second method, Clark said, is employing a permanent team member through an outsourcing provider to fulfil the tasks like a traditional team member.
“Whilst they are very likely not on location with you, in fact most of the time they’re not, they are a part of your team and you treat them in that way. You give tasks to them and they get done just in the normal workflow,” she said.
According to VBP’s 2024 Advice Operations Research Report, businesses that outsourced a team member had the highest average EBIT, hitting 25 per cent, and satisfaction score, 3.8 out of five. Businesses that only outsourced tasks had an average EBIT of 22 per cent and a satisfaction score of 3.7 out of five.
Notably, firms that didn’t outsource at all had a higher average EBIT than those who outsourced tasks, with 23 per cent, however, they also had a lower satisfaction score, 3.5 out of five.
Referring to the report’s findings, Clark noted that those who previously outsourced had a considerably lower average EBIT than the other groups.
“Interestingly, all the way down the other end of the scale, those who had outsourced in the past but didn’t currently, their EBIT sat around 15 per cent, and their satisfaction was at 3.5 out of five. So it’s a fascinating thing,” she said.
“I’m not sure how to equate that, whether the wheels just fall off when you decide to stop outsourcing, or for whatever reason you’ve stopped outsourcing, but make no mistake, outsourcing is an undertaking in your business.”
To hear more from Lana Clark, tune in here.
