BGN Entrepreneur

In the increasingly complex world of outsourcing, there are no easy solutions. If you can avoid the pitfalls, there are sometimes surprising benefits to be had, but in spite of the common perceptions, cost saving may not be one of them.
Outsourcing bears an upfront cost that comes as a surprise to many organizations, the cost savings do not come through for a while. Yet cost cutting comes out as a key drive. Some 67% of investment organizations agreed that outsourcing deals are entered into by a desire to cut costs.
However, actually, institutions that were driven to outsource purely due to the cost are the ones that are suffering now. If it is done for cost reasons rather than looking for quality or skills, it will often end in tears.
According to consultancy Oliver Wyman, people need to cut the costs when revenues are down by as much as 20%, as they are for the fund management industry in the past years. People might consider outsourcing functions such as the back office, but they may find that bringing the work back in-house is the way to go.
People can use technology to make the human interaction more efficient, but they cannot replace it. There is a cost to service. There are strategic reasons to bring jobs back onshore. For examples, the financial institutions should consider bringing back in-house those functions that touch the client.

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