Friday, 13 February 2015

Why Outsourcing Works

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Summarised in two words….PASSION AND MAGIC! 

I have been privileged in my career to have worked for two Outsource Service Providers and one major international company.  My key learning has been that outsourcing partners are generally passionate about the stuff that internal marketing and sales teams see as merely supportive functions.  It is important to note that my comments are not based on my exposure as an employee only, but more so from dealing and discussing outsourcing services across the insurance industry with major local and international corporate companies.

At CDA, our passion for finding the best solution to any challenging project drives us to perform the way we do and when all the analysis and reports show the improvement in response ratios and persistency, magic happens…. Abracadabra……. our clients turn into happy smiling people!!!
We are seriously passionate about fulfilling that policy quickly, we are passionate about finding the magic in each call centre campaign to ensure its profitable for us and our clients, we are passionate about finding the right person to target your products to, we are passionate about ensuring that the customers you sell to are people who can afford and will pay the premiums.   In a tightly regulated industry these simple functions are paramount in proving that our clients are servicing their policyholders in the most compliant manner possible.  As a Registered Financial Service Provider, our internal processes and procedures have been specifically designed to meet our clients’ compliance requirements.

Effective remunerations structures are key to ensure that outsourcing is beneficial for both parties.  At CDA we have adopted a risk-model approach, where payment is linked to and dependent on delivery. With in-house call centres and administration divisions, the cost is incurred regardless of delivery of sales and service. In fact, in most cases where we have compared costs on a call centre seat basis, the cost of an internal call centre seat is 25% to 100% more than ours.  This is simply due to our relentless focus on expenses as our pricing is under constant scrutiny from our clients.  We need to remain competitive in pricing, but also importantly, we need to constantly innovate and bring new ideas or improved services to our clients.  The focus on innovation or re-engineering is not always the highest priority in internal administration divisions or call centres, innovation is often left to the “creative” marketers or product developers.   
As in everything there are exceptions to the rule and many of our clients or potential clients have had really negative experiences with outsource service providers.  Unfortunately you will always find companies who are inexperienced, ignorant or just simply dishonest and wanting to make a fast buck, often to the detriment of your client, the policyholder.   If at any point, you are considering outsourcing any service (especially intermediary or regulated services) make sure that you extensively evaluate your partner based on knowledge, experience and triple check industry references. Ensure that they not only understand your business objectives and needs, but that they have embedded it into their processes, compliance and regulatory standards.

So if you are in the market for an outsource partner look for these things:
1.     Do they understand your business?
2.     Are they willing to take risk?
3.     Do they have a proven track record with institutions of similar size and deliverables as yours?
4.     Do they understand the regulation and compliance requirements around the services that they perform?

Last, but not least, listen carefully, PASSION can be felt in their very first sales presentation and the MAGIC can be seen in the extent to which they will go to fulfil your needs. If you can’t feel the passion and can’t see the magic, maybe they are not the right outsource partner for you.

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