Business process outsourcing (BPO) helps businesses to thrive because of the cost advantage it offers. International financial research and consulting firm Celent reports that outsourcing wealth management is on the rise. Some of the main findings of this report are:
- Cost cutting is the primary motive for outsourcing. It helps organizations cut costs by 20 percent to 30 percent within a period of three to five years.
- BPO is expected to grow much faster than IT outsourcing. In fact, BPO firms are reporting higher revenues than IT services.
- Outsourcing offers easy scalability and as a result, firms are quickly terminating their operations in some markets to expand other markets. Time is a critical factor in marketing, says the Celent report.
- Firms are outsourcing certain non-core business functions, including front office functions, technology and operations, so that they have more time to focus mainly on their core business. This is necessary because of the pervading financial crisis, stringent regulations, depleting asset position, and rising client demands. Many are outsourcing on an ad hoc basis to deal with short-term needs.
- Besides front office functions, large wealth management companies will outsource more middle office and back office functions. These include data and document management performance data aggregation, data cleansing, portfolio accounting and bookkeeping, clearance and settlement of domestic and international securities transactions, client reporting, client service platforms, client support and help desk, order management, advisor- / relationship manager-facing technology, channels, CRM, client reporting, providing mobile presence, and more.
- Wealth management firms will have up to two or three strategic vendor partners. So large BPO companies will strive to offer superior end-to-end wealth management solutions, while smaller vendors will focus on serving niche areas.
It’s not only wealth management firms that can benefit from outsourcing non-core activities. Any business from healthcare to law, media and education, can reduce costs and enhance their operational capabilities by teaming up with a professional BPO company.