Making the real estate industry more efficient

Blog

Common Questions When It Comes To Outsourcing

business

Change is important for any organization. Internally it allows your employees to explore new opportunities and expand their skill sets, which directly benefits your operation. Externally, change can uncover new growth opportunities and more efficient ways of operating. Yet, like individuals who are averse to change in their personal life, organizations often have the same aversion. Management becomes comfortable in the processes and techniques they’ve employed for years, often overlooking or failing to see changes that could make them more efficient or more competitive.

While we could continue this post expounding on the benefits of change, our intent is to be more focused. Over the past couple of years, we have frequently discussed the benefits that lenders and settlement agents can gain from outsourcing back office processes to a service provider such as String. Though since a move such as this does require change, there is always some aversion. With this post, we want to share with you some of the more frequent objections we’ve encountered as to why an organization does not view outsourcing as a possible solution. Many of these comments were initially voiced by organizations that are now customers of String, yet this is not a self-serving, promotional post. What we are trying to provide are some general answers to questions on outsourcing that some of you may already be asking yourself.

By far the most common comment we receive is that the lender/ settlement agent has excess capacity and no need to outsource. With the cyclical nature of our business, many organizations routinely maintain excess capacity in-house to handle seasonal spikes. This practice does result in experienced staff being “on-call” when business picks up, but when the market slows this excess capacity becomes a sizable expense and drain on overall profitability. Through outsourcing, organizations can maximize profits by maintaining minimal staffing levels and utilize the outsource provider to address spikes in business. For our lending customers, managing staff and spikes in this manner has resulted in a greater than 25% reduction in cost to close and decreased cycle times by at least 15 days.

Control is another common issue. Organizations do not want to outsource because they believe it means they will have to relinquish some or all control of their processes. This is a misconception, at least as it applies to String. While it is true that our team will be working on your files, they will always be working under your direction within your LOS or platform. Operating through a VPN and following your designated workflow and tasks, you will have the same level of visibility and control that you have today with your in-house staff.

A third concern is that outsourcing interrupts face-to-face interaction and staff communication. That the outsourcer, in effect, acts as a middleman delivering the work product between your teams. This could not be further from the truth. For our customers, we operate entirely behind the scene and do not interfere with internal communications. We are a “workforce multiplier”. By that we mean we can help a single staff person become as productive as a team at a fraction of the cost. The communication between your staff members/ teams will be unaffected.

The final objection we’ll touch upon is that cost savings will be nullified because staff enjoy performing the processes that would be outsourced and will continue doing them even after an outsourcing relationship is established. Duplicative efforts, such as this, are something we attempt to avoid at all costs as it greatly reduces the cost savings we can provide our customer.  For organization where this objection is a concern, management must decide if they want to maximize the benefits provided by the outsource provider. If the answer is yes, then they should commit to moving the complete process to the outsource provider and re-assign impacted staff to more productive revenue generating tasks.

Making the decision to outsource processes within your organization should be well thought out. While we have provided you with some answers to the more common objections, we would welcome the opportunity to address any specific questions or concerns you may have. We can be reached at 202-470-0648.

  • Categories
  • Archives
    Related Links