A practitioner’s handbook to outsourcing with Taskize

Outsourcing back-office operations has been a growing trend over recent years, driven by cost, regulatory pressure, the need to create capacity in operations, difficulty in hiring qualified staff to maintain legacy systems, and a desire to access the latest technologies offered by outsource service providers.

However, firms who have outsourced activities and the providers of outsourcing both face concerns in managing a set of complex relationships and workflows.

Taskize is an intercompany workflow platform which increases operational efficiency whilst giving management oversight and control, including in outsourcing relationships. More than 350 clients are live on the Taskize network, including tier-one sell-sides, large buy-sides, medium-sized firms, and market infrastructures.

Taskize allows a company to outsource its operational processes whilst retaining its valuable relationships with its clients. Outsource service providers benefit too, since Taskize makes it easier for them to service their customers and to grow their reputation and business repeatably, at scale.

How Taskize helps firms considering outsourcing
Last year we conducted a survey of senior operations and risk executives in 100 firms. The survey, “Both hands firmly on the wheel: How buy-side firms gain and maintain control in a business process outsourcing world” aimed to uncover information about buy-side firms’ attitudes to outsourcing, both positive and negative.

One key finding from the survey was the necessity for firms who have outsourced activities to maintain active relationships with their clients, even though the operational execution of that business is undertaken by a third-party provider. However, today, many firms are putting their underlying customers in direct contact with the outsourcing providers’ teams as part of service delivery. This creates real problems, not only from a commercial perspective but also in meeting regulatory control requirements.

So a key question from firms wanting to outsource was, “How do I maintain control and oversight of the processes that have been outsourced?”. “How can we protect our brand in the market?”

The answer lies in Taskize’s ability to route work effectively and efficiently to-and-from the outsource service provider.

Any work that needs to be delivered, or exceptions that need to be resolved, are sent directly to the firm by the underlying customer (see diagram below). Some of these requests may be retained and dealt with by the firm itself, but everything which needs to be handled by the outsourced service provider (or outsourcer in the diagram below) is sent automatically to them by the Taskize platform. The outsourcer resolves the issue on-behalf-of the firm and routes the work directly to the underlying customer as if it had come directly the firm itself. The process is completely invisible to any counterparties and the underlying customers. All the time the firm has complete visibility of the outsourcer’s performance, and the service level being received by the client.

Being able to keep the customer relationship entirely separate from the outsourcing function means the firm is secure in its relationship with its customer.Not only is the relationship maintained, but because of the benefits of outsourcing, access to the latest technology, and access to specific skills and resources, the firm that has outsourced its operations may be able to offer a better service and a more diverse range of services to its underlying customers than if it had retained these functions in-house.

Taking responsibility
A further consideration to keep in mind is that even when tasks are outsourced, under the Senior Managers & Certification Regime (SMCR), the firm’s senior management remains responsible for managing and controlling the business they have outsourced. In practice, this means they will have to have access to the right level of information and the ability to act quickly to counter any failures that may arise.

To comply with the SMCR provisions, there is a need for an efficient framework of oversight across all operations, including outsourced tasks. Taskize’s workflow tools allow senior managers to systematically monitor workflows in real time if needed. Being under tight regulatory scrutiny has become an uncomfortable normality for the industry, but with tools like Taskize, the benefits of outsourcing are more open and available to firms than ever.

And if it does go wrong…
If, despite the best efforts of both parties, something goes wrong in the relationship that cannot be resolved, the firm will want to change providers. This has been a major concern for firms considering outsourcing. In our survey, the difficulty of changing outsource service providers was one of the leading barriers to outsourcing expressed by respondents. (31%).

However, because Taskize routes the work between the outsourcing firm and the outsource service provider transparently to the customer, moving providers becomes much easier. Taskize provides a level of insulation or distance between the firm and the outsource service provider, allowing changes in outsourcing strategy to be actioned without requiring the firm to communicate this to their customers.

Perspective: Outsource service providers
As much as Taskize supports firms looking to outsource, it provides important benefits for outsource service providers, too. Outsourcing is a scale business with slender margins. Outsource service providers want to deliver as many services as they can, at scale, in order to be profitable. Over time, they expect to be dealing with hundreds of clients and counterparties, bringing the sophistication they have as an outsourcer to the organisations that are looking to outsource. The business model is incremental, starting by taking on one operation like settlement and winning more through the value of the services they provide.

Interestingly, the challenge for the outsource service provider is to create uniformity and control to manage the scale of their businesses efficiently. They are not alarmed by the commoditisation of the services they provide because they are competing on the quality of their services, the scale and efficiency (cost and accuracy) of their delivery, and the diversity of services they can offer. Their execution and control actually benefit from standardisation and commoditisation.

Because margins are slim, it is imperative for outsource service providers to find the right balance by providing an acceptable level of service whilst not over-delivering. Taskize’s real-time reporting on service metrics allows an outsource service provider to see the levels of service it is providing. It is then straightforward to compare these to agreed KPIs, for example, the average time-to-resolution in settlement breaks or corporate action queries, eliminating any guesswork or anecdotes from service reviews.

It is easy to see the areas in which (for example) time-to-resolution is strong and where it needs more work. And as both the outsourcer and the outsource service provider are looking at the same reported numbers, plans of action can be agreed upon to improve where necessary. In this world of slender margins, the outsource service provider will also be able to plan and optimise resources across its client base to ensure the appropriate amount of resources are available for the fees that are being paid.

This insulating effect between the firm outsourcing its activities can also help the outsource service provider grow its business. Put simply, if the firm realises the benefits of outsourcing and there is no change in operational processes for its underlying customers, it becomes an easy decision for the firm to outsource more to the outsource service provider.

Still have questions?
If you are either an outsourced provider or a firm looking to outsource and you would like to know more, please get in contact with us: sales@taskize.com. We’ll explain the outsourcing support model in Taskize and support you through the process of deciding whether Taskize is right for you.