Offshoring a challenging yet rewarding option for brokerages

A recent episode of Business Accelerator delved into the potential opportunities available through offshoring at a brokerage. Jason Back, founder and director of Broker Essentials, discussed the attractiveness of offshoring in the current market.

“Over the last decade, the offshoring from our industry perspective has been heavily driven through cost. It has been a very cost-effective channel. You could be picking up staff in the $30,000 to $40,000 range is pretty normal. Whereas onshore they might be costing you $70,000 or $80,000,” Back said.

“So, there was a clear cost benefit for going offshore. Those cost benefits were then handed back to the business to drive sales, increase efficiencies onshore, streamline some models.”

Back said that co-operation with the wider organisation is essential for effectively offshoring. The process should be made with the intention of boosting efficiency and, if people are left in the dark, they may feel threatened.

“We had to think through the ethical and moral implications offshoring jobs domestically and what that meant. We had to talk to our team about it and how they felt. And I remember having that conversation with a dozen client service managers saying, which parts of your jobs don’t you like? If we could get rid of some parts that are inefficient to you and that are laborious and tedious, what parts would they be and would you be happy to get rid of them?” said Back.

“The cultural and values discussion with the business [are important]. What does it actually look like going offshore? So going out to the Philippines, visiting a number of different business process outsourcers (BPOs), understanding the culture, understanding how workflow works, understanding the size of their desks, the types of work they do, what biometrics looks like, security looks like, how data’s stored securely through BPOs.”

Regardless of how offshoring is approached, Back drove home that planning is imperative. Decisions made on a whim have the potential to backfire.

“It has always come back to process mapping and really sitting down. I remember having a conversation while I was in Manila at the time with another brokerage that was there meeting some BPOs. I had my process maps actually printed up and spread out across the floor and they said, what are you doing? And I said, well this is my end-to-end process, this is every little rabbit hole. And they said, oh, we haven’t done anything like that. And I said, well, you’re not ready to offshore then because it’s really about understanding every part of your business,” said Back.

“What are you looking to actually do? Is it just vows and pricing and discharges, loading into apply online renaming documentation? A lot of brokers want the offshore staff to ring the banks and follow up and give the credit assessors a hard time. And I always say, well that’s interesting. Do they know what to ask the credit assessor? Do they know how the deal is structured? Have they got the knowledge and base to actually have that conversation?

“So, a lot of it’s really going back to looking at your end-to-end process, where is there opportunity for efficiencies, where are the gaps? And having a realistic conversation about what can be offshored or outsourced, what can be done by someone who doesn’t necessarily hold a huge amount of expertise in lending, that’s more administrative, more has a huge degree of sameness, is process orientated.”

Working hand in hand with aggregators can help streamline the process. Leverage the expertise of an aggregator to help with mapping.

“Please do speak to your aggregator. Your aggregators will have different views on who potentially you can use. They may have preferred companies; they may have even their own setup. I know some aggregators have got their own setups overseas as well. They’ve got experience in these areas that can help navigate you through that process,” Back said.

“Some aggregators won’t allow brokers to go direct. There are some concerns around data and security and the like. So, you do need to make sure, depending on whether you hold an ACL or you’re a credit rep under someone else’s licence, that you do go through a compliance first mindset, safety first, because again, not all of these companies are created equal and our client’s data and security is paramount.

“We need to make sure that we’re protecting all those parties. So, speak to your aggregator, speak to some peers and then start vetting the market about what’s out there. But my advice, especially if you’re looking at some of these companies, is ask them about who they currently deal with. Give them, get some names from them about brokers who are currently using them so you can speak to them. If they’re not happy to give you those details, then there’s always another company out there you can find. But you want proof of concept, you want to know what’s working, you want to know the struggles that some of these people have gone through to get it right.”

While there is plenty of opportunity to be made through offshoring, it’s not for everyone. As Back said: “Offshoring isn’t simple and I know we’d love to make it sound like it is, but it is a process.”

The transcript of this podcast episode was slightly edited for publishing purposes. To listen to the full episode of Business Accelerator, click below:

Jack Campbell is the editor of Broker Daily. After graduating from the University of Wollongong in 2022, Jack began his journalistic career working on Broker Daily’s sister brand, HR Leader. In August 2023 he was made the news editor and worked alongside some talented journalists writing articles and recording podcasts.

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