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Outfox the traps of outsourcing

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Malavika Santhebennur 10 minute read

As brokerages grow and become busier, outsourcing certain functions can help them build a sustainable business. But outsourcing, either offshore or onshore, can come with its own unique challenges, particularly at the start. We explore how brokers can overcome these challenges and make outsourcing work for them.

The concept of outsourcing, either offshore or onshore, is often met with scepticism from brokers. For single operators, who have had control over the entire business operations, bringing in a new team member is daunting at the best of times, let alone to a stranger who isn’t based in the same premises as them.

According to Home Loan Experts’ (HLE) managing director, Otto Dargan, outsourcing largely has a poor reputation because customers may not have had positive experiences with it.

“The thing is that most people, because of their experiences with some of the big telecommunication companies and the banks, believe that an outsourced team is of a lower quality than an Australian team,” Mr Dargan tells The Adviser.


“That’s just not the case. The problem is that most of these big companies have hired very badly. So, hire great people and you’ll be fine.”

Common challenges

Before brokers decide to enlist the help of outsourced services, they must bear in mind some of the unique challenges that come with it, particularly if they wish to outsource offshore. As well as navigating different time zones and languages, managing a team or candidate outside of the business also requires a firm strategy and management process (as with any new hire).

“Generally, most of Asia typically has a very hierarchical workplace, whereas in Australia, everyone is kind of equal,” Mr Dargan says.

“What you find is, often, staff in Asia are less willing to speak up when something is wrong or to give ideas, so they need a lot of encouragement in that area.


“Another challenge if you’re setting up your own company offshore is doing business in another country. Dealing with the Nepalese government is challenging.”

But other challenges brokers encounter with their outsourced team can often be a reflection of the way they themselves are working, Mr Dargan suggests. He says efficient delegation of tasks is key to running a smooth offshore team.

“If they need to come back to you and ask any questions about the task, then you didn’t give them enough information when you delegated,” he says.

Mr Dargan warns: “If you scale – whether offshore or onshore – and you don’t know how to manage staff, then it’s not going to work.”

If at first you don’t succeed...

But while there may be challenges the first time a broker tries outsourcing, learning from those mistakes and identifying any issues is key to making it work the next time around. One broker who required a few attempts at outsourcing before she found her groove was Gayle Stapleton, managing director of Stapleton Finance and former CEO South East Pacific for ANZ.

Ms Stapleton was searching for someone who could look after the processing tasks in her brokerage, but she had to go through a couple of iterations before forming an offshore partnership that suited her, she told The Adviser’s Elite Broker podcast.

“I wasn’t clear on what I wanted the first time around. I wasn’t prepared to invest [to the level required] to achieve a good result. The language skills were a problem for me. I took on a very green support person, when my business is anything but green.

“So, the combination of that person learning, the language difficulties, and me being quite impatient as a person, it was always going to end up in tears.”

However, Ms Stapleton said she learnt from the experience and was eventually introduced to someone who suited her by Craig Vaughan, the founder and product manager of software company for brokers BrokerEngine.

The journey to outsourcing efficiently may be paved with hurdles, but brokers have benefited from the end result. Therefore, before embarking on the journey, it would be prudent for brokers to examine whether outsourcing is the right option for them.

Why outsource at all?

Mr Dargan, who opened his 200-strong outsourcing office in 2012 in Nepal, notes that outsourcing can be done for various functions, including broker support, credit analysts, marketing, human resources, technology/developers, compliance, and even brokers.

From Mr Dargan’s point of view, every brokerage could benefit from outsourcing. “I’d encourage them to give it a go, particularly if they’re at a stage where they’re working too much and they just can’t handle the number of customers they currently have, or if they’ve been unable to hire the people they need in Australia or if their business has been a revolving door,” he says.

Mr Dargan believes a small brokerage with five or 10 staff could benefit from using a company that provides outsourced solutions.

Alternatively, some brokerages have looked to hire their own offshore staff. Sydney-based brokerage Smartmove and Miranda-based Birdie Wealth have both made direct hires in the Philippines to help them with their workload.

According to Smartmove CEO Darren Little, the move was so successful that Smartmove grew the team in Manila exponentially and began providing some outsourcing services to broking groups with whom they have long-term relationships and where the brokerage believed it could add value.

He said he believes that outsourcing can assist a broker in building a sustainable business and provide more consistency in the customer experience.

Mr Little says his outsourced team provides “educational” assistance rather than data processing services. “They’re educators and ensure that the deals are structured in the way the banks want them presented,” Mr Little tells The Adviser.

“We show high-quality applications; we box them up; we give feedback to the brokers. Prior to the files being submitted, they’ll go through a quality assurance program because we’ve got a standard that we’d like to meet.”

When do you outsource?

Deciding when to outsource is a personal choice and needs to fit with your business plans and strategy.

For some brokers, outsourcing is something they start considering when they find their time is being sapped with administrative jobs – harming their capability to find new business. For others, outsourcing is something they embrace straightaway.

According to Jonathan Lee, principal of Mortgage Choice Williamstown in inner-west Melbourne, if a broker decides to outsource functions, they would be better served to outsource at the outset when they first establish their brokerage.

“I hear a lot of brokers who say they just want to know how to do it first and then they’ll get somebody to do it,” he recently told The Adviser.

“I think that’s counterproductive because you spend all this time trying to perfect something that somebody else is going to be much better at.”

Mr Lee suggested that brokers should find people who are experts in their field, whether that is processing and packaging loan deals or implementing a social media strategy.

“You want to get people around you that are better than you. It’s easier to find people who are better than you,” he said.

What should you outsource?

Having an honest conversation about a broker’s strengths and weaknesses can provide clarity on what functions they should outsource, according to Mr Little. For example, if a broker’s strength lies in facing clients and providing customer service, they could outsource the administrative tasks, and vice versa, he says.

“What it’s going to come down to is individual business needs and where the individual brokerage is. I don’t think there’s one answer for everyone,” Mr Little says.

Mr Dargan recommends that brokers begin by outsourcing simple, lower-level tasks such as loan processing. However, he notes that outsourced teams should be treated like any employee and be given the opportunity to climb the ladder and become brokers in the future, should they show the inclination and capability to.

“The offshore team should be your talent pipeline. We hire the top 3 per cent of the population in Nepal because we’re incredibly strict in hiring,” Mr Dargan says.

“We then train them to be broker support, a credit analyst, and then a broker or a manager. We aim to be able to hire and train over 100 brokers a year.”

 Communication brings clarity

When it comes to creating successful outsourced arrangements, Mr Little suggests brokers should be constantly communicating with their outsourced team, especially if they are offshore.

“You can’t just give them a job and expect them to do it. You’ve got to be able to consistently give that education piece to that person doing that task,” he says.

“Yes, there are cultural differences and there are time differences and potentially some language barriers, but it’s about putting that effort in to understand who they are as a person, what they’re looking to achieve and how we can work together.”

According to the Smartmove CEO, outsourcing may come with its challenges in the beginning, but brokers can overcome them by recruiting the right staff, delegating tasks appropriately and keeping the lines of communication open.

[Related: Why this broker outsources her social media tasks]

Outfox the traps of outsourcing
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Malavika Santhebennur

Malavika Santhebennur

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.


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