Furthermore, since the start of the Covid-19 pandemic, flexible work has become the norm, making it far more acceptable for people to work remotely exclusively.
For many advice businesses offshoring is the solution to their short-term and long-term talent management challenges. It is enabling them to drive efficiencies, deliver a better client experience and accelerate growth.
Where things have historically gone awry is when businesses have treated outsourcing purely as cost cutting exercise or hired the wrong skillset for the wrong role.
At the turn of the century, when technological advancements led to an increase in telephone and digital connections, financial institutions, telcos and other large companies seized an opportunity to outsource their call centre operations to countries like India in order to reduce labour costs, increase profits and boost shareholder returns.
This often resulted in hundreds of redundancies, a poor customer experience and significant brand damage.
More recently, the High Court ruled Qantas’ decision to lay off 1700 ground handlers and outsource their jobs was illegal and driven by a desire to avoid industrial action, in breach of the Fair Work Act.
Motives are important.
Most outsourcing failures are the result of inadequate consideration for customers, existing employees and offshore workers.
Advice business considering their outsourcing needs must ensure clients and staff are not negatively impacted. They should be see offshore people as part of the team, not a disposable cost centre. They should onboard, nurture and develop their offshore staff just as they would their local workers.
If done properly with the right motives, offshoring can be an effective solution for businesses struggling to attract talent.
Effective talent management
While the offshoring debate in Australia can be political and emotional, particularly in heavily unionised industries with large existing workforces, in financial advice, it is simply about talent acquisition and management. It is not about reducing headcount but freeing others up to focus on areas where they can add the most value.
One of the biggest challenges facing advice businesses today is how to achieve sustainable growth. In a nutshell, the answer lies in increasing their capability and capacity to serve more clients. That can’t be done unless the right people are in the right roles.
With unemployment in Australia at record low levels, and demand for advice set to rise as more Australians enter retirement, now is the time to be having serious discussions about how the advice industry is going to manage its long-term people needs.
According to research by the University of NSW Business School, over 30,000 Australian companies already outsource part of their business functions to other countries and around 70 per cent of leading Australian businesses outsource IT support for their technology needs.
A successful outsourcing strategy hinges on finding an experienced, reliable partner. They should be on the ground in a country with similar cultural values, strong language skills, and manageable time zones.
They must have an excellent reputation, a compelling people value proposition, and strong technology capabilities. Like any people business they need to understand the skills and behaviours required to do the job and have quality assurance and training programs in place to continuously improve each individual’s capability.
Importantly, a strong outsourcing partner will be able to help you communicate and demonstrate the benefits of outsourcing to clients. Offshoring shouldn’t be something advice business need to hide or apologise for. If their motives are right and they treat their offshore people like an extension of their local business, then every party stands to benefit.
Paul Barrett is chief executive of AZ NGA which invests in advice and accounting practices, and acquired a stake in offshore paraplanning and back-office service provider Virtual Business Partners in 2022.