Companies must have a thorough understanding of their business processes if they are to realise the full business advantages of outsourcing, financial services firms were told last week.
Chris Skinner, associate director at analyst firm TowerGroup, issued the warning at the Intellect Financial Services Outsourcing conference in London.
He told delegates that outsourcing encompassed a range of strategies, structures and capabilities, any of which might benefit a financial services organisation, but only if it was first prepared to examine its own business.
Skinner said institutions must be prepared to disaggregate all of their processes and where necessary reintegrate them in different ways to get the most from the outsourcing market.
"Financial services firms should look at their processes one by one and work out how they might be structured in a different model," he said.
"Which are the critical components that need to be kept in-house, and what are the reasons for keeping them there? Conversely, which are the critical components that can be transferred out-of-house, and where should you put them?
"Remember, you are looking to put them in the best place possible - rightshoring rather than simply offshoring."
He said many banks were struggling to find the answers to these questions. "Banks know why they should be outsourcing, but they need suppliers to show them how they should be doing it. It is a challenge for both sides."
In finalising the terms of any outsourcing contract, Skinner said financial institutions had to prioritise IT governance. Only by doing this would firms ensure that the risk management and due diligence issues arising from outsourcing were fully considered.
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