The outsourcing of higher-end, more complex tasks is becoming a mainstream activity for many financial services firms, particularly investment banks, brokerages, wealth managers and asset management firms. These tasks are usually a part of middle- and front-office functions that are closer to an organization’s clients and regulators, and often include activities that generate revenues and differentiate the organization’s products. Although a majority of firms have some kind of exposure to high-end outsourcing, most managers of the underlying functions that use high-end outsourcing, and most outsourcing managers, struggle to scale up and achieve transformational change from their initiatives in this space. Unlike the more mature Business Process Outsourcing (BPO) and Information Technology Outsourcing (ITO) set-ups, the mechanics of high-end outsourcing, in terms of ‘how to think about it’ and ‘how to execute’, are largely left to individual genius.

It is in this context that we have written this paper in order to provide a roadmap and describe the various elements that go into a truly transformational high-end outsourcing initiative. Towards this end, we have primarily drawn on the lessons learnt by financial services firms who have successfully executed high-end outsourcing programs that have had a significant impact on their business competitiveness. Specifically, we outline a very different approach to strategic high-end outsourcing as compared to BPO and ITO, particularly with regard to identifying objectives, solution design, implementation and governance.

Authors:

Andrew Houston, Co-Founder, Amba Research

Ravi Sundararaman, Director, Global Head of Product Management, Amba Research