Offshoring has long been a cornerstone strategy for optimising operational costs, reducing risk, and accessing diverse skill sets. However, due to the unique nature of the Wealth industry, the future landscape presents distinct challenges. Historically, firms have turned to offshoring to handle back-office functions and other non-customer facing activities, driving cost efficiencies, and ensured alignment to strategic investment decisions. Many offshoring models are now maturing and moving away from a focus on pure cost to increasing customer satisfaction, gaining better flexibility, and access to a more diverse range of skills.

Several factors will determine how firms continue to utilise offshoring to help underpin their future strategic plans. Access to highly skilled individuals in traditional offshoring locations is becoming harder as demand grows, there’s concerns with ongoing economic instability and political uncertainties. Inflation, interest rates and continued regulatory pressure also This means that Offshoring isn’t as straightforward as it once was, adding further layers of scrutiny, complexity and time to the journey.

Threat or Opportunity?

The traditional Offshoring model is under threat. But if adopted in the right way, the once purposeful approach to cost reduction can evolve to better meet customer needs. So, what are the threats to Offshoring and can they be used to tap into opportunities?

  1. Rising Costs and Skillset Demands

 Wealth firms are grappling with the impact of rising costs in previously ‘cheaper’ offshoring destinations. Inflation has soared globally, and firms in these pivotal locations are increasingly under pressure to raise salaries and try to balance the books for wider overheads themselves.

Chart: Salary growth in key offshoring territories over the last decade. UK averaged 2.3% for the same period.

Sources: Statisa, TradingEconomics, LiveMint

It begs the question as to whether Offshoring is future proof in its current state.

Whilst costs for skilled individuals is increasing, it still breeds opportunities, and this means entertaining those ‘higher risk’ roles, or those traditionally only ever done onshore when discussing the movement of roles.

  1. Technology’s Influence on Customer Service

The offshore contact centre industry has taken a bashing over the past decade – Repeated surveys and reports have shown that the public remains highly critical and sceptical of how they perform and their ability to safeguard customer privacy.

While firms who can promise customers UK only based contact centres may benefit by meeting the needs of their clients, the additional costs involved, as well as problems of staff availability and retainment makes it unfeasible for many to give up offshoring entirely from a voice perspective. However, utilising AI to support translation issues and automating instructions real-time without the need for hand-offs and delays are just small steps to building customer confidence again.

  1. Changes to consumer behaviour

 Offshore outsourcing of customer enquiries and support functions has allowed firms to handle large volumes of transactions while maintaining cost-effectiveness.

As customer expectations evolve though, they seek more personalised and insightful interactions. Firms are faced with the challenge of enhancing the skill sets of offshore customer service teams to meet these elevated expectations. Intelligent business automation provided by AI-powered SaaS technology, which can automate inefficient and time-consuming processes, can be leveraged here. This strategy also enables a firm to work on more productive, value-added tasks, leading to higher employee and customer satisfaction.

By using CCaaS (Contact Centre as a Service) firms can adopt technologies which transform inefficient working into a highly productive customer-centric based environment. If remaining offshore is the preferred option, will also allow firms to provide a more seamless, automated service, improving the overall customer experience. CCaaS ensures less downtime and better dependability when compared to on-prem solutions, scalability, Omnichannel capabilities and integration of other 3rd party tools/AI/Machine learning services.

  1. Adapting to Regulatory Changes

As regulations become more stringent, it adds further complexity to the decision to Offshore functions.

With Consumer Duty and Operational Resilience, the centre of attention it likely means that systems and controls will need to remain in place to monitor the support provided.

Strategic Considerations for the Future

It’s clear Wealth firms must adopt a strategic approach to navigate the upcoming challenges in Offshoring, but we believe it will remain a key strategy for firms and expect the model to continue to mature as the likes of AI and machine learning become more mainstream in Wealth.

Benefits will be realised beyond exclusively cost savings and will help firms experience new ways of working.

These will compliment some of the existing successes such as 24/7 Operations which allow round-the-clock operations by leveraging teams across different time zones. They will support the ever-growing demand to remain agile and easily scale by tapping into extremely experience staff.

There will be continuous battles to overcome, Technology Implementation Costs, navigating Regulatory Complexity and attempts to change Customer Perception but none of these challenges are new – this time they will drive better outcomes for the customer, for the firm and shareholders alike.

At Simplify, we can help with all aspects of strategic planning, offshoring initiatives, and regulation. If you would like to harness the power of SimplifyDNA and the team to support your firm’s journey, get in touch with us today.

Chris Lamb

Wealth Consultant