The passage of the financial reform bill has introduced quite possibly the most sweeping reform of financial regulations since the Great Depression.
It promises to usher an unprecedented era for businesses and consumers alike. The bill aims to protect consumers and ensure economic stability from Main Street to Wall Street. Similarly, last year’s Credit Card Accountability Responsibility and Disclosure (CARD) Act redefined the business models of credit card issuers and consumers.
The effects of the Card Act center on greater disclosure of information to consumers as well as heightened restrictions on interest and certain fees. The impact on the accounts receivable management industry will focus on administrative functions, such as a need to provide more disclosure, provide notices of change of terms and other similar requirements.
Understandably, issuers are looking at ways to operate profitably and yet meet consumer demand both in terms of products and services. Optimizing operations cost is therefore drawing renewed focus. It is no surprise then that credit card issuers are looking to leverage the benefits of outsourcing that traditional banks have admirably leveraged over the past decade.
In the course of adopting and adjusting their strategies to respond to these challenges, many companies are reconsidering an offshore solution, regarded as taboo during the recession. Among the mission-critical questions raised for issuers in this new landscape is exactly how to select and implement the right collections solutions in ways that don’t disrupt service and that leave customer relationships intact.
"Rightshoring" - a hybrid of onshoring, nearshoring and offshoring - has gained significant traction with global organizations of late. With its blend of strategies, rightshoring is ultimately about restructuring and designing a client’s workflow to reflect the optimum mix of work performed locally as well as in near- and offshore settings. Central to this task is determining what work is best handled outside the organization versus inside.
Indeed, an appropriate rightshoring implementation combines the best of near- and offshoring solutions. A growing number of companies that had been utilizing one or the other have been embracing a blended solution. A truly global delivery model will become key for regional and super-regional firms.
This is happening right now – a growing number of organizations are looking for this type of blended solution.
Companies making such a move must confront the question of why to choose rightshoring, how to evaluate service providers, while correctly identifying the challenges inherent in the process. From a cost-benefits perspective, rightshoring affords several core advantages:
• Rightshoring is a cost-effective means to employ high-quality services. Historically, an outsourcing solution came down to one of two choices: Pure cost savings through offshoring or a high degree of quality control through onshoring. Today, companies are coming to recognize that cost reduction cannot be divorced from quality assurance. By retaining certain business-critical processes in-house while allocating simple and non-core functions to a combination of off- and onshore providers, clients can be sure of maintaining high-quality services within a cost-effective framework.
• Done correctly, rightshoring can improve customer relationships. One of the unexpected outcomes impacting companies as a result of regulatory reform is the need to manage customer reception of these broad changes in their many forms. Providers with a forward-looking mindset will look for ways to leverage multi-channel communications strategies to proactively address these changes and provide guidance to customers on how to interpret them. Approached in such a supportive way, rightshoring can constitute an enhanced customer experience.
• Rightshoring is a valuable tool in managing the customer lifecycle. Implemented appropriately, a rightshoring solution will engage several dimensions of the customer service value chain. For example, customers simply ascertaining a balance or engaged in order management can be well served by an offshore execution. Fraud protection and dispute work that has escalated to voice will be best addressed through an onshore platform.
From a business-process perspective, the two major advantages of onshoring, for example, are local language expertise and knowledge of country-specific products, services and, importantly, culture. By carefully interlacing onshore and offshore support with specific business functions, the customer experience is optimized. For example, if a call is escalated, rightshoring will allow for a “warm” transfer to a U.S. agent.
The hard, immediately measurable benefits of designing a successful rightshoring solution are complemented by important softer benefits that also accrue to the implementation. A client’s ability to work with customers stretches into that client’s profile in their local community. The local standing of these clients is critical, and represents an important source of goodwill equity.
Two other important factors that influence the long-range viability of a rightshoring business are, first, multi-geographical distribution of solutions. This helps neutralize risk factors since resources are being spread over a wider arena. Second, the disruption in the labor force wrought by the economic impact of the financial crisis has been a positive factor in talent acquisition.
As banks re-orient themselves to the ways of doing business in a substantially new landscape, intensified pressure on the bottom line will need to be balanced against the imperatives of effective, superior customer service. In their response to this new world, developing the appropriate rightshoring solution will test industry players in new and unprecedented ways. Having a smart, adaptable and cost effective roadmap will be job number one in accomplishing this
Tim Smith is senior vice president of Firstsource.