How Outsourced Support Reduces Pressure for U.S. Financial Firms

The U.S. financial industry is under immense pressure. Regulatory changes are piling up, operational costs are rising, and staffing shortages are the new norm. Executives are struggling to keep up while ensuring their institutions stay competitive in a rapidly evolving landscape. According to the 2023 Global Shared Services and Outsourcing Survey, 83% of organizations have identified cost reduction as a top objective, highlighting that financial and shared services entities are focusing on outsourcing and similar strategies to cut operational costs​. One solution gaining traction is outsourced support—a tool that not only relieves some of the pressure but also enables financial firms to operate more efficiently and strategically. This article will explore how outsourcing can address these pressing challenges, allowing financial companies to focus on growth and customer satisfaction.

What are the Current Challenges in U.S. Financial Firms?

• Operational and Regulatory Challenges

The financial sector faces a complex web of operational and regulatory hurdles. Compliance requirements are growing more demanding, leaving institutions to bear heavy administrative loads just to meet regulatory obligations. The Financial Services Global Market Report notes that the financial services market is projected to grow from $31,138.82 billion in 2023 to $44,925.71 billion by 2028, at a compound annual growth rate (CAGR) of 7.6%. Alongside these challenges, customer expectations are also fluctuating—demanding more personalized and faster services, all of which adds to the operational burden. To navigate these complexities, many businesses turn to offshoring trends for scalable solutions.

• Staffing Shortages and Customer Service Demands

The industry is also dealing with a critical shortage of qualified personnel. Recruiting and retaining skilled talent is a tough nut to crack, particularly in specialized areas like risk management, IT support, and customer service. A report by the Society for Human Resource Management (SHRM) highlights that 58% of HR professionals across various industries identified a lack of qualified candidates as a significant challenge in talent acquisition. This underscores the widespread difficulty in filling critical positions due to skill shortages, leading to operational inefficiencies. For instance, many firms explore building effective offshore teams to enhance workforce capabilities.

Additionally, the 2022 Global Outsourcing Survey by Deloitte notes that 76% of executives reported their IT services were delivered via third-party models, indicating a substantial reliance on outsourcing to enhance efficiency and manage complex processes.

What are the Key Benefits of Outsourcing for Financial Firms?

•  Cost Efficiency

Outsourcing can significantly reduce operational costs. Firms save on the expenses of recruiting, onboarding, and training new employees, while also lowering infrastructure costs. Forbes notes that outsourcing customer service provides immediate access to established processes and reduces initialization costs, which can contribute to financial efficiencies. 

•  Access to Skilled Talent

Access to specialized expertise is another key advantage. Financial institutions can tap into a global talent pool, gaining access to skills that might be prohibitively costly to hire internally. This immediate access to experienced professionals is especially valuable in complex fields like regulatory compliance and risk management.

• Flexibility and Scalability

Outsourcing allows financial firms to remain nimble. They can quickly scale their outsourced operations up or down depending on market conditions or seasonal demand. This kind of flexibility is critical for managing costs and maintaining operational efficiency during times of fluctuating customer needs. Deloitte’s 2020 Global Outsourcing Survey highlights that cost reduction remains a primary objective for organizations considering outsourcing, with 70% of respondents citing it as a key driver. Additionally, 64% of respondents indicated that enabling business transformation was a significant factor in their outsourcing decisions. 

• Focus on Core Business Functions

By outsourcing routine administrative tasks, financial firms can redirect resources towards their core competencies. This means investing more time and attention in strategic initiatives like product development, improving customer experiences, or navigating market expansion opportunities.

Addressing Concerns About Outsourcing in Finance

• Data Security and Compliance

A major concern for financial firms considering outsourcing is data security. However, reputable outsourcing partners invest heavily in state-of-the-art security systems and are well-versed in U.S. regulations like GDPR and GLBA. Deloitte’s 2022 Global Outsourcing Survey indicates that 81% of executives turn to third-party vendors to provide, in full or in part, their cybersecurity capabilities, underscoring the importance of data security in outsourcing partnerships. These partners follow strict compliance guidelines, ensuring client data remains secure.

• Cultural Alignment

Outsourcing can mean something other than a misalignment of company culture. By working closely with the partner firm, financial institutions can ensure that the outsourced teams reflect their brand values and uphold their customer service standards. Structured onboarding and regular communication go a long way in bridging any potential cultural gaps. A 2022 article from Forbes emphasizes that leading with values during onboarding helps ensure that new employees align with company culture, which is crucial for maintaining brand integrity.

How to Choose the Right Outsourcing Partner?

• Key Considerations

Choosing the right outsourcing partner is crucial for success. Look for partners with experience in financial services, a proven track record, and strong compliance standards. A good outsourcing provider will have a deep understanding of the financial regulatory landscape and provide transparent processes.

• Partnering for Long-Term Success

Successful outsourcing relationships are built on a foundation of mutual trust and a long-term strategic approach. Rather than viewing it merely as a way to cut costs, see it as a partnership that supports the growth and evolution of the business.

McKinsey emphasizes that partnerships with clear, shared objectives and effective communication are more likely to succeed. For instance, aligning parent and partnership objectives and maintaining effective internal communication and trust are critical factors contributing to partnership success.

Take the Next Step

The U.S. financial sector is under pressure, but outsourcing can be an effective solution. From cost savings to flexibility, outsourcing enables financial institutions to focus on their core strengths while improving operational efficiency. Ready to reduce the burden on your team and concentrate on what matters most? Outsourcing is what you need to thrive in today’s competitive financial landscape. The evidence from industry leaders and global reports makes it clear: outsourcing can turn operational hurdles into opportunities for growth and innovation.

Contact Us Today: If your firm is ready to explore how outsourcing can alleviate pressure and improve efficiency, reach out to us for a consultation. We provide customized outsourcing solutions that fit your needs.

FAQs

Q1: Is outsourcing secure for financial firms?

A1: Yes, as long as you choose a reputable partner with a strong track record in data security and compliance. Reputable outsourcing partners often comply with major data regulations such as GDPR and GLBA, ensuring your data is in safe hands.

Q2: What types of services can financial firms outsource?

A2: Common services include customer service, IT support, compliance, and back-office functions. These are non-core activities that, when outsourced, can free up valuable resources for financial firms.