In 2022, the outsourcing industry experienced significant attrition and wage hikes. However, those metrics stabilized in the first few months of 2023, and due to today’s economic environment, the focus has turned to cost control. To make the best decisions going forward and fulfill their cost-cutting mandates, business leaders must stay on top of these shifts.
In this webinar, our experts will discuss the six key pricing and commercial themes observed in the first half of the year and how enterprises can incorporate them into their planning whether entering new outsourcing relationships, renegotiating, or consolidating.
Our speakers will discuss:
Which key outsourcing pricing and commercial themes were observed in the first part of 2023
How these six themes are expected to play out for the remainder of the year
How enterprises can use these themes to plan and execute on their cost-cutting directives
To combat a looming recession, healthcare providers will need to take strategic action, including cutting costs, investing in patient experience, embracing digital technologies, and strengthening outsourcing partnerships. Read on to learn about the healthcare provider trends coming and how service partners can help hospitals and health systems overcome the challenges in an economic downturn.
Reach out to learn more on this topic or ask questions.
As we covered in our last blog, healthcare payers, particularly commercially-focused enterprises, have to brace for the impending economic downturn. The need to survive becomes even more essential for healthcare providers that are already bleeding under financial challenges.
The first half of the fiscal year 2022 was one of the most challenging times for hospitals in the US as they faced months of high-magnitude negative operating margins (Fig. 1). Although the margins stabilized slightly later, 2023 started on a rough note again owing to labor shortages, rising supply chain costs, and lower patient volumes – eventually leading to a further drop in hospital margins. To add to their challenges, the prospect of an impending recession is likely to exacerbate the situation.
As concerns of an impending recession take hold, patients may begin to reassess planned medical expenses in relation to other household costs, particularly when budgets become tighter. This can be particularly challenging for hospitals, especially given the aggressive cost-sharing measures associated with high-deductible health plans (HDHPs), which can pose additional obstacles to their financial recovery.
Recently, 4 in 10 Americans were compelled to delay or skip healthcare treatments, trim regular household expenses, or borrow money due to rising healthcare costs. These pressures will lead hospitals to carefully re-strategize their investments. Let’s deep-dive into some of the changes that hospitals and health systems can expect in a recessionary year.
What healthcare provider trends can we expect in a recession?
Moderate drop in specialized resources demand: An extreme shortage of clinical resources last year led hospitals to depend heavily on expensive contract nurses, extended overtime hours, and more clinical errors, eventually resulting in worse patient outcomes.
While the demand for clinical resources is expected to continue to keep provider leaders up at night, a full-fledged recession might ease the shortage a bit. Several healthcare institutions reported a rise in nurses in the last recession because some retired nurses started working again or postponed retirement.
However, this is not expected to eradicate the labor problem in the long term as the “experience-complexity gap” will only worsen with an increasingly aging population having complex and chronic care needs
Squeezed cost pressure: Hospitals will continue to see cost pressures hitting their margins because of increased baseline labor rates and supply chain costs. The pandemic and ongoing geopolitical issues elevated the supply chain disruption leading to costlier negotiations for specialized medical products. As a result, medical supply prices were up a whopping 46% at the end of 2021, compared to 2019.
Furthermore, it is important to note that healthcare provider businesses face a considerable amount of exposure to labor costs. This is especially true for more labor-intensive provider businesses like home health, personal care services, and hospice, where labor can account for more than 50% of costs.
Unfortunately, while costs continue to rise, reimbursement rates tend to only increase modestly because pricing negotiations with payers take place over multiple years, and government entities adjust pricing annually. While providers may seek to re-negotiate with health plans midway, pricing corrections may not be substantial enough to adequately prepare for the financial frugality that patients may begin to exhibit
Reduced demand for non-urgent/elective care: An impact on household budgets tends to make patients rethink planned surgeries and, in some cases, delay the avoidable, non-threatening ones as well. A survey conducted during the Great Recession found that families with limited financial means prioritized spending on essential non-medical items and decreased their healthcare utilization.
The survey also revealed several concerning trends in healthcare, including patient anxiety due to the inability to pay medical bills, a rise in missed appointments, an increase in significant stress symptoms, and new illnesses and health problems resulting from a lack of preventive care.
Moreover, with reduced patient volumes, healthcare providers may face increased competition for patients, particularly in the outpatient settings, leading to lower prices and diminished profitability. The competition can be further intensified with the entry of players like Walmart and Amazon expanding their retail clinic presence
Greater revenue dip: A recession leads to an increase in uninsured patients which negatively affects hospitals’ revenue streams. During the Great Recession, hospitals suffered a huge rise in bad debt and uncompensated care.
This impact can be more prominent for hospitals with higher exposure to commercial plans. According to the American Hospital Association, the hospital reimbursement rate by private payers increased from 116 percent of hospital costs in 2000 to 128 percent eight years later.
This rate has continued to climb, with hospital systems now charging commercial insurers an average of 208 percent of their costs or even more, findings from a 2019 Rand report that analyzed claims data from private employers in 25 states show.
If unemployment leads to a shift from privately-insured plans to Medicaid, hospitals could lose revenue. While cutting costs to save margins is an option, this might have a spiraling effect as resource and bed shortages would further impact revenues.
These healthcare provider trends will compel suppliers to take a streamlined and targeted approach to survive a recession. Here are some of these strategies:
Four strategies for healthcare providers to combat a recession
Identify cost-saving opportunities: Healthcare providers will have to conduct robust audits to identify cost-saving opportunities across the front-end, mid-, and back-end revenue cycle processes.
By identifying areas where costs can be cut without impacting patient care, providers can take concrete steps to reduce expenses and operate more efficiently. Providers with in-house revenue cycle management (RCM) operations can consider outsourcing as well as offshoring to benefit from cost arbitrage by identifying the right process, delivery, and partnership for outsourcing. In fact, outsourcing medical coding staff alone can save hospitals 25-30% on administrative costs.
Healthcare providers that have partially outsourced operations can consider expanding sourcing partnerships to other segments after a comprehensive assessment. Several health providers, such as Northern Light Health and Owensboro Health, have accelerated their RCM outsourcing plans in collaboration with service providers
Double down on patient experience: With competition intensifying during a recession, healthcare providers can differentiate themselves by investing in initiatives that improve patient satisfaction and loyalty. Providers need strong customer experience (CX) capabilities and to deliver informed and robust patient communication addressing a range of administrative and clinical issues.
Providers should strategically focus on improving awareness of overlapping needs for better relationship management, segmentation, marketing, analytics, product innovation, and engagement. The CX program should be built on fundamentals of personalization, particularly for complex care needs, as every patient has their own needs and preferences.
Healthcare providers should be open to feedback and actively seek to improve the patient experience by conducting patient surveys, analyzing data to identify improvement areas, and implementing changes based on patient response
Embrace digital: Providers will have to invest in future-proofed digital tools, solutions, and innovative portals that not only improve the front-end patient experience but also eradicate redundancies in the back office.
These solutions can span from point-based, pre-configurable solutions to E2E cloud-based artificial intelligence (AI)-enabled platforms coupled with automation and analytics capable of consuming vast amounts of information from data lakes.
A testament to this opportunity can be seen in Norman Regional Health System’s investment in VisiQuate’s AI-powered Denials Management Analytics and Revenue Management Analytics to power RCM operations using analytics.
On the clinical side, providers will have to invest in solutions that provide a comprehensive look into patients’ care journeys through proactive insights. Areas like remote monitoring and population health analytics should no longer be considered the care of the future and must be leveraged now to improve care coordination. Some of these efforts can be channelized in collaboration with health plans to ensure that care gaps are closed in time
Strengthen sourcing partnerships: Healthcare providers should comprehensively review current sourcing partnerships by taking an outcome-focused approach, adopting the right technological solutions, and creating a dynamic communication channel to manage operations and prioritize escalations.
By clearly defining performance metrics and incorporating a robust governance mechanism, healthcare providers can get the right benefits and meet the anticipated objectives.
What does this mean for service providers?
Service providers in the RCM operations space will have to adopt a unique and differentiated go-to-market strategy to solve these healthcare challenges by taking into account individual as well as market-specific issues.
This can be achieved by having a strong resource base with specialized skills and expertise, such as nursing, coupled with the scale that can support providers based on fluctuating demands.
Moreover, service providers also will have to leverage digital partnerships while simultaneously building their core competencies. By taking these steps, service providers can help hospitals and healthcare organizations weather the coming storm.
Global Services: Lessons from 2022 and Key Trends Shaping 2023
The global services industry found its stride coming out of the pandemic, quickly adapting to clients’ evolving needs and clocking double-digit growth rates in 2021 and 2022. However, as we look toward 2023, multiple factors – such as cost and price pressures, large-scale lay-offs, energy crises, geo-political instability, rising inflation, and GDP contraction – have left business leaders unsure of what to expect and how to prepare for 2023.
Join us as our experts reflect on the previous year and discuss global services trends, including the potential impact of the expected slowdown in the market on the overall workforce, sourcing, and the shoring/location strategies of enterprises.
What questions will the speakers address?
How did the global services industry perform in 2022?
What are the key trends and outlook for the global services market in 2023?
With rising macroeconomic uncertainties, how is the demand for IT-BP services evolving?
What are the observed trends in location strategies, and will talent concerns begin to fade?
Does sustainability take a back seat as the focus shifts to resilience?
The failure of Silicon Valley Bank (SVB) along with Silvergate and Signature Bank raises the question: Are these isolated incidents or signs of greater trouble in the financial services industry signaling a recession in the US? We believe this will start a domino effect impacting banking regulations, profitability, and technology spend.
The recent collapse of the banks will have repercussions across the financial services system and may trigger the following aftermaths:
Opportunities for large banks to capture business from banks with similar concentration sector risks of sectors that are seeing slowdowns (e.g., the start-up and tech concentration for SVB)
Rising mergers and acquisitions (M&As) to counter concentration risks and take advantage of current banking valuations, especially in the mid-market and regional banking segments
Reversing rate hikes by the Federal Reserve could bring about a multi-fold impact, as most organizations have planned their business strategy with the assumption of additional hikes for rates in 2023
Tightening of spend across organizations to manage near-term profitability. This could also cause spending slowdowns this quarter for IT outsourcing suppliers. Discretionary spending also will dry up, and decisions on new large modernization deals will be delayed
Declining revenues and loss of business in the current and following quarters for IT outsourcing suppliers catering to these banks
After the dust settles, these bank collapses can bring about the following two key learnings in the long term:
Data and analytics and Artificial Intelligence (AI) technologies could play a key role in better risk management (e.g., for the SVB asset-liability mismatch issue) to predict similar risk scenarios and prevent future failures
Additional stress test scenarios can help avoid future bank runs on non-SIFI institutions
Banking trends and impact
As the events played out, Moody’s downgraded its view on the US banking system from stable to negative, citing a rapidly deteriorating operating environment. Banks with sector-specific concentration risks, specializing in two or three sectors, have grown deposits in the last couple of years and also have a higher percentage of customers with average deposits exceeding the FDIC-insured limit, putting them at higher risk.
These banks will need to assess their portfolios and provide assurance to their customers. Even with these guarantees, customers still may decide to change their banking partners and seek traditional large banks that have more liquidity, impacting regional and smaller banks’ growth.
Declining customers and subsequent deposits will also affect other banking portfolios, and digital and technology transformation spend may take a hit. Banks’ risk management functions also will be scrutinized again. For example, only one of the seven members of SVB’s Risk Committee had risk management experience.
Implications for the financial services industry
The global financial services industry also could be impacted. Other geographies like Japan and the UK are showing signs of distress with banks of similar portfolios and exposures.
The bank failures could have a lasting impact on the sector as the financial services industry restructures and implements new processes to avoid similar scenarios, including:
Stricter stress testing rules to prevent further risk to the nation’s financial stability
Increased frequency and number of stress testing within banks as they reassess their portfolios and plan for any asset-liability mismatches
Greater focus on banking governance in the US triggered by the questions raised over systemic risk exemptions for SVB and Signature
Layoffs and hiring freezes as the industry becomes more prudent and conservative
Larger banks taking business from banks that have similar risk issues and might struggle
Rising M&As, especially in the mid-market and regional banking segments
Opportunities for providers
Here are our recommendations on how technology and service providers can capitalize on these new banking trends:
Adopt a multi-stakeholder approach with large banks: More than half of the business and financial services (BFS) technology spend comes from Tier 1 banks, and we expect investments by these market giants to remain strong and even expand to address the ripple effects. Providers should adopt a multi-stakeholder approach to target risk and compliance, marketing, operations, technology, and business unit leaders who all might course correct their strategies (in response to potential Federal Reserve reverse rate hikes, products being stress tested, new ones being launched, increased regulatory reporting activity, etc.)
Prioritize accounts for small and mid-size banks and credit unions: Service providers need to re-prioritize their account strategy for these banks as they renew priorities and focus areas. We expect overall spending by small- and mid-size banks to decline, making it critical for providers to identify and pursue the right accounts with the most relevant messages (based on the level of financial health)
Reenergize pre-COVID cost-takeout playbooks with next-gen elements: As banks come under immense margin pressure, some asset takeovers and carve-out opportunities may arise. A solutions mindset will resonate more soundly with clients than a pure talent-led play. Providers should plug gaps by working with technology partners and/or bring in-house technology assets.
We expect an increase in offshoring intensity and a push for captive setup conversations through a build-operate-transfer (BOT) model approach. Service providers should watch the direction of US dollar prices as commercials will need to be revised for the foreign exchange (FX) impact (the double impact of potential rate reversal and wage inflation)
Support clients on product/portfolio diversification strategies (long-term): BFS firms entering and/or expanding their asset and wealth management business as part of their revenue diversification plan will spike. We hold onto our growth forecast in this segment with renewed affirmation from the market
Pivot to growth pockets that will be less impacted: Not all lines of businesses will be equally affected. There’s a glimmer of hope for a revival in investment banking, private equity, treasury, and brokerage spending on technology outsourcing. However, cards and payments will stay flat, and lending might struggle
Looking ahead, BFS firms will cautiously approach technology and outsourcing spending, resulting in another quarter of soft demand. We also expect increased medium-term regulatory actions leading to spending increases across risk and compliance functions for non-SIFIs.
Rippling effects across geographies
The recent bank failures have an underlying mix of bank-specific (micro) and macro-economic factors in play. The macro factors have the potential to increase fear in the markets (and depositors) as government bond yields have shown signs of reversing their course, and the added factors of slower economic recovery, inflation, high-interest rates, and the resulting layoffs in specific sectors add further pressure.
Credit Suisse saw a 20% fall in share price on fears of a liquidity crunch on March 15. This also impacted shares of other European banks, such as BNP Paribas, Societe Generale, Commerzbank, and Deutsche Bank falling between 8% and 10%.
We are closely observing the market and regulatory actions and are available for any questions you or your teams might have about the impact of these latest banking trends. Please reach out to Ronak Doshi, [email protected], Kriti Gupta, [email protected], or Pranati Dave, [email protected].
In 2022, the global talent shortage and outsourcing price increases due to wage inflation led business leaders to rethink business operations and workforce plans. As we near the close of the first quarter of 2023, will we finally see opportunities to lower costs 📈?
Join this LinkedIn live as our outsourcing pricing experts provide insights tailored to the Asia-Pacific (APAC) region into how pricing is likely to shape up in 2023.
What questions will the event address?
✅ What does current outsourced deal pricing look like in the APAC region? ✅ What is the future outlook for pricing in APAC? ✅ What should enterprises do to ensure commercial competitiveness for their deals in a fast-changing environment?
Trust and Safety (T&S) is no longer just good to have, it is one of the most critical business functions for any organization that has a presence in the digital world. Read on to learn about six strategies that can be deployed to bolster your T&S capabilities even as the fear of a recession looms large.
Multiple economic indicators are signaling that a recession is in the cards. Soaring inflation rates, the geopolitical shocks caused by the Russia-Ukraine war, and the lingering impact of COVID-19 continue to take a toll on the global economy. The US economy is expected to contract by 0.5 percent in the fourth quarter, and a more severe impact is predicted for the UK and the European region.
Contrary to previous recessions, the high-tech industry is the most impacted of all segments. Layoffs have been among the many cost optimization measures the industry has adopted to navigate these uncertain times. Over 93,000 employees have been laid off in the US alone so far.
Opportunity to rethink the current T&S practices
Regardless of the macroeconomic situation, T&S remains critical for all businesses that host user-generated content on digital platforms. The recession may be a short-term phenomenon, but it clearly presents enterprises an opportunity to re-examine their current T&S practices and determine how to do the work more efficiently over the long term.
Here are some strategies that enterprises can consider to optimize their T&S/content moderation investments:
Consider outsourcing as an option: Maintaining and managing a large talent pool for T&S can be costly. Companies also need to take into account the incremental costs of creating a wellness infrastructure for employees and continuously training them on the latest regulations. In addition to potential cost benefits, outsourcing enables businesses to manage and moderate user-generated content in various niche and mainstream languages at a global scale, while ensuring accuracy and agility in response. The recession warrants enterprises to evaluate the sustainability of maintaining in-house T&S teams in the long run
Identify the most viable shoring mix: Offshoring T&S is an effective way to cut costs while maintaining the same quality. In a bid to optimize costs during the economic slowdown, certain large tech firms have already shifted their T&S capabilities from the US and Europe to cost-effective locations such as India and South East Asia.
Enterprises even can consider leveraging certain non-traditional delivery regions such as Africa and Latin America, which offer significant cost arbitrage opportunities. Some of these regions have relatively high maturity for the delivery of certain trust and safety services (e.g., Kenya has high maturity in the delivery of data annotation services). Sourcing from certain locations also can fit in well with broader environmental, social, and governance (ESG) initiatives of firms
Adopt a pragmatic approach to digital investments: Large tech firms’ T&S strategies have always been to build the technology in-house and partner with third-party service providers to leverage their talent pool for any human intervention required. As building technology for every new type of threat may not be economically viable, “buying” or “partnering” with the relevant technology providers can be a better long-term alternative. Several digital platforms already have resorted to mergers and acquisitions to boost their T&S capabilities – Microsoft’s acquisition of Two Hat and Reddit’s acqui-hiring of Oterlu being the most notable examples.
Another trend to keenly observe is the growing number of partnerships among service providers and technology providers. This is a move that can unlock Artificial Intelligence (AI)-human synergies and lead to further cost and process efficiencies. Enterprises need to evaluate how these collaborations can be effectively leveraged as part of their T&S strategy.
Leverage alternative talent models for non-sensitive work types within T&S: Alternative talent constructs such as the gig workforce and contractual workforce are cost-effective alternatives to full-time agents, Everest Group research While the gig workforce is not deployed to moderate egregious content due to persisting concerns around data privacy and ensuring the well-being of moderators, these workers can be extensively used to handle non-egregious content moderation and other trust and safety tasks (data annotation, translation, etc.).
In fact, a hybrid model that involves gig workers and full-time employees is becoming more prevalent in the market. From 2019-2021, the share of the gig workforce in translation and localization and transcription services in the service provider workforce has grown 20% and 28%, respectively. At the same time, the full-time employee growth rate for these services has been less than 10% and 3%, according to Everest Group research
Engage in discussions on creative constructs: Many organizations are already deploying proactive threat detection tools and T&S solutions that can minimize human intervention by analyzing the context. Innovation in talent management and well-being facilities can reduce the backfill costs from attrition and create a more resilient workforce. Adopting innovative commercial constructs such as Experience Level Agreements (XLAs) that supplement Service Level Agreements (SLAs) can help enterprises drive business value while optimizing spending. Innovation should be a major criterion for any organization in its T&S investment strategy and when engaging with third-party suppliers
Reduce the portfolio risk: Enterprises can de-risk their portfolio by diversifying the supplier mix. This would require them to identify “at-risk” vendors and to have an active plan for business continuity. Leveraging a healthy mix of global and local providers would help in maintaining a localized flavor in service delivery while optimizing costs.
Trust and Safety outlook for 2023
With newer content formats such as metaverse and generative AI gaining popularity, the volume and variety of malicious content on the internet are expected to surge. Additionally, regulators across the world continue to tighten their grip on social media and hold them accountable for the content on their platforms.
Hence, organizations need to tread carefully and keep growing their T&S capabilities to ensure a safe experience for their users. They should not be overly focused on cost and must weigh the risks arising from making any changes to their T&S function. Given the current trends, the fast-paced growth that the content moderation market has been witnessing in the previous years is bound to continue near term.
In the past, GBS organizations have displayed resilience – tackling the ongoing pandemic and intensified talent war. For 2023, GBS organizations must maintain this “persevere” mindset and continue alignment with CEO mandates.
In this on-demand webinar, our analysts will discuss how GBS leaders can sustain the strong momentum they have developed.
What questions does the on-demand webinar answer for the participants?
What are GBS leaders’ strategic priorities for 2023?
How can GBS organizations continue to build their strong foundation and drive more alignment with the enterprise?
What actions should be prioritized?
What steps can GBS organizations take to stay on top of talent needs for 2023 and beyond?
With Australia facing a looming recession, outsourcing is emerging as a solution for banks and financial institutions to navigate economic uncertainty, improve efficiency, and find expert talent. Read on to learn more about the impact of an Australian recession on the industry and opportunities for service providers.
The Australian market is not immune to a recession
While the Australian economy has avoided a recession for the past 27 years, it may not be able to withstand the current environment. Its long history of stability can be attributed to relatively stronger population growth than other developed countries, with Australia recording an average 1.37% growth rate between 1992-2017. Clear-eyed decisions by the Reserve Bank of Australia (RBA) on when to follow the US on rates, plus a large reserve and export of minerals and other natural resources, also contributed to Australia ducking a few recessions.
But comparing the Gross Domestic Product (GDP) per capita for the US and Australia from 1970-2021 shows a similar pattern that could signal an economic slump.
Although the American reaction to financial crises seems exaggerated compared to the Australian market, the direction is very similar, with a strong correlation coefficient of around 99% and a coefficient of determination of around 98%.
Correlation doesn’t imply causation, but we can reasonably infer that they tend to move in similar directions or at least are impacted by similar global trends, showing that Australia isn’t as shielded from the global recession as the world wants it to be, at least at a per capita level.
Key drivers for the slump
The Australian recession (at least in per capita terms) is slightly complex. Unlike other countries globally, one key driver isn’t behind the economic downturn. Instead, the following hindrances are impacting its economy to varying degrees:
Higher energy costs – Supply-side energy price inflation has a greater impact on Australia because of its 71% dependency on fossil fuels. The Consumer Price Index (CPI) rose 1.8 rose in the quarter and 7.3% from the prior year
Increasing wages – As the labor market tightens, wages increased 2.9% in the private sector in the third quarter of 2022 and 11% from last September. But the increases won’t compensate for rising goods and services prices
Dropping real estate prices – Even though the number of residential properties rose, the total value fell $359 billion to $9,674 billion this quarter with the average prices falling $36,800 to $889,800
The RBA has been closely observing this situation and is attempting to counter inflation by increasing interest rates, which will lull the economy into a slower state. Interest rates have risen to 3.1% from an almost negligible rate of 0.1% in December 2020. This will greatly hamper consumption and investment spending. Non-discretionary spending increased by 21% in October 2022 from the previous year.
In addition to this, Australian businesses are being marred by the talent crisis, with almost a third (31%) of businesses finding it difficult to find suitable staff and almost half (46%) of businesses experiencing declining operating profits.
Will banks suffer?
In one word: Yes. Financial services have been significantly impacted by the Australian recession. While the Australian banking sector still is dominated by the big four banks (NAB, CBA, Westpac, and ANZ), their share has been declining over recent years with the emergence of tier 2 banks and nonbank financial companies. Operations have been difficult for banks, with almost 20% facing difficulty in finding suitable staff and the cost of doing business rising exponentially.
Rising interest rates also will contribute to lower mortgage originations and refinancing. With consumers having less personal income combined with higher interest costs, residential property investment and mortgage volumes will suffer. Falling property prices also will impact consumer wealth. Apart from originations, financial institutions’ cash inflow will suffer as delinquency rates rise since most loans in the Australian market are variable rate loans.
Also, most transactions now are made using electronic payment methods rather than cash, and checks rarely are used anymore. With the growing trend of using credit cards and increased offerings for buy now, pay later (BNPL), default rates may rise in the future. BNPL also faces challenges under the National Consumer Credit Protection Act, which bans unsolicited credit limit increases and requires background checks for most consumer lending.
Outsourcing as a strategy
Historically, Australia has been an insourced market due to government regulations, job loss concerns, quality issues, and high-profit margins for banks. However, a local talent shortage, high wage inflation, and shrinking profit margins have reversed this trend.
Outsourcing has recently emerged as a popular workforce solution, with 10% of all firms and 22% of large firms considering outsourcing functions in the next three months. This is due to 59% of firms finding applicants’ qualifications insufficient.
Increasing demand for domain-specific expertise, especially in the area of Financial Crime and Compliance (FCC), has made it difficult for firms to find affordable experts. This has led to increased outsourcing interest, even among smaller enterprises. The growing need for technology and expertise in FCC is exemplified by recent cases, such as Westpac’s anti-money laundering (AML) law breaches and the Commonwealth Bank of Australia’s settlement of a $480 million compliance breach case in 2017.
In response to the need for compliance with growing regulations, digital-oriented solutions are in increased demand, and providers are finding success in helping banks improve operations. For example, one bank improved loan origination efficiency by 30% and freed up employee time by transforming its lending operations with the help of Accenture. The National Australia Bank also brought in Accenture to address its financial crimes compliance shortfall and identify high-risk customers.
An effective outsourcing strategy can help banks navigate the current economic recession and achieve cost efficiency with minimal investment and a quick transition time.
How to enter the land down under?
Recognizing that the needs of Australian enterprises differ from those in the US is essential. In this market, digital business process services and digital integration in operations are in growing demand.
However, implementing technology at a surface level will not be effective in Australia, as major banks have previously tried this approach with negative results, making them cautious this time. With stringent regulations, pre-existing products must be modified to meet each financial enterprise’s specific size and sector requirements.
Service providers can utilize their existing global delivery network to gain a foothold in the Australian business process services industry. By offering cutting-edge technology and custom solutions that cater to each client’s unique needs, they can provide more efficient and effective services.
Offshoring can be leveraged for transaction-intensive processes, enhanced with automation and analytics to provide intelligent insights. Modern offerings like business process as a service (BPaaS) can also be utilized, and providers can form partnerships to address gaps in their offerings.
While outsourcing can offer a solution for some functions, critical activities such as payments, mortgage administration, and anti-money laundering (AML), among others, often require complex judgment and technology dependencies and are typically managed by onshore control operations with experience in the Australian market.
To gain additional insights and discuss the impact of the recession on the Australian market and outsourcing’s potential in the Australian banking industry, reach out to [email protected].
Pricing Actions to Capture Outsourcing Savings and Drive Success in 2023
The past two years have witnessed a major talent crunch for technology services skills. The rush to pursue digital transformation created mass demand for IT and tech skills, escalating the cost of labor and leading to high wage inflation, attrition, and consequent pressure on pricing.
However, as we enter 2023, attrition has started to cool off, and indicators are pointing to an economic slowdown.
Join this webinar as our pricing experts discuss how enterprises can navigate this environment successfully and avoid overpaying for IT and technology services in 2023.
Our speakers will discuss:
How the economic environment is expected to impact outsourced deal pricing through 2023
What enterprises can do to ensure their contracts remain competitive in the current environment
How to pre-emptively plan for risks, and what to watch for
Driving Outsourcing Maturity: The Answer to Economic Uncertainty
Entering 2023, enterprises face continued economic uncertainty and are searching for ways to safeguard against the impacts of a pending recession.
Learning from previous economic downturns, enterprises can find significant cost savings and deliver more business value by driving increased outsourcing maturity. Business process services (BPS) offers benefits, including structural cost reductions through labor arbitrage, immediate transformative savings through creative deal structuring, and distribution of risk by making fixed costs variable.
In this webinar, our experts will discuss how a recession could impact the BPS industry and how increasing outsourcing maturity could be the defense enterprises need.
What questions will our experts cover?
How does economic recession impact the BPS industry?
Will the impact of this potential recession be different from previous ones?
How does outsourcing help organizations weather economic uncertainties and periods of recession?
What benefits can organizations capture by driving increased outsourcing maturity?