The ﬁnance industry must invest long term to reap the beneﬁts of external workers, according to Chris Willcocks, vice president and head of intelligent spend management at SAP ANZ, a market leader in enterprise application software.
While businesses have long acknowledged the importance of their external workforces, the COVID-19 pandemic has put the spotlight on contingent workers’ remarkable capacity to offer ﬂexibility in a time of profound disruption.
External workers – often referred to as freelancers or contractors – make up a growing proportion of the remote workforce of mortgage and ﬁnance brokerages, banks and non-bank lenders.
The recent shift to remote working opened the door to talent beyond a company’s actual physical location. Research shows that while on-demand talent comprise 5% of the current ﬁnancial services industry workforce, in the next ﬁve years this is expected to rise to 20%.
Investment in intelligent automation can help institutions deﬁ ne debt collection models, manage non-performing assets, reduce losses, complete foreclosure audit reviews and resolutions, monitor internal communications, and create personalized offers and ﬁnancial advice. The outcome is efficiency and an improved experience for both employees and their customers.
Research shows that 42% of a company’s workforce spend is on external talent. Yet many executives lack visibility into this large cost line and do not manage it effectively. Attaining cost-efficiency is imperative to both the procurement and human resources functions in any organisation.
Here are four approaches to ensuring a business’s ﬁnancial investment in its external workforce is cost-effective – not only saving money but generating value for the company in the long run.
1. Planning ahead
The costs of a wrong hire can be steep. Determining which jobs and tasks require which skills and talent in advance allows a business to speed up the hiring process.
When workforce planning takes a back seat, businesses end up scrambling for talent, sometimes sacriﬁcing quality and skills in favour of speed. Strategic planning and partnering with workforce vendors on identifying and procuring the right talent can conserve money, time, risk and eff ort. Talent must be available to meet projected demand whenever and wherever it arises.
2. Upskilling vs cost-cutting
Cost-cutting is one of the tactics businesses adopt in difficult economic times. However, it’s often only a short-term solution to a persistent business problem.
The ﬁnancial investment made in external workers should be long-term rather than a short-term cost-cutting measure. External workers should receive training and development, access to tools and technology, and feedback on performance. Upskilling the workforce produces better results, precluding the need to continuously seek out new talent and bear the costs associated with that.
3. Leveraging managed service providers
Managing routine activities – such as day-to-day responsibilities, maintenance and IT support – can be time-consuming and not cost-effective. A managed service provider can offer the expertise and industry knowledge needed to handle these standardised tasks, rather having them managed in-house. Managed service providers are typically compliant with regulations and industry standards and can drastically reduce overhead costs.
4. Gaining visibility into the external workforce
With greater visibility into their contingent workforce, a business leader can make quick decisions even in disruptive times, eliminating some hidden costs related, for example, to compliance, risk and productivity – without the long-term costs of hiring the wrong candidate.
For example, COVID resulted in Australian banks with overseas processing facilities experiencing a signiﬁcant backlog of mortgage applications, which impacted their turnaround times. Yet banks with onshore loan processing facilities, such as Commonwealth Bank, were able to keep their turnaround times down. CBA also added more than 400 staff to cope with the significant increase in applications.
Several large Australian banks had to move quickly to hire external people to help deal with demand. Tech tools and remote training allowed remote workers to integrate seamlessly and ease the backlog.
In another example, the Australian Tax Office at one point experienced limited visibility into its contingent workforce supplier performance, market rates and costs. This prompted it to improve an expensive and resource-intensive process for engaging contingent labour. To facilitate a single point of reference for users, such as hiring managers, suppliers, workers and panel management teams, the ATO streamlined and automated its services procurement processes.
Adapting to the future
Managing an external workforce can be a challenge. But streamlining processes allows a business to get the most out of its contingent workforce and ensure it is cost-effective. Investment in digital tools, such as cloud-based platforms, helps decrease the time spent on administrative tasks, provides deeper insights, and supports business leaders to make impactful decisions that improve productivity and value.
VP and head of intelligent spend management, SAP ANZ