Outsourced loan processing and staffing is growing at a ‘phenomenal rate’ as brokers seek to reduce costs and find good staff, according to Astute Ability Finance Group principal Mhairi MacLeod.
MacLeod (pictured above), whose brokerage is based in Erina on the Central Coast of NSW, said she was increasingly turning to outsourcing offshore to meet the rising costs of running a small business, which includes hiring good staff.
The business currently has three team members based in Fiji sourced through outsourcing provider Bula Outsourcing, as well as another four loan processing staff, who are based in the Philippines.
“Outsourcing is absolutely growing – and it is growing at a very fast rate. The velocity of take up in the industry is phenomenal. Because the cost of a running a business now is huge,” MacLeod said.
The problem of sourcing staff in Australia amid skills shortages and the cost of paying them higher salaries due to a rising cost of living was problematic for small businesses, she said.
Staff were now demanding tens of thousands of dollars more for hybrid roles – and were getting it.
The broker business equation was “not just about what we put in the bank account”, McLeod said, but had to factor in a long list of business overheads, including compliance, insurances and taxes.
Commission clawbacks driven by a lender cashback blitz are also a “major problem” for brokers.
“We have clients chasing cashbacks and we are doing the job of moving them from one deal into another because it is in the best interest of the client, but that can be within the clawback period.”
“The cost of retention is becoming more and more expensive,” she said.
While MacLeod said she does not take offshoring work lightly, outsourcing work to quality staff that cost her about a third of onshore staff is something that has changed her business planning.
“I have two teenage boys, and I would like to employ as many local Australians as possible.
“But sometimes it doesn’t work out financially when there is such a velocity of change, like coping through the COVID pandemic, the rising cost of living in Australia, and rising interest rates.”
She argued brokers were being forced to “really get under the bonnet of our business and reset”, and that the reality was that the biggest cost to broker business’ was staff.
“How do we reduce our staff costs without sacrificing the level of care and sophistication and service that we provide the client? It turns out outsourcing is a great option,” MacLeod said.
“If we can outsource and get a high quality level of employee that meets all of the standards, KPIs and everything our business requires for a lot less cost, then that becomes a business decision.”
Brokers typically outsource to loan processing centres or staff to free up time on lower value admin activities, or seek to add more integral members of their business’ team at a lower cost offshore.
MacLeod said if they were doing the latter brokers needed to expect to put in the time and effort to ensure that any new team member was fully trained and engaged, even if they were outsourced.
Astute Ability Finance Group’s key hire through Bula Outsourcing in Fiji has been their current operations manager, Esther, in addition to a sales team member and an administrator.
The business may also seek to hire another para broker in the near future.
MacLeod said that her new operations manager was brought to Australia to work in the office for two weeks, where she was given extensive training and introduced to customers and staff.
Esther was also shown around Sydney to absorb and understand the culture in Australia, and she is included as much as any other member of the team in things like birthday or Christmas celebrations.
“If you have are looking at an operations manager or a para broker – someone who will be talking to other staff members and engaging with clients, then you can’t treat them like a clearing house,” MacLeod said. “You need to put in the effort to make them a member of your team.”
While some brokers who attempt outsourcing say it hasn’t worked for their business, MacLeod said that often, this failure was due to not making enough effort to make the person a part of the team.
“The buck really stops with the broker,” she said.
“If the broker is not prepared to put in the time and effort into knowing who is working for them in their business and training them in their ways of doing things, then of course it is going to fail.
“You can’t expect to pick a loan processor in the Philippines or Thailand or wherever and just say you process my deal without any interaction or training and expect it to run smoothy.
“And it’s not just training in product or process. It’s also about culture. Have they been educated about how things are done in Australia and how you do things in your business?”