Financing Services Inc.
Business Process Outsourcing:
Internal Management vs. External Outsourcing Arrangements
David Martin
Director, Portfolio Management
TD Financing Services
Financing Services Inc.
Business Process Outsourcing:
Internal Management vs. External Outsourcing Arrangements
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About TD Financing Services
Internal Process Management: The Upside
BPO: The Downside
The Case for BPO
Understanding the Value of BPO and the People Behind it
Financing Services Inc.
Business Process Outsourcing:
Internal Management vs. External Outsourcing Arrangements
About TD Financing Services…
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Formerly VFC Inc., a non-prime vehicle finance company founded in 1996;
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In 2006, acquired by TD Bank Financial Group;
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In 2010, rebranded from VFC Inc. to TD Financing Services, offering indirect lending
products such as prime/non-prime vehicle loans, and home mortgages;
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In 2011, with the completion of the sale of Chrysler Financial, to be rebranded “TD
Auto Finance” with the set objective of expanding the new brand in the North
American market.
Financing Services Inc.
Business Process Outsourcing:
Internal Management vs. External Outsourcing Arrangements
Internal Management: The Upside
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The development of sound internal processes with proper regulatory oversight is
instrumental to a company’s success;
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Hiring and retaining top talent is key to the successful development and deployment
of internal best practices;
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Internal employees, it could be said, have more stake “in the game” with regards to
the servicing of a portfolio, as opposed to BPO companies which tend to concentrate
solely on their respective bottom lines;
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Internal controls mitigate the potential risk of security threats from both a
communication and privacy perspective.
Financing Services Inc.
Business Process Outsourcing:
Internal Management vs. External Outsourcing Arrangements
BPO: The Downside
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From a subject matter expert/knowledge perspective the evolution of an attitude of
indifference in employees due to BPO may take root (i.e. Who cares, just outsource
it.);
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The loss of independence in terms of managing a portfolio can evolve in cases of
weak internal regulatory oversight;
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The risk of impacts on a company’s goodwill with regards to BPO tends to be a major
concern for FIs;
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The possible underestimation of running costs (i.e. internal IT expenses,
administration expenses, etc.);
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The lack of a proper business continuity management (BCM) model. BCM consists of
a set of steps, to successfully identify, manage and control the business processes
that are, or can be outsourced. (Forbes, Gibb, and Steven Buchanan. A Framework
for Business Continuity Management, 2006)
Financing Services Inc.
Business Process Outsourcing:
Internal Management vs. External Outsourcing Arrangements
The Case for BPO:
BPO vendors can help a company improve its performance by transforming fixed costs
(salaries) into variable costs creating more flexibility;
Outsourcing can provide a reduction in resource management, freeing up valuable human
resources;
BPO offers state of the art technology, the ability to handle high volumes which prevents
bottlenecking;
BPO can speed up the delivery of results, necessary for company growth initiatives;
BPO can reduce risk by contractually guaranteeing results-driven performance and
regulatory accountability.
Financing Services Inc.
Business Process Outsourcing:
Internal Management vs. External Outsourcing Arrangements
BPO & the People Behind it
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In order for businesses to have successful outsourcing initiatives, a thorough
understanding of the business’s needs and expectations is required. Vendors hire
staff. Businesses must be cognizant of this and ensure the need for BPO is validated
thoroughly.
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Business’s and vendors alike need to evolve their current relationships. The
conventional “us and them” relationship is not as productive as a business partner
relationship.
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Businesses must be willing to venture into new ways of improving, not only their own
businesses, but that of the vendors in their employ (i.e. incentive programs).
Financing Services Inc.
Business Process Outsourcing:
Internal Management vs. External Outsourcing Arrangements
BPO and the People Behind it
Vendors must be fully integrated with your strategic objectives on a year to year basis.
They need to have a transparent and open relationship built on substance (i.e. We expect
vendors to have an internal understanding of our business).
Many of our vendors have assisted us – from an internal perspective – in filling and
improving “gaps” in business processes.
Nickel and diming does not work. Pay for performance and reap the rewards!
Financing Services Inc.
Business Process Outsourcing:
Internal Management vs. External Outsourcing Arrangements
What to make of all of it…
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A business must thoroughly review its overall strategic objectives before engaging the
in BPO.
Arguably, internal employees have more “in the game” than some external service
providers. However, as a company grows, simply adding employees internally may
not be an option.
When engaging a service provider for BPO, it is important to establish a business
partnership based on openness, transparency and accountability. Stop the
vendor/client adversarial relationship and build each others’ businesses!
How? Involve them in your business, and reward solid performance!
Financing Services Inc.
Questions?