Outsourcing slideshow: 5 questions you should ask your custodian

Outsourcing, or contracting work to an outside party, can be done for a variety of reasons. It becomes problematic if communications gaps emerge – which may lead to errors, delays or a decline in quality. However, it can also present some potential advantages:

• Expense reduction
• Gains in productivity
•  Labor flexibility
•  Greater specialization
•  Increased capacity
• Skillset-specific efficiencies and more

Offshoring, or outsourcing work to a vendor in another (usually less-expensive) country, can be done for similar reasons – but usually cost cutting is the primary driver. When a service partner offshores key functions, additional risks emerge. Complications to consider include:

• Communications gaps
• Pandemic preparedness
• Time zone delays
• Increased turnaround times
• Cultural and language differences
• Political turmoil
•  Misaligned holidays and office closures

Work that’s outsourced – and specifically offshored – can often add disruptions to the course of daily operations. The best partners prioritize proactiveness, responsiveness and flexibility to ensure you’re able to get what you need when you need it. Ask these questions to assess compatibility:

• What are your turnaround times?
• What are your response times?
• What’s your client service approach?
• What’s your ability to accommodate urgent requests?
• How do you accommodate time zone difference?
• What’s your location strategy today and into the future?

A great wealth of experience, expertise and technology often resides in a custody provider like U.S. Bank. Relying on the centralized resources of a knowledgeable partner can be a key step toward staying in sync with regulators and best practices.

Compliance becomes more difficult when a provider adds additional links to the outsourcing chain. Keeping vendors in check requires diligent oversight, so you should confirm that your custody provider has a framework in place to ensure governance, manage risk and maintain business continuity.

Every situation is unique, so it’s crucial to find the right custody provider that’s best suited to your specific needs. It’s important to assess your short- and long-term goals to determine the best balance of potential cost savings to potential risk.

The client-provider relationship often suffers when a provider starts offshoring too many essential functions, which can in turn reduce the control of the client and custodian. If your provider is outsourcing tasks and you feel it’s impacting their level of service, that’s a clear sign it’s time to reassess.