Should Your Firm Outsource Business Support Functions?

Many firms have slashed their support functions (ie Finance, BD, HR, IT etc). I’m not at all sure that’s the right thing to do. Do you really want your partners spending time on administration?

I offer an approach to ensure getting best value from the business support functions. It’s based on a major post-merger project I’ve worked on, to improve the efficiency of the service functions in a major professional service firm. And what a fascinating and challenging experience it was.

All the options were available to us:

  • Keep the services as they were, perhaps tweaked in certain ways
  • Re-shape (eg to a single central service)
  • Outsource some of the services

So how should firms go about ensuring they have the right support and that it’s delivered efficiently? Here’s a suggested four step process.

Step 1 – Establish what the firm needs

Most of the work in this phase involves interviewing the internal clients (mostly partners). A checklist is important to ensure asking consistent questions. But be prepared to receive a range of answers. Some partners will highly rate the support they get from the BD team and others will think it’s rubbish. That’s life! The outliers need to be listened to and learned from, but the salt cellar should be available and used! Go with the majority view.

What can make it harder is that the internal clients (those providing fee-earning services to external clients) aren’t usually sure what they need! So it can help to provide some options, making it clear what are the higher and lower cost options.

Senior members of the support teams also need to be listened to. They will also have a view about what the firm needs. It may also be helpful to consult some outside commentators, such as recruitment specialists, legal commentators and technology specialists.

The trend seems to be to require fewer, lower level support staff and to hire more senior, strategic advisors. Higher cost – yes. But potentially greater value.

Step 2 – Assess whether the current service meets this need

Consider both the cost and value from each of the activities provided. I don’t recommend crunching lots of numbers here – a simple grading of H, M or L for High, Medium or Low is sufficient. High cost and low value services should obviously be addressed as a priority.

Step 3 – Review other service options

Ask yourself if there is a better way. At certain stages of a firm’s evolution it appears that a central support department is best. As a firm grows and specialises in different business-generating activities it usually makes sense to streamline down most of these functions (particularly, HR, BD) and provide account managers sitting with the fee earners. The role of the centre might be to provide specialist services (eg Events, Recruitment, PR/Comms, L&D, Legal, Treasury, Tax etc).

There are a lot of misunderstandings about the outsourcing option. With a clear service level agreement in place, I believe this would be a good solution for many firms.

There are also potentially interesting developments for the ongoing use of secretaries. Most junior fee earners can do their own typing, so there is an interesting potential role for partner PA’s to support the key account teams to build closer relationships with clients. One large accounting firm is famous for encouraging their PA’s to build relationships with the PA’s of directors at major clients.

Step 4 – Establish new systems, processes and skills to deliver

Many of the inefficiencies in delivering the services inside professional firms are caused by the lack of discipline in what might be called the contracting process of the projects. Outside agencies are usually more rigorous and disciplined about this because they have to get the service right to get more ongoing work.

Firms would benefit from introducing more rigour, perhaps through checklists or even having internal budgets. Indeed if the service is outsourced, you would get this improved discipline.

I don’t think there’s a one size fits all solution to how to structure the back office of professional firms. The answer lies in being really clear where your firm gains its competitive advantage and then equipping the services to deliver.

What happened on the post-merger project? A few functions stayed the same – they were already offering great service and value. Others were streamlined or outsourced. In the end, the project team literally saved the firm millions of pounds.

Should your firm look at your back office services more closely? Are you sure you’re getting best value?

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