The objective of outsourcing is to contract with an external service provider to perform specific functions or processes. It is expected to cut back the costs, to profit from better resources and to transfer risks. Nevertheless the companies are constrained to deal with specific regulations related issues such as the upcoming Solvency II regulatory regime which should lead to a growth in outsourcing services within the Luxembourgish market.
Companies have to face several regulatory challenges:
- Which function or activity may be outsourced?
- To what extent a function or activity may be outsourced and what are the criteria which must be respected?
- What are the rules of outsourcing?
And more practical issues:
- Managing a short period workload,
- Dealing with a large part of the production cost of various reports related to data collection, computation and formalisation,
- Achieve successfully outsourcing.
Deloitte services offering
Deloitte can help you throughout the different steps of outsourcing:
- Evaluate accurately how the outsourcing initiative will support your strategic objectives,
- Define clearly the capabilities you need,
- Assess your internal resources and capabilities to support and monitor the initiative,
- Align your business objectives with the outsourcing risks and required mitigation actions.
Business case development
- Consider on-going governance and management costs,
- Global view of the company’s strategy instead of a simple outsourcing of “tasks”,
- Integrated approach of the outsourcing project linking various service lines,
- Risk analysis and risk mitigation cost,
- Use adequate due diligence to validate technical and legal assumptions accurately.
Service provider selection
- Choosing only on the basis of costs or relationship must not be an option,
- Comprehensive RFPs with clearly defined performance requirements and techniques for security, recovery, audit and control,
- Carry on an in-depth analysis and adequate due diligence to assess capabilities, control environment, governance framework, delivery processes, risk management policies, etc.
- Involve (internal if available) lawyers to fix legal issues,
- Clarity and common understanding of content to avoid future disputes,
- Performance criteria and SLA metrics,
- Defined payment terms,
- Checklist of legal, regulatory, contract and insurance requirements and clearly stated implications of non-compliance,
- Contract termination and transition right,
- Security, confidentiality and ownership of data and processes.
- Accurate scheduling of transitional period,
- Management of internal resources during and after the transitional period,
- Focus on transfer of knowledge in line with ongoing services.
- Keep business and outsourcing strategies aligned: monitor efficiency and savings,
- Ongoing monitoring program,
- Assign internal audit an ongoing role in post-deal governance monitoring,
- Monitor the timeliness and quality of deliverables, in line with your expectations and needs,
- Take corrective actions without any delay,
- Monitor constantly compliance with contracts, SLAs and other formal provisions.