The topic of business process offshoring is an important one for management teams to evaluate -- particularly in the current market environment. It is also a significant topic to discuss in the context of creating and building value for a company. This column is based primarily on a Deloitte Consulting LLP study entitled Business Process Offshoring in the Mortgage Industry: A Tale of Two Opportunities, which discusses business process offshoring in the mortgage industry.
Business process offshoring continues to gain adoption in financial services; its long-term effect on the mortgage banking business will likely be substantial. While considered a late-entry to business process offshoring versus other financial services industry participants, the mortgage banking industry is rapidly accepting this strategy, which is destined to have a sizable long-term impact on how lenders do business both externally and internally. According to analysis done by Deloitte Consulting, approximately half of the nation's top 40 lenders are offshoring.
An effective business process offshoring strategy becomes a critical element in enhancing profitability, given the current competitive landscape. Those that do not implement some sort of business process offshoring may be poorly positioned in tight, volatile markets as pressures on margins continue. An effective offshoring strategy could mean the difference between profit or loss, achieving or not achieving specific objectives and, perhaps most important, independence or acquisition. Further, greater profitability resulting from a well-implemented offshoring strategy may enhance the value of a company in a sale or an initial public offering (IPO).
The U.S. residential mortgage market represents an incredible opportunity for the effective utilization of business process offshoring. The Outlook for the Real Estate Finance Industry report, prepared by the Council to Shape Change -- an independent group of mortgage industry leaders, of which this author was a member -- concluded that the mortgage market's correction...
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