How to Outsource Your Middle-Office

For many firms, outsourcing their operation can be overwhelming, as they're not sure where to begin or what to expect.

As a middle-office outsourcing provider, we understand that feeling. That's why we make it easy for our clients and firms like yours to get started.

Our clients are part of a growing number of investment firms that outsource their middle office. In fact, the global middle-office outsourcing market is projected to more than double between 2022 and 2029.

Clearly, there is value in the outsourced model, as firms choose this path for a number of reasons: 

- cost savings
- increased efficiency
- faster processing times
- freed up capacity
- more time to focus on clients
- dealing with high turnover and talent shortages

Here at Empaxis, we want you to reap the benefits.

That's why we've laid out a series of steps you can follow, putting you in the best position to make outsourcing work.

7 Steps to Follow as You Prepare for Middle-Office Outsourcing

1. Set Goals with Outsourcing and Discuss With Your Team

Does your firm need to cut costs? Are you struggling with turnover? Tired of hiring and training new workers? All of the above?

Whatever your reasons, they are all worthy and achievable goals.

Of course, outsourcing your middle-office is a big decision; make sure all stakeholders and decision-makers are open to the move.

The last thing you want is a board member or your legal counsel to shoot down the idea, after you've spent all this time speaking with vendors and reviewing proposals.

2. Determine the Middle-Office Processes You Want to Outsource and How Long They Take

Performance reporting? Billing? Trade settlement? 

Whatever they are, take note, then find out on average each day how long it takes to complete.

Outsourcing providers typically require a minimum number of monthly hours to ensure a partnership works for both sides.

Additionally, the numbers of hours helps the provider determine how many resources they need to assign to you.

3. Speak with Middle-Office Outsourcing Vendors

It's not enough to read a few things about a firm online and jump to a conclusion.

After all, what makes outsourcing work are the relationships.

A human conversation with a provider and their team goes a long way.

Take the time and reach out to the outsourcing providers. You'll have reference points.

4. Do Your Due Diligence

You want this partnership to work. If you're serious about moving forward, due diligence is everything.

Your board, legal counsel, or IT team may need to see some of the following:

- Signed and countersigned NDAs
- Compliance reports
- Cybersecurity protocols
- ESG policies
- Case studies / Proof of Concept
- Client testimonials
- A list of client references

Ready to Sign an Agreement? Read the Fine Print First

Once you have agreed upon scope of work and pricing, you're almost ready to sign.

But before doing so, read carefully the agreement terms and conditions.

It's not to say there is anything in fine print meant to mislead you, but the agreement terms are legally binding. You should know the terms of the partnership (payments, vendor-client expectations, termination clauses, etc.).

Your legal and accounting teams should definitely sign off on it. If they request changes to the agreement, that's ok. The vendor in certain cases can meet your requirements.

5. Allow Time for Knowledge Transfer

With outsourcing, it's not as simple as saying, "You're hired. Here you go, you figure it out. Bye."

For things to work, there is an initial investment of your time to get things up and running.

Every firm has their own day of doing things, and it often takes a few weeks to understand the client requirements.

If you have any process documentation, no matter how imperfect or incomplete it is, share it with the vendor. They can follow it or use it as a reference to create new and better documentation.

And once the knowledge transfer is complete, then things will run smoothly. That's when you really start to feel the benefits of outsourcing.

6. Gather Technology Requirements

This one is more for the IT department...

Make sure IT provides a secure, controlled, and remote environment for the outsourcing provider to work in.

They should also provide a safe place for password access and storage.

As for Empaxis, we always prefer working in a client environment that they control. We want them to see (and control) everything we see.

7. Communicate Regularly

Just as the relationships are what make outsourcing work, regular communication is what keeps a good working relationship.

With middle-office outsourcing, you are working with a remote team. Frequent communication (and at times you want the team available) is very important.

You want the relationship to feel as personable as possible. Voice calls, video conference calls, emails... whatever it is that keeps you feeling connected, take advantage.

At Empaxis, we always keep the lines of communication open, and we encourage clients to share feedback and updates with us right away.

Outsource with Ease

Download Our White Paper: Making Outsourcing Work

Middle-office outsourcing offers many benefits, but getting started may feel overwhelming.

And as said before, it doesn't have to be like that.

That's why we clearly spelt out all the steps and what you can expect at each point.

Long-term benefits require long-term planning and strong relationships, and Empaxis is here to make that outsourcing journey easy for you.

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