Reap the Benefits of Outsourcing
By: Jennifer Vaden, Student Business Services (SBS) Consultant
Many institutions have been feeling the pinch since the pandemic hit, with resource scarcity becoming commonplace. The question of how to accomplish more with less is getting tougher to answer. Meanwhile, students and parents expect a high level of service and support. This has created an environment in which colleges and universities must be creative with the financial and human resources we have to meet student and parent demands. Now is the time to reap the benefits of outsourcing.
Outsourcing a service to a third-party vendor can position an institution to improve operational efficiency, reduce overall costs, and enhance flexibility for its employees. Even though the word “outsourcing” may elicit a negative reaction as some inevitably link it to the act of laying off workers, outsourcing does not have to be all or nothing. Outsourcing can be approached as a partnership utilizing both institutional and third-party resources to significantly improve a service that is vital to students and parents. Many shared student services teams have embraced these partnerships to better meet customer service demands.
The first step is to assess which operational tasks, such as customer service, credit balance refunds, or financial aid verification, may be good candidates for outsourcing. Before exploring a partnership, however, it is imperative to start with what you know, namely, what is your data telling you. Achieving a high level of service and operational efficiency often requires a deep understanding of trends in volume, needs, and student and parent behavior as well as the productivity and capacity of your employees to meet those service demands. Today’s students live in an on-demand world in which waiting more than five seconds to receive a response can feel like a lifetime. Students and parents expect shorter wait times as they believe that the service level should be commensurate with the high costs associated with attending an institution of higher learning.
At one private four-year research institution, the business peaks align with the start of the Fall and Spring semesters, registration periods, and our yield season in April. Outside of these peak times, student and parent service demands tend to level out considerably. This presents a staffing conundrum. During peak times, far more staff are needed than are currently employed on the team to meet the higher demand for our services; however, in non-peak times, current internal staffing levels can meet the lower demand. Based on a thorough data analysis, it was clear that supplement staffing was needed for phone coverage. This would lower wait times and reduce complaints that sometimes were escalated to senior staff or even the presidential level.
Consequently, the institution engaged a third-party vendor to manage incoming calls rather than hiring additional benefited (W2) employees. The specific department was designed or resourced to staff seasonally whereas third-party vendors and servicers specialize in staffing for shifts in volume and activity. A third-party vendor can help you reach an optimal level of staffing to meet operational needs during the high, and shoulder, seasons.
Given the financial constraints facing many institutions, outsourcing a service is a decision worth considering especially if the demand for that service fluctuates throughout the academic year. The internal costs to hire, train, and retain benefited employees can be substantial. Budgetarily, direct costs to cover salary and fringe benefits for additional staff positions can add up rather quickly, making it more difficult to obtain the funding required to meet demands.
Outsourcing can be a viable alternative. The cost of a contract with a third-party vendor should typically be less than what an institution would need to budget to hire internally to meet the demand during peak times. In the instance mentioned above, the annual cost equates to approximately four internal frontline staff positions. However, the third-party vendor easily scales the staffing coverage beyond four positions to easily meet peak season demands. Bringing the service back in-house would cost nearly twice as much and result in overstaffing outside of peak times.
When factoring in the time and allocation of managerial staff to onboard and train new employees, the indirect costs quickly mount up. Moreover, complex learning curves often create situations where new employees are not able to significantly contribute for some time, requiring current employees to pick up the slack. This can increase burnout among current employees.
In this case, the third-party vendor is responsible for hiring, onboarding, and training their staff to support the client’s institutional needs. The institution supports the vendor as needed to ensure the content and quality are up to standards. This arrangement generally frees up managers to focus on more pressing service issues and reduces the burden that would otherwise fall on current employees. Considering the direct and indirect costs, outsourcing is a pragmatic solution.
Establishing a partnership with a third-party vendor can also provide you with the flexibility to focus on more than just day-to-day operational needs. There are important nonoperational needs that require managers to take their teams offline. Meetings, staff training and development, and campus events are a few of the reasons that operations may need to close temporarily. With a third-party vendor, operations can continue uninterrupted while you can dedicate time to grow and support your staff members. This flexibility benefits the leadership level as well. You now have the bandwidth to focus on the greater vision for the student experience because operational needs are being met efficiently and effectively.
Consider outsourcing operational needs to a third-party vendor when the data suggests it’s a smart option and your leadership asks you to be more creative with resources. Achieving cost savings, enhancing efficiency, maintaining compliance, and boosting flexibility are only a few of the benefits that await you when you embrace outsourcing as a viable solution.
If you’re just beginning to consider outsourcing, pinpoint the most time-consuming tasks. What takes your staff’s attention away from direct service to students? Most often, it’s back-office processes ranging from the Return of Title IV Funds (R2T4) to reconciliation and verification. All these functions are required by federal regulations. Outsourcing them to a trusted partner gives you peace of mind that you’re in compliance and the added efficiencies give you a real operational advantage. Contact FAS to learn how outsourcing is key to strengthening financial operations, optimizing enrollment, and enhancing the student experience.