I think the question of whether or not to outsource backroom operations has been around almost as long as title insurance. The eternal question for companies is whether it is nobler to bite the bullet and make the investment in technology and people or to let someone else take that risk. I can tell you that there are pros and cons on each side of the issue. I can also tell you that for many lenders, outsourcing, on balance, makes the most sense in the long run. Here is why.

* Making the most of your people — The best use of those limited staff resources is doing what they do best – generating business and dealing with customers. It makes more sense for them to spend their time getting more loans, marketing the company’s services for the future and dealing with current customers than chasing to get court documents and finding out the taxes owed. Inside staff should do what they do best and let outside vendors finish the product on the back-end.

* Mobilizing best practices — Being an outside resource gives a vendor more freedom to adapt the best of the best practices. In-house staff is often constrained by what has been done before, the politics of the institution and corporate history. I find that in these shops, people have been there a long time and have not been given the freedom to adopt new practices that go beyond the way they have traditionally done things. The “Not Invented Here” syndrome keeps them from being able to try new things. As outsourcers, we have worked with a variety of institutions and learned to take the best of what we have seen. We have the freedom to change practices to make them better. We can bring in the lessons we have learned by tackling problems that most Insurance companies only see once or twice in a lifetime. Then, we can customize those best practices to the way that fits with what they want. We have the experience and freedom to do that precisely because we are outsiders.

* Bundling services to cut costs and delivery time — Bundled services mean less of everything – costs, time and data input. With bundled services, data is input once and used for everything from title to appraisal to mortgage insurance to closing. That means less staff time, fewer mistakes from multiple input of data and an ability to seriously lower costs.

* Putting technology to work — Better technology means processing quicker and cheaper. Yet, you would be amazed at the number of companies who are still handling many backroom operations manually. That is because it is expensive to bring in the latest title processing systems. Clients get regular updates on the system itself about orders. Invoicing and accounting is much simplified that is one of the things outsourcing brings to the party – advanced technology that was acquired on someone else’s nickel (ours).