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Poornima Mohandas

Banks are taking care not to outsource functions that involve cash handling or ones that would violate security concerns of its clientele.

Mumbai , Sept. 7

WITH technology being the backbone of new-age banks, many are increasingly adopting outsourcing as a fast and flexible way to handle specialised activities and processes.

Private sector giant, ICICI Bank has outsourced several functional activities right from data entry, data checking, mailing chequebooks, documentation, document storing, picking up leads and documents as part of business acquisition, payroll management to housekeeping and security to specialised agents.

"We prefer to focus on our core competencies and outsource other functions that come under repetitive processing work. This brings a lot of specialisation and brings down the chances of errors in the work,'' said Mr K Ramkumar, General Manager, Human Resources, ICICI Bank.

The bank has about 3,000 people to whom work is outsourced, who are spread across various specialised `off-shops' across the country. This is in addition to the bank's staff strength of over 9,500. This number of 3,000 may increase as the volume of business increases. IDBI Bank outsourced its data processing department involving about 300 people in 2002.

Small entrepreneurs usually run these off-shops. The domestic outsourcing industry available for Indian clients is still said to be unorganised. The culture of outsourcing has just made its entry into the financial services industry taking after other sectors like the engineering industry where it is well entrenched, said Mr Ramkumar.

Many foreign banks have outsourced back-end processing work of global operations to BPO set-ups in India, since they have the scale but private banks have to outsource to specialised agents

Banks, however, tread on a cautious note and take care not to outsource functions that involve cash handling or ones that would violate security concerns of its clientele. Jobs involving regulatory or financial authority such as passing of cheques, teller positions are kept in-house.

The outsourcing project usually entails a job contract entered into between two organisations called a principal to principal contract typically 1-2 years long.

When technology-driven jobs are outsourced there is ease in getting rid of the agent in case of upgradation of technology or requirement of a new set of skill sets. The job contract on expiry need not be renewed. There is no issue of firing or hiring new people.

According to recruitment agencies, another trend in the financial sector, albeit slowly and behind the scenes, is that of contractual staffing. Banks as well as general insurance companies are said to hire people particularly for the front-end sales team through this mode in addition to the direct sales agents network, side by side with their fast-paced retail branch expansion.

Often the staff will be on the pay rolls of the HR consulting firm and not that of the company. The HR firm will then handle all HR issues right from issuing the appointment letter to the provident fund registration, issuance of salary slips, leave sanctions, implementation of HR policies and corporate culture, medical insurance and even insurance policies.

"With many banks on the fast track to grow they need to keep hiring people in large numbers. The internal HR departments of banks are often inadequate to hire and maintain such large additions of employees and they prefer to outsource the function to a firm like ours,'' said Mr Pavan Karimbil, Peopleone Consulting.

Initially, contract staffing in India was practised by the multinational FMCG companies since they found it a lengthy ordeal to procure permission from their overseas head offices to increase the head count and slowly took flavour in IT, IT enabled services and telecom verticals.

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