The Hindu Business Line : `My outsourcing experience'

WE see more overseas clients visiting our centres"; "clients are very happy with us"; "their reference helped us win more orders". Sure. You hear a lot of this from IT or BPO companies in India. But how many times does an overseas customer come on record saying this? eWorld was keen to meet at least one such customer. Especially one who has not had the experience of sending work over to India earlier.

David Busoli, CEO of Total Super Pty in Australia, is just the man. Busoli's company sells process outsourcing services to investment advisors of the superannuation industry. (See box for how superannuation works). Excerpts from the chat:

How long has Total Super been in business?

I have been in this and allied businesses since 1979. We have been specialising in superannuation funds for the last 10 years.

Have you ever outsourced work within Australia in the last 10 years?

It's happening only now because our Government is becoming much more strict in the penalties and how they apply them. So a lot of accountants and financial advisors and stockbrokers have realised that they don't have the time or competency to do that So, they outsource that function to us.

How has Total Super's outsourcing evolved over the years?

We were only two people at first. But as we did more, we realised that the industry needed both training and resources. So we developed resources internally — and that was putting the results of our inputs on the Web. Then we found that other investment advisors were interested in that too. We started to work with them as they outsourced their work to us. As we got bigger we realised that this was an increasingly large opportunity, as the Government too was paying special attention to it and was creating an environment where more people wanted to outsource.

But, we just didn't have the scalability. And we, in turn, looked to outsource. That was when Sundaram Business Services (SBS) approached us. We saw this as something that would help us scale up. Because, if we had someone come to us with 100 or 200 funds, it would have been difficult for us to scale up. But here, with SBS, we had the ability to do that quickly and because of our concentration on IT, it wasn't a problem to have people operating externally . For, we still do something that virtually no one else does — and that is we input on a value basis and send information on to the Web on a daily basis. Very few in Australia do that, probably about three totally. We needed a partner who could be accurate, fast and scalable. And that is what SBS has provided. We have to work on the IT at our end and they have worked on IT at their end. We think it has given us the ability to take advantage of the opportunity in a major way.

Do you continue to be investment advisors?

No, we pulled out of investment advisory totally quite sometime ago. When we had our own clients, we couldn't grow too much, and there was a conflict of interest. Now we only work on a wholesale basis with the investment advisors.

What is the `IT at your end'?

We maintain our database in Brisbane, Australia, and through Citrix and scanning technology, we absorb all the information into our computer. We have our own programmes that SBS accesses by Citrix and it brings up the documents that they need to input. We also have all sorts of checks and balances wrapped around that, so it assists in the administration.

Did you outsource these services to someone in Australia before giving it to SBS?

No. We didn't. We did it all by ourselves before we outsourced to SBS. We first put up more staff. Without using technology, there is a problem. And if we had to scale up to several thousand funds, we needed more office space. That means putting all the cabling and the expenses involved there. We designed the systems in such a way that people outside our office could use it. I hadn't intended that those people would be in India when we designed that. But it just happened that at the time we were putting this in place, SBS approached us.

How did you evaluate vendors before you finalised your outsourcing partner?

Since SBS was already an expert at offering services over a distance and were comfortable with Internet technologies, our only concern was the individual competency of the people who might be involved. For that, SBS employees came over to our office and stayed for six weeks. That also helped build a sense of team spirit. We don't see them as an outsourcer. Too many times these arrangements fail because each party is looking after its own interests and blames the other for failures. There have been some challenges that have come up from both sides since this association began. But we have both acted in the utmost goodwill to overcome these.

What kinds of transactions have been outsourced to SBS?

We haven't dumped an enormous amount of business in one go because this is a process that requires people to gain experience before they can take on more. Since October 2004 we have put through 20,000 to 30,000 transactions. But this is more complex than merely data processing or general accounting. Superannuation requires several layers of accounting. To do this, you need to know the business. That was another reason we wanted SBS employees to visit our office. I must add that the SBS folks who came there already knew much about the business.

We also had an offer from China. However, none of us speak Chinese. I would think that if there wasn't the capacity to communicate in English, we couldn't have done this.

What percentage of your total transactions has been outsourced to SBS?

It's a small percentage at this stage because we are bringing them over. This is so specialist. At present, there are about 13 on the team at SBS. It is easier when you got 1,000 funds to put on another 200 than it is when you have to put on 50 funds on 200. So we want to get several thousand funds over to SBS. It will be a process during the year.

Do you see the team size increasing?

Yes. The team at SBS will be stable for about three months. But I expect over the next three years we will give them about 10-15 times the number of funds that they have got now.

Has the number of clients you have taken up increased since the time you started outsourcing to SBS?

We have been trying to move about 30 clients a week to SBS in Chennai. When you actually provide 30 clients here at SBS, you will have to send all of their records right back (because everything is electronic now). Also, we don't want the team at SBS to be overloaded. We will continue to transition about 30 clients a week to SBS for the next few months. This will go on until we have transitioned all our existing business and then we will move over new clients we have acquired in the mean time.

Currently, we assist nearly 1,000 funds. In Australia, this type of fund is getting a lot of attention. Because there is a change of law from July 1 which allows people who weren't previously able to have these funds to have them. A lot of big institutions have become interested in this business. And when they come around and talk to us, they have all said that our service capacity is (commendable) . And that would not have been possible without SBS.

Has there been a cost savings to you because of this outsourcing relationship?

At present, it is a cost increase to us because we maintain the staff. However, we would be able to add another 1,000 funds without one extra staff. So that, in future, would be a saving. Your staff strength?

Eighteen, and we now employ about 13 with SBS in Chennai.

How did you convince your own employees on outsourcing?

We told them that we weren't doing this to save money but to increase service. So no one lost a job. What happened is that we merely are in the process of tooling them up to provide a different style of activity. In this area, we have two major concerns: the actual input and administration of the data; and, making sure the legal frameworks and related issues are looked after. So, while the data is done at SBS here in Chennai, all the legal framework work is done at our office in Australia. So our people are still doing Self-Managed SuperAnnuation fund work, but they are just doing it differently.

Earlier we had to make sure that the Government forms would come properly, that the calculations were accurate, the minutes were done, and investment strategies were in place. Now they don't have to do the inputs, which means each employee can do a lot more work on the legal side.

Have only the non-critical roles been outsourced to SBS?

No, both are critical roles. Because we upload to the Web every day, accuracy is absolutely critical. Nearly everybody else in Australia does their accounts once a year. Sometimes, 18 months after. So, the client never sees any of the mistakes because by the time the client receives anything, the order is gone through and everything has been fixed up.

We don't have that luxury, our information goes to the Web every day. So, if we make a mistake, it's there and they notice. So we need people who are very accurate and that's why we have involved SBS.

Did you get any warning alarms about outsourcing/offshoring when you ventured into outsourcing?

There are always people who want to say that whatever you do is bad. We always see our glasses as half-full not half-empty. We trusted our judgement in this because of the people involved. We did our research before we chose SBS. We knew technologically it could work, as long as people were the right fit, which they were and have been. A lot of people now come to us and say, this must have been a disaster. We tell them that this outsourcing relationship has been quite successful.

If you were to do it again, what would you have done different?

We would have visited SBS earlier. One of the problems with IT is that at one end, people might have an impression about people at the other. But you don't know what that impression is till you actually visit. And, this is perhaps an Indian cultural thing; you people are too polite. There are things we could have done better, but the people here rather than upsetting us by telling us, worked around the problem, which made them work harder.

And we keep telling them that we are in the same family. If you have a problem with us, please tell us and we will fix it. We would have liked to have had those things fixed already.

Did you consider evaluating other outsourcing vendors before finalizing on SBS?

No. We didn't, which is strange. We met the SBS people and if you had already found someone that you are more comfortable with than anybody you have dealt with before, then that's about the situation I reckon in our business and they can do the job. There's no point looking around for more.

You gave up investment advisory to do this. When did this switch happen and why?

About five years ago, we realised that it was a conflict of interest. We couldn't go into investment advisors and tell them that we will do your Superannuation and by the way we are also investment advisors. We saw the Superannuation opportunity very early and the Australian market was very fragmented. And the people who do what we do in Australia are very few. The largest player would have a fund size of 3,500 and they have been around for many years. The opportunity for someone doing a special job is there.

How it works...

SUPERANNUATION products help people save for their retirement and draw pensions. A type that Total Super is involved with is "self-managed" and typically has only four people in one fund, in Australia. The fund sizes average about A$0.5 million. It is regulated, and penalties for error are stiff.

In Australia, 97 per cent of superannuation funds are this type. There are 300,000 of them and are growing at the rate of 20,000 a year. Total Super offers administration and compliance services. It runs the funds, advises on what the funds can and can't do. It keeps them legal, and makes sure that they don't break laws, says David Busoli, CEO of Total Super. "We train people on how to use them. We also train advisors, who require that training in order to receive licences from the Government." (You actually require licences to advise on this type of product).

There are three layers, the Trustees of the superannuation funds. They are the members who get the benefits; the accountants who assist them in the investments and the legal structures that they need; then come the investment advisors who make sure that what they are doing is correct, that the funds don't break the law and, that they don't invest in things that they are not supposed to.

Says Busoli, "Now Total Super has moved away from investment advice and offers transaction processing to investment advisors. So, it's at the fourth level."

Picture by Bijoy Ghosh

bharatk@thehindu.co.in

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