How a Swiss Company Selected Its Offshore Location

By Outsourcing Center, Beth Ellyn Rosenthal, Senior Writer

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How a Swiss Company Selected Its Offshore Location

It was becoming obvious that Telekurs had to look into offshoring. But how would they select the offshore location?

At one point, there were suddenly so many new financial instruments coming into the market that all market participants had difficulties in keeping up with the multiplying volume, recalls Karl Landolt, Head of Data Operations for Telekurs Financial. Telekurs Financial provides real-time data and back-office information to the world’s leading banks. These banks depend on accurate and timely information to use in their trading rooms, or in the back offices for their data processing.

Employees still enter many of the data entries into the Telekurs database manually, which means that increasing the data entries leads to an increase in the number of data editors. Telekurs was faced with a volume problem, as well as with a recruiting problem, as it got harder and harder to employ skilful employees at the level needed to keep up with the increased volume.

What Was the Right Offshore Location?

Telekurs carried out an extensive study to find the right outsourcing partner and model. Malaysia, the Philippines, and India were on the short list of countries. India’s advantage, in addition to its existing business centers, was its large skilled, English-speaking labor force. Telekurs needed English-speaking employees, as it intended to handle transactions mainly from the UK and the USA.

At first, Telekurs thought that setting up a captive was the way to go. However, it decided to outsource in order to mitigate its risk.

Initially, they spoke to a major Indian supplier but rejected it because it was based in Bangalore. “Bangalore’s infrastructure didn’t make a good impression,” says the Telekurs executive. The Swiss company was also worried about the high attrition rates there. It had opened an office in Stanford, Connecticut, and painstakingly trained its new employees, only to have a competitor steal them away two years later. “We didn’t want to go through that again,” Landolt says.

Telekurs selected Capgemini, a global leader in Business Process Outsourcing (BPO), which has an office in Mumbai. “Once we determined that the price was right-which didn’t differ much from the other offers-we based our decision to go with Capgemini more on the soft [people management, general appearance] rather than on the hard factors [financials],” says Landolt. Telekurs liked how the supplier worked with its Indian employees and was impressed with the intensive training program saying, “Capgemini listened to us,” Landolt added. The two signed an outsourcing agreement.

Capgemini understood that a standardized solution would not work for Telekurs, so it offered a tailored approach including a robust, cost-effective, and highly flexible transition methodology. As part of this overall company strategy, Capgemini recently announced major enhancements and new services to broaden its North American BPO solution portfolio.

The Importance of Investing in Training

Telekurs proposed a hybrid model: its managers, who are responsible for the processes, continuously train Capgemini’s Indian employees at the offshore center. “The key is the ability to work together,” says Tony Kelly, Global Product Marketing Director for BPO for Capgemini.

Managers from both the UK and the US moved to India and worked very closely with Capgemini’s Indian employees during the entire first year, Landolt reports.

Then Telekurs put together its own training program and hosted some key Capgemini employees at its Zurich office. “We wanted them to learn a little bit more behind the curtains,” says Landolt. This helped Capgemini set up its operations. “We built a back office that looks and feels like their back office,” says Kelly.

After four months of intense training, the engagement went live with 20 people. “We started with a small number because we didn’t know where we were headed. We didn’t want to take too much work out of our US and UK subsidiaries if offshoring wasn’t going to work,” he adds.

The cultural differences between Europe and India have been surprisingly few. Landolt says Capgemini’s manager in Mumbai had previously worked in Zurich. Many on the team had worked in the western world. “They know what our world is like.” He says he enjoys the calmness Indians have in a business setting. “Westerners are more nervous,” he has noticed.

Today the Capgemini staff serving Telekurs has grown to over 100 Indians and in the last two years, the Capgemini team has maintained a single-digit attrition rate annually; Kelly says the average attrition rate at Indian BPO companies is 20 percent plus.

Landolt attributes the low rate to the fact that the Capgemini team works normal Indian working hours. “And the work is quite interesting; there’s a lot more to it than invoice checking,” Landolt says. “Our employees are now familiar with worldwide derivatives. They are excited about learning about these advanced instruments.” Adds Kelly, “We keep the work exciting. Our people don’t do transactions; they bring business benefits to the top line.”

The investment in training had a significant ROI. “Capgemini India really understands our business,” says Landolt.

Flooding Leads to a Second Center

The offshoring effort has been so successful Telekurs and Capgemini opened a second center in Kolkata–this was not in the original business plan, Landolt reports. The second center came about because of severe flooding in the city of Mumbai. “We realized we needed a back-up center in India. We understand natural disasters because we have avalanches,” he notes. Today the Kolkata office has 15 employees working there; he expects the engagement to grow to 40 people.

Offshoring has helped Telekurs win new business. Kelly says the strong back office “was a key element” in winning the business of a major bank in America. The Capgemini team was able to amalgamate the new customer’s financial database into its own in just 60 days.

Governance is based on service level agreements. But Landolt says they are really unnecessary because unhappy Telekurs customers will complain instantly if the quality falls. “If there’s an error, we get complaint letters and phone calls right away,” says Landolt.

He recalls that Telekurs moved some work from Singapore to Mumbai. During the transition, customer complaints shot up. “We fixed that in six weeks,” he reports.

Looking back, Landolt says outsourcing was a good decision. “We couldn’t handle the business we had. Now we can handle everything economically. Why not offshore? It’s cheaper and the quality is the same.”

Lessons from the Outsourcing Journal:

  • European companies often look to Eastern Europe for offshore outsourcing locations. In this case, Telekurs wanted to keep open a data center in a major financial center; so it looked to India, which had both the brain power and a large enough English-speaking labor pool.
  • The buyer didn’t like the infrastructure in Bangalore, so it eliminated all the suppliers based there. Infrastructure is a key deciding factor in an offshore location decision.
  • A flood caused the buyer to set up a second center in India. Natural disasters are possible everywhere, so disaster recovery and back-up is wise in any outsourcing engagement.
  • Intensive training and interesting work has kept the attrition rate down.
  • A hybrid model–the workers and people managers work for the supplier, but the process managers work for the buyer–works for this group. Hybrid models work when the process is complicated; then it’s better for the buyer to manage them.

About the Author: Ben Trowbridge is an accomplished Outsourcing Consultant with extensive experience in outsourcing and managed services. As a former EY Partner and CEO of Alsbridge, he built successful practices in Transformational Outsourcing, BPO, IT Outsourcing, and Cybersecurity Managed Services. Throughout his career, Ben has advised a broad range of clients on outsourcing and global business services strategy and transactions. As the current CEO of the Outsourcing Center, he provides valuable insights and guidance to buyers and managed services executives. Contact him at [email protected].

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