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How an Offshoring Relationship Grew from a Low-Cost Provider to Strategic Partner

In the early 2000’s, Barclays Global Retail Bank was attracted to the low labor rates in India. According to David Skillen, Chief Operating Officer, Barclays Global Retail Bank, the original driver for outsourcing was labor arbitrage, delivering as much as 40 percent savings compared to the UK.

Barclays initially outsourced its non-voice back-office services for both its commercial and retail banks to Intelenet in 2003. “There was no reason for us to own our servicing call centers since they were really a commodity,” Skillen says.

In addition to reducing labor costs, the ability to serve customers 24/7/365 was another lure. Skillen says its credit card customers often need help on the weekends and holidays, which were expensive days for the internal call center. “We don’t have to pay more on holidays” once it outsourced, says the Barclays executive.

In addition, outsourcing helped the call center balance its workload. It also provided flexibility.

Consolidating service providers

Barclays had also offshored some technology, finance and accounting, human resources, and back-office functions to other Indian service providers. The bank used many different BPOs in India.

But the British financial institution had one issue: there was little consistency in delivery. “The Indian service providers were still evolving back then,” Skillen says. “Each firm was building its own best practices. Reporting was different so we couldn’t create a consolidated view.”

In 2004 Barclays had the opportunity to consolidate to a single provider. “The benefit was to create a critical mass, build consistency, and standardize,” he says.

The question was: which service provider to choose?

Buying a piece of Intelenet

HDFC Ltd. and Tata Consultancy Services formed Intelenet in 2000. A Barclays’ group executive had a relationship with HDFC. At the time, Barclays wanted to invest in growing companies. It also felt it would have more control over the offshore experience if it became a BPO owner. So Barclays bought TCS’s ownership stake in 2004, purchasing 50 percent of the service provider.

Thereafter, Barclays began consolidating its offshore work, moving most of the back-office tasks to Intelenet from the other providers.

The increased confidence caused the bank to increase Intelenet’s original scope, too. For example, it added retail voice touch with its customers. “We set up a call center so Barclays’s customers could get an answer to any type of query,” says Chandra Mouli, Chief Operating Officer of Intelenet. Now Intelenet sells products and takes referrals. Its advisors even have voice contact with Barclays’s premier customers, Skillen reports.

The service provider now also performs more complex functions like underwriting, fraud management, and payments processing, “processes which require our staff to understand the banking industry and British regulations,” says Mouli. “Now our people are making decisions for the bank. This is a paradigm shift,” he adds.

Today Barclays has 3,200 service staff at Intelenet. The service provider handles its English calls from multiple delivery centers in India.

In June 2007 Barclays sold its share of Intelenet. “We are a bank and we wanted to put our capital to work in the bank. We did earn a nice return,” says Skillen. He pauses, then adds, “And the service quality continued to improve!”


The bank achieved its initial goal of cost savings. Currently it has saved well over 30 percent of the cost of doing the customer service work in house, says Skillen.

After transition, Intelenet has achieved a 99 percent service level agreement compliance rate. And the quality went up.

Intelenet has a group that assesses processes, then changes them if necessary. “They offer us continuous process improvement free,” he says. “If they see a blemish on a process we gave them, they are willing to work with us to make it more efficient,” he reports. One benefit: Barclays has been able to reduce overall hours, saving even more money. “Reducing process time has been a big benefit,” he adds.

In addition, Intelenet executives serve as consultants “to help us determine what else we can offshore.”

Mouli posits that Barclays achieves enviable results because it has outsourced processes end to end to Intelenet. In the early days of offshoring, buyers sliced off the mechanical aspects of a particular process and just outsourced that. Service providers can only deliver value at the strategic level if they control the process from start to finish, Mouli believes.

Mouli refers to credit card applications as an example. Financial institutions like Barclays started with merely offshoring data entry. In this case Intelenet can deliver value to Barclays because now Intelenet staff also determines if the applicant is a good credit risk. “We have improved the process and cut the issuance time because we work on the entire process. And the bank’s customers are happy because they get their cards faster,” he says.

Why this relationship works

The two partners formed a relationship board composed of the principals; its goal is to solve problems. Skillen says the board has given him the opportunity to get to know the Intelenet operations manager personally, which provides an advantage.

Transparency is key. “I get a report on my desk at 8:00 a.m,” says Skillen. “I know what’s happening. I know if my dashboard is green, amber, or red.”

The relationship requires give-and-take on both sides. Skillen recalls a time when Intelenet could not meet a particular service level. Barclays sent a team to India to work on a solution. “Our team discovered the service level wasn’t possible, so we lowered the SLA level. “You have to have a dialogue,” he says.

The service provider is flexible. “They always let us substitute one task for another to equal their fee,” Skillen says. This flexibility is good for the bank because he says the financial institution constantly reevaluates what it thinks should be its core competencies.

Skillen says the two teams engage in honest communication at every level. And they make a point of communicating often. “The goal is to have different people in different roles giving input so the team can collectively form an opinion,” the executive adds.

Intelenet is flexible and has the bandwidth to meet challenges as they arise. When the British government passed a new law to catch money laundering, Barclays had to race to meet the tight deadline. Intelenet sent a team of 40 experts to the bank to design a process, document it, then build the system. The team lived in the UK for 90 days “to build a process the bank didn’t have before,” says Mouli. He says it was then easy to offshore the process because the Indians who designed the system simply moved back home.

Skillen remains a member of the Intelenet Board of Directors. “I can understand and influence their strategy,” he says.

“Today, our relationship has gone from service provider/buyer to a trusted partnership,” says Mouli. “We’ve learned a lot in the last seven years.” Concludes Skillen, “Today, they are more than just our back office. Far more.”

Lessons from the Outsourcing Center:

  • Good outsourcing relationships take time. Time builds trust, which breeds a sense of partnership.
  • A service provider has a greater chance of providing strategic value to a buyer if it controls a process end to end.
  • Both sides have to participate in give-and-take. Buyers don’t always get to have their way.


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