Let’s say you are in the process of getting a mortgage loan from IndyMac Bank to finance the purchase of your new home. Your online application was approved within minutes by IndyMac’s automated underwriting system subject to documenting your income and other information. Your loan broker collects the documentation from you forwards it to IndyMac and within a day or two you get final confirmation that the bank is ready to move forward to funding. Sounds simple? You just became the beneficiary of some “bestshoring” business processes.
Here’s what happens in the background according to IndyMac Executive Vice President Mark Nelson. The documents you provided are converted to electronic images and stored at IndyMac’s main data center in Southern California. At EXL Service one of IndyMac’s offshore outsourcing vendors employees access the images via a secure data connection from EXL’s facility in Pune India. Each document is reviewed by EXL staff and “attached” to the electronic loan file in IndyMac’s loan processing system. Within hours a U.S.-based loan underwriter reviews the information and makes the final determination that the documents are adequate and that your loan can proceed.
While complex questions during loan processing are handled by Indy Mac’s employees stateside you will receive your “new customer welcome” phone call from an India-based call center. “We find that the easiest processes to send offshore are those that are simple and repeatable. These serve as knowledge building blocks that enable performing increasingly more complex processes offshore over time” says Nelson.
At a time when many of the country’s largest banks are under tremendous financial pressure IndyMac continues to enjoy profitable growth while gaining market share in the immense U.S. mortgage market. IndyMac projects its total headcount to grow to 8000 by 2008 with approximately 15 percent being represented by offshore personnel. IndyMac intends to develop its offshore organizational base through growth and with a commitment to minimizing potential impact to IndyMac’s domestic workforce. “This approach allows us to build a global organization that actually creates opportunities for our U.S.-based employees by offshoring the more basic processes and allowing employees [at home] to elevate to more value-add positions” says Nelson. IndyMac also has a relationship with India-based WNS for business process outsourcing services and with Cognizant Technology Solutions U.S.-based with software development centers in India for IT outsourcing services.
Small companies can benefit too
Smart companies of all sizes are taking advantage of global resources to deliver the best value to their investors customers and employees often without painful reductions in staff.
Ed Allwein former CIO of Echostar Communications is building new software for his current company Active Sensing Inc. which is in the product lifecycle management business. Allwein is funding the company himself using offshore resources he can stretch his investment almost twice as far. Bestshoring in Allwein’s case meant making two extended trips to Delhi where he worked for three weeks at a time in the same office as his vendor/partner’s team. Allwein never hired any development staff in the United States so he did not have to lay anyone off either. Leading Silicon Valley venture capitalists such as Sequoia Capital and Kleiner Perkins are also locating development staff in India and China in addition to the core teams in the Valley. Bestshoring is showing up everywhere.
Gary Ahwah CTO/CIO at health-plan PacifiCare also believes in a blended approach. Pacificare uses CapGemini and Accenture as domestic outsourcers and they in turn leverage offshore resources. He’s also signed a direct relationship with mid-tier vendor Covansys U.S.-based with offshore facilities run by Raj Vattikuti. Presently Covansys has assigned software developers and project managers both onsite in Cypress Calif. and offshore at their location in Chennai India.
“In our current situation we hire many senior in-house staff to oversee projects run by Covansys and others. In additional to technical brilliance my staff must have superb communication skills” observes Ahwah who recently had to turn away an intellectually bright Ph.D. in computer science because the candidate lacked the ability to speak and write effectively.
Major IT outsourcers such as Accenture IBM Global Services and Tata Consulting Services have practiced bestshoring for some time. Each of these companies employs thousands of staffers in both the United States and India. Ed Altman of Tata says that his company uses a global delivery model with nine centers in the United States and 23 in India. To companies operating at this scale most technical skills are available in both geographies. Onshore staff may perform any highly interactive work. If the outsourcing contract included a component where the customer’s employees were “re-badged” to the outsourcer it is unlikely that many of them will move offshore. On the other hand if a project is running out of budget more work may get moved offshore. Nimbleness in juggling a global workforce has become a requirement for leadership in this business.
The tide flows both ways
While politicians and trade unions raise talk about jobs fleeing our shores the truth is that capital jobs and work is moving in both directions. Take the case of Venkat Tadanki CEO of Secova an HR outsourcer. He co-founded Daksh E-Services in 2000 with an India delivery center. Over a dozen Fortune 1000 companies including Amazon and Sprint embraced Daksh’s customer contact services. In April 2004 IBM paid a reported 200 million for the business which had grown to an astonishing 6500 employees.
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This time around Tadanki is taking a different path. Secova has embedded bestshoring philosophy deep into the corporate DNA. It merged with a New Jersey delivery center as an immediate way to establish an American presence. Secova plans to grow both American and offshore operations simultaneously.
Tadanki believes that customers are looking for better service and better value not just lower prices. So his customers participate in the bestshoring decision process. Payroll processing may happen in India but checks are printed and mailed from New Jersey. When “Open Enrollment” comes around for his customers’ employees they can call any time of day or night since Secova has call center employees located in both India and the United States. Secova’s American employees stay abreast of changes in benefits practices payroll tax issues HIPAA compliance and myriad other details that HR professionals have to be concerned about. In turn they are available to train the India-based delivery center on tasks that get offshored. Secova typically hires college graduates often with master’s degrees for all positions in India. His customers value that extra education in his employees for certain tasks.
Whether it is business process outsourcing or information technology whether it is small companies like Active Sensing or larger operations like PacifiCare and IndyMac Bank smarter businesses will continue to deploy their human capital in ever more sophisticated ways. Bestshoring is simply an expression of trends being exploited by nimble companies in today’s competitive climate.
