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Offshoring Examples by Industry
Airlines | Consulting | Insurance | Investment Banking |
Retail Banking | Credit Card Operations | Backoffice Operations | Government | Telecom
Airlines
Delta Airlines
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Atlanta-based Delta enlisted two vendors to handle select customer reservations functions: Sykes Enterprises and Wipro Spectramind, a subsidiary of Wipro Limited. Delta said the partnership is not expected to affect employment in Delta's reservation sales contact centers. The airline is slated to save $26 million in 2003 from offshoring reservation processes. Delta has 20 reservation contact centers in locations around the world where more than 6,000 employees handle 120 million customer contacts annually.
[Source: Mary Hayes, "Outsourcing Call Centers Pays Off for Delta," InformationWeek, June 17, 2003] |
| British Airways |
In 1996, British Airways opened an offshore processing center in Mumbai, India, to handle some of its operations work. Customer relations (handling complaint letters rather than phone calls) and passenger revenue accounting (an airline finance function) were the first two major business tasks moved to India. The ROI from offshoring included savings of nearly $23 million per year per 1,000 jobs it relocates to India, reduced delays in answering complaint letters (from more than two weeks to less than three days), shorter training periods, and higher work quality. The new offshore passenger revenue accounting center became so efficient that it began to service other airlines, producing additional revenue streams for BA.
[Source: Shamus Rae, IBM Global Services] |
Consulting
McKinsey
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McKinsey has based a large part of its global research division in Madras, India. This group developed high-quality client presentations for consultants. The department began with ten local staff in 1998 and has grown to more than 100.
[Source: ebs Interviews] |
| Accenture |
Accenture, which has offices in 48 countries, is ramping up its Indian operations in Mumbai and Bangalore from an estimated 4,300 employees to about 10,000 in the next 12 to 14 months.
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| IBM |
IBM will continue building its global sourcing model and add thousands of jobs in India and China with as many as 4,730 programming positions moving offshore. The Wall Street Journal, quoting Indian government officials, said that IBM has scheduled a huge rise in its Indian workforce, doubling the number of jobs located in Calcutta, India, to about 4,000. IBM currently has a several thousand staff working in India, with 1,800 in Calcutta, mainly working in the software development field.
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Ernst & Young
KPMG |
Ernst & Young, which employs more than 1,000 workers in Bangalore, will prepare 15,000 of 100,000 tax returns abroad. Most are corporate returns. About 4,000 will be for U.S. citizens living abroad, and about 1,000 for U.S. residents. KPMG has six offices providing tax and consulting services for 2,000 firms in the subcontinent. The average accountant in India makes $250-$300 per month, compared with $3,000-$4,000 in the United States. Firms say they'll use the savings to undercut competitors or add premium services.
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| Atos Origin |
Atos Origin, the French consulting and IT services company, has announced that it will raise the head count of its Indian operations from 700 to 5,000.
According to the Asia-Pacific CEO of Atos Origin, "Atos Origin targets to double its turnover to EUR 10 billion by [the] end of 2005 and the Indian operations would play crucial role with high-quality talent and cost advantage. Our team is looking for new locations in India to expand operations and ramp up human resource base to 5,000 in next three years."
He added that offshore work for some existing clients and new business would be carried out from India but there would be very few job transfers. Asked about strategy for growing business for the Indian unit, he said, "Our large outsourcing contracts involve taking over assets and people, and we have spoken to some Indian companies about acquiring their IT functions or units."
[Source: The Times of India, March 17, 2004] |
Insurance
Prudential PLC
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British insurance firm Prudential PLC will lay off 850 workers in the United Kingdom and move the positions to a planned call center in India. The cuts will take place over the next two years at Prudential's call center in Reading, England. The cuts will trim the center's staff to 1,400 workers. The new call center in Mumbai, India, will be operational by 2004 year-end. The move is expected to save the company $25 million annually starting in 2006. (Prudential is unrelated to the U.S.-based financial services firm of the same name.)
[Source: DMA News, "British Insurer Sending Call Center to India," October 02, 2002] |
Investment Banking
Lehman Brothers
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Investment banking firm Lehman Brothers is negotiating with TCS (Tata Consultancy Services), Wipro, and Infosys to outsource IT services as part of its global outsourcing strategy. Lehman plans to outsource IT services worth $400-$500 million, $200-$300 million of which would be delivered by Indian vendors over the next year. The company has not decided which IT services it intends to outsource. TCS is currently running three pilots for Lehman Brothers and appears to be number one in the race for the contract. This is Lehman's first outsourcing project with Indian software vendors.
[Source: Times News Network, "Lehman in Talks to Source $300 mn of IT Work from India," October 15, 2002] |
| Credit Suisse |
Credit Suisse chose Cognizant as its offshore outsourcing partner with a five-year outsourcing agreement. Cognizant was picked after a competitive process that included other leading Indian and global firms. According to Michael Bischoff, vice president of strategic sourcing, "Our strategy to use offshore services has started to become mainstream inside Credit Suisse."
Cognizant will be developing and maintaining Credit Suisse's new online retail banking solution using state-of-the-art technologies. The new system will enhance the customer experience and includes bill presentment and payment capabilities.
[Source: Business Wire, October 21, 2003] |
Retail Banking
HSBC Holdings PLC
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By 2004, HSBC plans to increase staff in Asia Pacific by 6,000, to reach 10,000. India will receive 2,000 of the additions for back-office operations. HSBC has three Indian processing centers - two in Hyderabad and one in Bangalore. The company is bullish on the Indian BPO market.
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| ABN AMRO Bank |
ABN AMRO Bank launched a back-office processing operation in Mumbai, India. The center, with a 400-seat capacity per shift, manages IT, communications network, consumer operations, and call center functions. The facility also handles processing work for banking and accounts payable services for ABN AMRO's operations located in other countries. The center acts as a funnel for all of the banking group's application development and maintenance services. The company has a similar 180-seat facility in Chennai.
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| KeyBank |
KeyBank is part of Cleveland-based KeyCorp, a financial services company, with assets of approximately $86 billion. Wipro will be setting up and running a dedicated offshore development center (ODC) for Key. The center, which will look to employ close to 60 people, would begin operations by the end of October 2003. Wipro will be setting aside the site for the development center within its premises in Electronic City, Bangalore.
Wipro was shortlisted from a long list of vendors who had offered their services for the work, which pertains to IT related support and maintenance activities for KeyBank. The Ohio-based bank has only one other development facility out of its hometown and will not be looking into any BPO until the success of this particular center is proven.
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| Bank of New York |
According to the Bank of New York's annual report, the bank is moving about 250 technology jobs from the United States to India. The outsourcing is part of a larger effort by the bank to reduce its expenses by shifting jobs to low-cost areas such as India; Liverpool, England; Florida; and upstate New York.
The offshore work is in software development and is related to bank's acquisition of Pershing financial services, which has a captive center in Mumbai, India, with about 600 people.
Nearly 75% of the bank's 23,000 employees work in metropolitan New York, New Jersey, and Connecticut, including 8,500 in New York City. Only 20% of the payroll is based outside the Unite States, primarily in Europe and Asia.
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Credit Card Processing Operations
American Express
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American Express opened a 137,000-foot global service center in India that employs several hundred professionals. The center offers voice and data based customer services, fraud and risk modeling, and financial processing to American Express's clients. In addition to helping the company cut costs and become more competitive, it should give the company more operational flexibility.
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| CompuCredit |
CompuCredit, a leading issuer of credit cards, outsources noncore operations such as data entry of credit card applications to Patni Computers. Patni re-engineered the business processes to take complete process ownership, including mailroom functions, scanning, data entry, and reporting. Patni completed migration of processing offshore in three weeks to prevent any business disruption to CompuCredit. Subsequent to migration, Patni improved the process quality through Six Sigma initiatives that helped increase accuracy to 99%. Further, the productivity improved from data entry of 28 credit card applications per hour to 50 applications per hour through focused training and automation and the turn-around time was reduced from three days to same day.
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Back-Office Operations
Automatic Data Processing (ADP)
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ADP, a Fortune 200 company and top provider of transaction processing, data communication, and information services, opened a $2 million global technology center in Hyderabad, India. The 40,000-square-foot center with 400 employees has been operational since July 15, 2003. It is expected to grow to 1,000 employees in 2004. The facility offers critical services and support to ADP's global clients. The center, complete with a 2 Mbps link direct to the United States, provides a global working environment and allows for direct client interaction through its high-quality voice infrastructure.
[Source: Indo-Asian News Service, "$2 Million Global Technology Centre Coming up in Hyderabad," June 25, 2003] |
Government
| The Greater London Authority |
The Greater London Authority awarded a $10 million contract to offshore software company Mastek to develop the software and run the back end of the radical new program in London that charges tolls for driving within the city during rush hours. Data show that buying services offshore saved the city $4 million to $5 million.
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Utah and New Jersey State Governments
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Imagine the scenario: you are unemployed and your questions about food stamps and unemployment benefits are handled by an offshore agent. Utah and New Jersey have outsourced their welfare benefits management to eFunds, which handled the incoming calls through a Wisconsin call center. To reduce costs eFunds migrated some of the calls to an Indian call-center. This is causing an uproar among residents of both states.
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Telecom
British Telecom
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British Telecom signed a $160 million contract with Indian IT service company HCL Technologies. The contract includes telemarketing, billing, and conferencing. HCL is setting up a 3,000-seat center on the outskirts of New Delhi that will be staffed with software data analysts and engineers, in addition to call center employees.
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| BellSouth |
BellSouth's Project Horizon is aimed at reducing costs associated with the ongoing maintenance and enhancement of IT applications. In order to accomplish this goal, BellSouth will utilize offshore resources from Accenture and take advantage of the differential cost savings.
According to BellSouth, India was chosen as the initial pilot site for a variety of reasons including: access to highly skilled, low cost resources; more than 60% of companies with best in class process maturity (CMM level 5) are located in India; and more than 40% of Fortune 500 companies utilize India for their application support. BellSouth's IT Strategic Partner, Accenture, has more than 1,000 employees and supports more than 40 clients in India (e.g., Oracle, Nortel, Verizon, Lucent, Dow, Dupont, and Bank of America). This cost savings initiative is expected to enable BellSouth to reduce IT expenditures and save $275 million over a five-year period (2003-07.)
The initial phase of the program is a 4 1/2 month pilot in Bangalore, India. The pilot includes 17 Accenture resources delivering maintenance and enhancement services for applications in a non-U.S. location. After successful completion of the pilot, BellSouth plans to transition 634 employees offshore continuously through the year 2007.
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| T-Mobile |
T-Mobile International is partnering with LogicaCMG to save an estimated 35% in costs and enable faster time to market for its latest content, such as games, ring tones, and mobile data services. T-Mobile achieved this savings by transferring its Partner Integration Helpdesk to LogicaCMG's offshore international service centre in Bangalore, India.
LogicaCMG Offshore Services is the development arm of LogicaCMG plc that employs 300 staff. It focuses on providing offshore and onshore product and project management, business process outsourcing, and client services such as call centers and technical support.
LogicaCMG employees review and approve service descriptions of new content, set up T-Mobile's portal configuration to include content, provide proactive development support to T-Mobile's partners, and perform integration testing of the content.
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| Telstra |
Telstra, Australia's largest telecommunications carrier, is outsourcing IT from Australia to India as part of a software maintenance and service with IBM, who is distributing the work to its Indian and Australian operations.Telstra also had a new branded IT hub (offshore development center) in Bangalore under a contract with Satyam Computer Services. The unit has 130 employees.
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