Financial Services KPO Best Practices


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This presentation by Amba Research ( founder, Andrew Houston, CFA, discusses:
- Why would you want to outsource?
- What type of work can be outsourced?
- How would a company go about outsourcing?
- How can a company outsource successfully?
- How should the offshore teams be managed/maintained?
- How can you maintain continuity in an offshore team?
- What kind of service/infrastructure is available when outsourcing?
- Is sensitive information properly guarded?
- Where can you find good talent for outsourced work?
- Arguments against outsourcing
- Barriers to overcome to outsource successfully

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  • Why would you want to outsource?What type of work can be outsourced?How would a company go about outsourcing?How can a company outsource successfully?How should the offshore teams be managed/maintained?How can you maintain continuity in an offshore team?What kind of service/infrastructure is available when outsourcing?Is sensitive information properly guarded?Where can you find good talent for outsourced work?Arguments against outsourcingBarriers to overcome to outsource successfully
  • Financial Services KPO Best Practices

    1. 1. Financial Services KPOBest Practices<br />18 November 2009<br />Andrew Houston, CFA<br />Co-founder, Amba Research<br />
    2. 2. Knowledge Process Outsourcingin Financial Services<br />WHY would you want to outsource?<br />WHAT type of work can be outsourced?<br />HOW can a company outsource successfully?<br />WHERE can you find good talent for outsourced work?<br />Barriers to success and how to manage them<br />2<br />
    3. 3. The Case for Third-party Outsourcers<br />SAVE TIME: Saves lots of senior management time (something that’s scarcer than money!)<br />CUT COSTS: Costs the same or less in cash terms as an in-house alternative<br />SPECIALIST SKILLS: Provides access to specialist skills not available in-house (e.g. Quants)<br />TALENT POOL: Allows you to cherry-pick the best talent without demoralising the stay-behinds<br />SCALE: Allows you to scale research staffing levels up/down more quickly<br />3<br />Why would a global financial institution consider third-party investment research outsourcing?<br />Image from<br />
    4. 4. What’s High-end Work?<br />Increased judgment required<br />Greater use of job-specific skills<br />Fewer standardised tasks<br />Execution of more complex tasks that take time to learn<br />Higher level of daily interaction with the onshore team<br />4<br />Image from<br />
    5. 5. Preparing the Ground<br />Decide what (and what not) to outsource based on in-house sponsorship<br />Create a team structure that matches both initial- and second-phase profiles<br />Agree on operational procedures and communications protocols<br />Onshore-offshore knowledge sharing: How to handle design and transition phases?<br />Workflow: How is the work to be prioritized, rated and reviewed? Whatare the discrete work steps?<br />Feedback mechanism: Users-direct-to-offshores, or supervisor-to-supervisor?<br />Governance: Frequency of calls, agenda items, participants<br />5<br />
    6. 6. Best and Worst Practicesin Outsourcing<br />What works<br />Maintain good communication and provide frequent, specific feedback<br />Treat offshore associates as full-fledged members of the onshore team (call/e-mail them)<br />Gradually increase the quality of work <br />Ensure sector leader knows what the offshore associates are doing<br />What fails<br />Abdication instead of delegation: 100% of relationship handled by junior staff onshore<br />Reluctant onshore users: The programme must be sold internally and accepted institutionally<br />Infrequent communication and vague instructions<br />6<br />Images from<br />
    7. 7. Team Management<br />Hands-on management leads to lower risks and faster scale-up<br />People management: Team must know roles and be properly trained to meet requirements; build in redundancies<br />Inculcate a quality-oriented culture: A ‘do-it-right-the-first-time’ culture starts with team management<br />Ensure continuity and quality of team output<br />Document work processes and end-user preferences<br />Develop customised training programmes <br />Put career plans in place (with HR) and use planned rotation vs. ‘leave-it-to-chance’<br />Scale up with deliberate speed<br />Once proof-of-concept is demonstrated, gradually increase the complexity of work<br />Adapt the team structure to reflect and anticipate changing work mix<br />Train the team from the outset in respect of domain knowledge and technical skills<br />7<br />Images from ttp:// and<br />
    8. 8. Mitigating Attrition<br />Minimise unwanted attrition while structuring work tominimise the negative impact of resignations<br />Employee lifespan makes a big difference to success<br />Classroom and on-the-job training improve staff quality<br />Repetitive work must be documented<br />Knowledge must be recorded in an intranet library<br />Supervisors must be capable of training new team members<br />8<br />
    9. 9. Service Delivery Infrastructure<br />9<br />Engagement Setup<br /><ul><li>Experienced Transition Team
    10. 10. Best-Fit Team Selection
    11. 11. Client-Specific Training</li></ul>Knowledge Management & Training<br /><ul><li>Best-in-Class Training
    12. 12. Sector Material and Models
    13. 13. Lectures on Video
    14. 14. Continuous Education Programme Sessions
    15. 15. Mentoring Programmes</li></ul>Compliance & Information Security<br /><ul><li>Wall Street Standard Compliance
    16. 16. Compliance Application Tools
    17. 17. Compliance Controls
    18. 18. Regular Audits
    19. 19. ISO 27001 Certified</li></ul>KPO Provider’s Engagement Team<br />Quality & Documentation Process<br /><ul><li>SOPs
    20. 20. Dynamic Documentation
    21. 21. QC Checklists
    22. 22. House Calls – Improvement Plans
    23. 23. Periodic Customer Satisfaction Surveys</li></li></ul><li>Compliance and Confidentiality<br />Compliance awareness training compulsory for all employees<br />Presence of compliance lawyers on staff<br />Utmost care is taken to maintain client confidentiality<br />10<br /><ul><li>Associates working for rival firms are physically segregated
    24. 24. Clients are assigned code names. The identity of a client is only available on a need-to-know basis
    25. 25. Any breach of confidentiality results in dismissal</li></ul>Image from<br />
    26. 26. Where to Locate:Amba Research Experience<br />Sri Lanka<br />Capex and cost structure 15% lower than India<br />Supportive Board of Investment<br />Pool of UK-qualified Chartered Management accountants and overseas educated graduates and good mathematicians – the second-largest number of CIMA qualified personnel in the world, after the UK<br />Excellent spoken English<br />Finite labour market at the high end. Emigration is popular<br />Amba Research started in and continues to expand in Sri Lanka<br />Global consulting giant AT Kearney’s 2007 Global Services Location Index ranks Sri Lanka 29th among the top 50 outsourcing cities<br />Tholons, a US-based outsourcing consultancy, ranked Colombo 7th among 15 emerging global cities and as a Centre of Excellence for Financial and Accounting Outsourcing<br />India<br />Large and diverse talent pool<br />Good telecommunications infrastructure in key cities<br />Domestic capital market can be a source of management talent<br />11<br />Image from<br />
    27. 27. Good Reasons Exist toStay Captive, Too<br />100% control: Compliance, security, and corporate culture remain in-house<br />No third-party contract negotiation and monitoring costs<br />Can be spun off later if it is big and profitable<br />12<br />What might make a captive the best alternative after all?<br />Original image from<br />
    28. 28. Overcoming Barriers to Success<br />There are five other non-trivial obstacles to successful offshoring<br />Recruiting middle managers: Location in a preferred city helps with offers requiring relocation<br />Controlling operating costs: It’s tough and getting tougher. Do you site the next facility in a tertiary city with less competition and cost, and split senior management? How do you maintain the same culture across locations? What is the fiber availability like?<br />Increasing productivity: Priority needs to be given to teaching young managers to manage. Once they can manage people they can apply project management and professional services best practices to day-to-day team supervision<br />Inculcating a customer service mentality: A continuous process<br />End-user resistance: Momentum results only when most-senior management mandates offshoring<br />13<br />
    29. 29. Contact Details<br />Andrew Houston<br />Mobile: +44 7944 986 461 (UK)<br />Mobile: +66 89 812 4315 (Asia)<br /><br />Europe:<br />Johan Wissinger <br />Office: +44 20 3201 0033<br />Mobile: +44 7850 600 596<br /><br />Website:<br />14<br />