Project_report - Final[1] POM

8/7/2019 Project_report - Final[1] POM

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Project: Management Offshore Back office Model

Team Members:

Angel FernandesDiptiNamrata BedreNeeta BadhekaSmita RaikarSnehaTikshana RawatTeena

Agenda

1. Objective2. Define Back office & Offshoring3. History & Advantages of Back office Offshoring4. Management Styles in Back office Offshoring

5. Case Study Introduction6. Vision, Mission & Objective7. Organisation Structure8. Culture & Values9. Planning, Leadership, Control & Motivation

10. Competition11. Conclusion

Objective:

To make everyone understand what back office offshoring means.

Explain the management model in back office offshoring


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Offshoring What it means?

Offshoring is relocation of a business process by a companyfrom one country to another country.

Typically an operational process, such asmanufacturing, or supporting processes, such asaccounting. Even state governments employ offshoring.

The economic logic is to reduce costs. If somepeople can use some of their skills more cheaplythan others, those people have the comparativeadvantage. The idea is that countries should freelytrade the items that cost the least for them toproduce.

The economic logic is to reduce costs. If somepeople can use some of their skills more cheaply

than others, those people have the comparativeadvantage. The idea is that countries should freelytrade the items that cost the least for them toproduce.

Examples of off shoring business:

Financial Telecom IT (Information Technology) KPO (Knowledge Processing Outsourcing)


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Back Office What it means?

A back office is a part of most corporations where tasksdedicated to running the company itself take place.

The term comes from the building layout of earlycompanies where the front office would contain thesales and other customer-facing staff and the backoffice would be those manufacturing or developing theproducts or involved in administration but without beingseen by customers. Although the operations of a backoffice are usually not given a lot of consideration, theyare a major contributor to a business.

Examples of back-office tasks include IT departmentsthat keep the phones and computers running(operations architecture), accounting, and humanresources. These tasks are often supported by back-office systems: secure e-commerce software thatprocesses company information (e.g. a database).

Back offices may be somewhere other than theheadquarters of a company. Much of the time they arein areas and countries with cheaper rent and lowerlabor costs.

Back office functions can be outsourced to consultantsand contractors in any country.

Examples of Back Office processes:

ITHR Legal Banking


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Back Office Offshoring Processes:

FinancialServices

PayrollServices

BankingServices

Other BPOServices

FinancialAccounting

PayrollAccounting

Creditassessment ofloans

Legaldatabase

BankReconciliation

Employer &EmployeeTaxes

Applicationprocessing

Data capture

AccountReceivable/Payable

Retirementbenefitcomputation

ATMmonitoring

Insuranceclaimprocessing

Income Tax E-bankingservices

Medicalbilling


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History of Offshore Back Office:

Pinpointing the exact start of the offshore outsourcingindustry in India is an art, but is generally recognized asstarting in the 1980s.

In early 1800s, manufacturing work was offshored byEngland to U.S.Before the revolutionary war, England would send itsmanufacturing work to its colonies, however after the

war, they realised that cheap labor was available inU.S. where labour reforms had not started yet.The working conditions & benefits were poor.

From 1900-1950, U.S. started offshoring carmanufacturing.When Ford launched its T model car, it started lookingfor ways to reduce it price & were successful in doingthe same by offshoring its car manufacturing work byopening factories in U.K. & other European countries.

In 1980-90s, U.S. & other developed countries startedoffshoring to nearby countries like Mexico when Japanimproved its productivity.When Japan entered the car manufacturing industry, itwas able to improve its productivity continuously whichlead to acute competition to U.S. car manufacturers.

They started offshoring manufacturing work to nearbycountries like Mexico & Canada.

In 1980s, British Airways set up its back office offshorebusiness in India.


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British Airways and other global airlines startedconducting back office operations in New Delhi.

They were quickly joined by firms like American Express thatconsolidated regional back office operations. In 1985, Texas

Instruments set up the first multinational technical designcenter in Bangalore.

In 1989 Jack Welch, CEO of General Electric, visitedIndia and was awed by the opportunity. GE already hadsignificant operations in India, but they were largelyfocused on the Indian market. Welchs visit triggered arapid growth of captive services for non Indian

operations and the start of the first large offshoreoperation in India.

By the late 1990s, fears of the Y2K bug and the internetboom drove demand for IT services. At the same time,the telecom bubble drove investment in fiber opticinfrastructure which helped drive up communicationsquality and drive down cost.

Ironically, the following telecom & internet bust in 2001-2003 also drove growth in offshoring to India.

The big push in the 1990s was to find resources at anycost, but now western firms were looking to cut costsand offshoring to India was a great cost savingopportunity.

In 2000, United States started experiencing aneconomic downturnPressure to cut costs was there in a weak anduncertain economy


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Offshoring was still slow in the 1990s, however whenUnited Started experienced an economic downturn,back office offshoring grew fast.

With interest & telecommunications boom, the businesscontinued to grow at about 40% every year from 2000-2005.

Many countries, like Malaysia, China and Philippinesstarted coming forward with their interest in offshoring

By 2003-09, India with English speaking, low cost

workforce emerged as a dominant player in back officeoffshoring.

Benefits of Backoffice Offshoring:

Reduce labor expensesThe labor in developing countries in 1/5th of the labor indeveloped countries. Labor itself leads to major costsavings.

Cheaper locationThe infrastructure, cost of real estate, building, rent is1/4th compared to developed countries.

Advanced technology


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State of the art technology & cheapertelecommunication & IT support is available in thedeveloping countries.

This technology advancement has led developing

countries to expand offshoring, Make use of latesttechnologies

Offshoring ensures that the company gets bettercontrol over information systems

Speed up process cyclesThe time zone difference in the western & Asiancountries ensures that work gets completed before the

next day starts.This has reduced the turn around time & helped speedup the process completion time.

Focus on core activitiesOffshoring labor intensive manual work gives thecompany time to concentrate its manpower &management on core activities.

Reduce skills gapsHighly educated skilled labourers are available indeveloping countries at cheap laborWith some developed countries population ageing thereis a significant difference in the skilled labours demand& supply

Iron out political difficultiesOffshoring could lead to better political relationshipbetween the parent company & the country thesubsidiary is situated in.

Reduces a lot of risks and hidden costs


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Outsourcing to a third company may lead to hidden costFinancial & HR processes have personal data like SSNno., date of birth, etc.

Management Styles of Offshore Backoffice

Decision makingThe management of the parent company & thesubsidiary/ joint venture discuss all ideas & changes

before implementation.The final decision is taken by the parent company.

Supervisory styleSupervisors generally have a team of about 12-15members.They given direction & review performance.Supervisors are expected to have in depth knowledge

of the process maps.

Managerial controlManagement control is narrow & administrative.Working hours & breaks are monitored regularly.Quality & Efficiency is highly monitored.Time taken for completion of transactions is tracked tomonitor employees work pattern.

Matrix orientationThe employees report to their superiors however theyalso exists dotted line reporting to the management inthe parent company who review performance &efficiency of the process.


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Communication pattern Extensive communication using start of the art

technologies is encouraged. Video conference & telecommunication conference is

used frequently. There is regular sharing of knowledge Keeping the subsidiary up breast with updates/

changes is given importance.

Open door policy Offshoring companies believe in open door policy

which is largely followed in developed countries. Employees can approach higher managers &

bypass their managers if they have any grievances

Case Study

BA Continuum Solutions Private Limited

Introduction:

It is a non banking subsidiary of Bank of America, Bankof America is one of the world's largest financialinstitutions

Business processing and technology development It has three divisions KPS, BPS & ITS which


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Located in Mumbai, Gurgaon, Hyderabad, Bangalore &Chennai

14,000 employees in India 10,000 + employees in backoffice It caters to 20% of Bank of Americas back office work.

BA Continuum Solutions work involves a unique mix of skillsand abilities.

Operationally, there are three divisions, Business ProcessSolutions (BPS), Information Technology Solutions (ITS) andKnowledge Services that encompass banking and

technology operations, and support processes throughoutthe Americas, Europe and the Asia Pacific. Part of thestrategy to remain globally competitive is to blend skillsacross ethnic diversities, education and experience, pullingall these multi-layered forces together to create a unique anddiverse environment, one that is catalyzed by technology, togenerate solutions day after day for customers.

Business Process Solutions

The Business Process Solutions (BPS) group supports Bankof America Lines of Businesses by providing TransactionProcessing, Accounts Management, Payments andSettlements, Analytics and Reporting, Loan Processing,Collection and Customer Service in the Consumer,Corporate and Investment Banking areas. With businessesacross corporate and consumer service, the teams work

24x7 to ensure seamless integration with the coreoperational requirements of the Bank.

Information Technology Solutions

The Information Technology Solutions group is committed toprovide technology solutions across all Lines of Business,


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which includes Global Banking Securities & WealthManagement Technology (GBSWMT), Consumer & SmallBusiness Banking Technology & Operations (CSBB T&O),Cards, Bank of America Home Loans and Enterprise

Technology & Delivery (ET&D).

It is uniquely positioned to support the banks strategicobjectives by providing diverse technology services in allLines of Business. They develop, maintain and supportvarious business critical applications across Bank ofAmerica, using a wide spectrum of technologies likeJava/J2EE, .NET, C++, Mainframes, Oracle, DB2 along with

others.Knowledge Services

The Knowledge Services Centre provides services rangingfrom Research, Financial & Credit Analysis, and QuantitativeAnalysis to Risk Management, Information Assurance, andSales Support. The lines of business supported includeGlobal Banking & Wealth Management, Global Markets,

Consumer & Small Business Banking, Global Risk, GlobalCard Services, Global Human Resources and EnterpriseTechnology & Development.

The Finance and Accounting Knowledge Centre (FAKC)supports the CFO group including Treasury Operations,General Accounting, Financial Reporting, Modelling &Analytics and Supply Chain Management processes.

MissionTo be the worlds most admired company.

VisionTo continue to help customers grow and demonstrate howthe company can turn opportunities into reality.


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ObjectivesFor all: To be the finest financial services company in theworld.

For customers and clients: Provide clarity, choice, control,and the best products, advice and service for all customersand clients financial needs.

For shareholders: To produce long-term, consistent returnsby deepening customer/client relationships, managing thebalance sheet wisely and managing risk well.

For associates: To create a workplace in which associateshave the opportunity to achieve their full potential; in whichdiversity and inclusion are valued and fostered; in whichassociates can succeed while balancing work, life andfamily; and in which rewards are based on results.For communities: To strengthen the communities we serve

through community development, philanthropy, volunteerismand environmental initiatives.

Core Values (Pending)


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Management Styles of BA Continuum Solutions

Goal oriented & objective drivenThe goals are defined at the beginning of the appraisalyear; this is percolate down to the employees.Hoshin methodology is used by the company fordefining goalsEvery associate & managers goals are derived from the

companys goals Extensive communication across time zones

Monthly meets with line of business

Six Sigma approach followed


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Equal importance given to all levelsRigid in implementing policies Flexible towards the difference of management styles in

the different locations Sensitive about the cultural practices (of the country the

subsidiary is located in.)Cross site visits & regular personal interaction among

management

Culture (Pending)

Diversity Equal Opportunities Employer An inclusive and supportive workplace Career and performance development Cross-platform partnership

(Point for Project report) related to race, gender, genderidentity, ethnicity, disability, religion, age and sexual

orientation, but also diversity of viewpoint, experience,talents and ideas.Respects and values differences

Planning

Selection of the right model for each process It's the framework in which every process emanates from. Without afirm foundation, process is bound to fail.

Employees with superior analytical skills are recruitedFor planning any model or any process a person

need to have excellent analytical skills so that he can


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judge the pros and corns of each and every aspect of themodel and ideas. Systems are moved offshore & tested

Managers are involved in the process flow

Managers are familiarised with statistics, process map,information systems and root-cause analysis.

Performance metrics are set in advance

Leadership Attract, recruit, develop, retain and reward the top

talent Develop & strengthen current leaders Monitor leadership performance to ensure that top

performers are in business-critical roles Ensure that leaders give all associates candid

feedback Execute processes that encourage diversity in

leadership Lead our associates to perform Drive consistent execution Sustain intensity and optimism

Control

Regular review of productivity & implementation ofactionsThe parent company & subsidiary work towardsmaximising profit & increase efficiency

Quality monitoring


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Monitoring is done by both subsidiary & parentcompany Emphasis of flow of free thought and sharing of ideas

Inputs are requested from managers as well as

employeesCommunication

Extensive communication between the line of business& subsidiary across time-zones, cultural area, interests,expectations and experiences.

Continuous improvementAnalyses why errors occur, analyze the situation, trackcritical issues upstream, determine the source of the

error, and keep continuous improvement Associate Satisfaction Survey

Employees are made to feel valued and content in theworkplace

Pay for Performance Plan360 degree feedback is taken from all


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Motivation

Associate Performance and Incentive PlanBi-Annual performance appraisals are conducted &employees are given ratings. Ratings are based onGoals & Behavior. Employees are paid incentive basedon their ratings.

Company Performance PlanBased on companys annual performance, fixed

incentives are paid to all employees.

Rewards & Recognitiono Gifts/ Voucher

Top performers & consistent performers are givengift vouchers / gifts.o Certificate of Appreciation

When an employee perform or do something

really creative and new or help others managementreward them with a certificate which is like a Tokenof Appreciation

o Hall of Fame


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Photographs of top performing employees are puton soft boards in the lobby of the offices.

Career Counseling & Career FairCareer Fair is arranged & employees are counselled

about career choices & educational requirements. Personality Development Training

Personality development trainings are arranged toimprove employees skillsTrainings like Advanced Excel, Fish, Belbin andSeven Habits, etc.

Tuition ReimbursementTo encourage employees for further studies,

company pay upto 80% of their tuition fee i.e. college feeand other study expenses. Fun Activity Days

Company conducts fun day/entertainment day andteam outing for all the employees once in a month to bust-up the stress and motivate them.

Few stress relieving and motivating activities whichcompany conducts are:

Team BudgetsManagement plans for outing, picnic/dinner/party for

employees for fun and motivation Thank you Card

If an employee help another employee ormanager help any employee them the person whogot help send an E- card which is a Thank you cardto show gratitude towards the help and to motivate

everyone to help each others. Fun Committee

There is a fun committee which takes care of allthe fun activities and conduct various kinds ofactivities for the welfare of employees. This


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committee is responsible for reporting of the budgetallocated for the activitiesIt includes celebration of all the festivals in officepremise, celebrating Ethnic day, celebrating

Birthdays and reward and recognization days. Games / Quiz Days

Various games and quiz shows are conductedto relive from mental and physical stress..

Celebration of FestivalCompany celebrates all Indian and Western

festivals in office premise to keep the bondingbetween all the departments and to encourage

employees to participate in all the events.

Cafeteria Special CuisineThere is a very big cafeteria which provides

all kind of hygienic food


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SWOT Analysis:

Strength Huge Customer Base

Bank of America has a huge customer base whichprovides for high amount of back office work; BAContinuum is able to support this requirement.


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Brand recognitionBrand recognition helps attract skilled labor.

Strength in attracting skilled employees. Diversification

BA Continuum is catering to non-banking financialservices, IT development & Knowledge processingservices.

Strong technological presenceStrong internet banking presence & use of advancetechnology ensures process cycle time is reduceddrastically.

Weakness Weak wholesale banking operations

Due to economic changes, the sub prime marketsegment impacted the company wholesale bankingoperations.

Not as nimble as smaller, regional outsourcingcompanies

The company is not able to change policies or goalsquickly compared to smaller firms due to the sheer size.

Opportunities Scope for Expansion

The company can expand & work towards getting moreback office processes to India in the banking services.

Provide outsourcing services to other financialcompaniesIt can look at the opportunity of providing back officeservices to other financial companies.

Merrill Lynch & Countrywide Home Loans acquisitionThe acquisition had led to more offshoring work

Threats


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Government RegulationThe government regulation towards offshoring couldchange impacting business

Financial economic turmoil

Economic recession has led to high competitiveness &pressure to reduce further cost

Bank nationalizationIf the bank gets nationalized, it will impact offshoringbusiness.

Ban on offshoringIf the U.S. government bans offshoring, the companysexistence will be threatened.

If war breaks out between U.S. & India, then offshoringwill have to be stopped.

Competitors

Company: JP Morgan Chase & Co.

Parent Company: JP Morgan Chase

Second biggest bank in the U.S. in terms of customer base.


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CEO: Jamie Dimon

Offshoring: $200-$250 million worth of backoffice business

Headcount 9000 employees30% backoffice work is offshoredLocated in Mumbai & Bangalore

Future Plan: Increase offshoring to $400 million

Company: Wells Fargo India Solutions (WFIS)

Parent Company: Wells Fargo & Co.

Third largest bank in the U.S. in terms of assets.

CEO: John Stumpf

Offshoring:

Headcount 750 employees, 6%-7% of its backoffice work is offshored Located in Hyderabad

Future Plan: Expansion & increase in offshoring business

Offshoring in India

India is the dominant player in offshoring India holds around four-fifth of the global market. Highly-educated english-speaking workforce Process maturity & experience Democracy, political stability & Investor-friendly policies Time zone difference


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Basic facilities with low tariff 0.8 million people employed 17.5% growth rate in offshoring Investment of US $115 billion business in 2009

Conclusion

Documents

Project_report - Final[1] POM