Chapter 14: Surviving Outsourcing

Our company had decided to outsource the maintenance of one of our B2B transaction platforms to a Chennai vendor. This maintenance was originally contracted out to a vendor located in Kuala Lumpur and they had been doing a good job for three years. However, with a projected saving of almost two hundred percents, the upper management could not find a reason for not transferring the maintenance contract.

Both onshore and offshore outsourcing seems to be a key business strategy in most MNCs. I remembered a few years back, slightly after the Internet Bubble burst, companies were skeptical about outsourcing important functions to others. They were uncertain about the financial payback and the quality of the service providers’ work. Now, quality is no long a big issue, with companies focusing on managing remote resources effectively.

Outsourcing is inevitable in the process of globalization. More manufacturers had moved their labor and land intensive production and processes to neighboring locations such as Indonesia to take advantage of their lower costs there. Singaporean workers are urged to train and retrain in order to move their knowledge up one, or a few, levels. This is to ensure that they could remain in the company as the middle management who will be managing and controlling the job quality of their vendors.

The first function that our company had outsourced to Kuala Lumpur was our IT help desk. Before the outsourcing, whenever my mischievous notebook decided to disable some of its functions for the day, I just had to call up our IT department and within approximately fifteen minutes, somebody would be at my desk to do a health check for my notebook. After the outsourcing, I would call up the IT help desk situated in Kuala Lumpur and note down a given request ticket number. The IT help desk will then put my request ticket on a queue, with the priority depending on the urgency of the request. When it was finally my turn, the Kuala Lumpur IT help desk will call up an IT guy in Singapore, in the IT department five stories above my office, to be precise. This IT guy will then come over to my desk to service my notebook. The whole process would normally take a few hours.

In those few hours that I could not work on my notebook, I would wander off to a nearby café to get a cup of coffee and read some newspapers. Some people viewed this as a total waste of time but I begged to differ. Having a few hours to relax my mind could give me some breathing space and the ability to think more clearly and work more efficiently for the day. There was this inflexibility that I disagreed with though…

“Mr. Tan, your IE problem was due to some spywares residing in your computer. I’ve already cleared it. But there’s another problem…”
“Yes?”
“I found that there’s some problem with your Outlook as well.”
“So could it be solved?”
“Yes, but you’ll need to raise another ticket for it.”
“What?”
“You’ll need to call the help desk and raise another ticket for it, and then either I or another colleague will come over to solve it.”

Our company then carried on to outsource the Finance’s Claiming department to Chennai. As expected, after the claiming function was outsourced, the staffs’ claiming process for transport and travel allowances etc. took longer, but it was still bearable. However, the invoice payment process was also made more complicated, with more forms to fill and longer waiting time. That was unbearable to some.

In the new process due to the outsourcing, after an invoice had been received, a couple of taxation and declaration forms had to be filled. The whole stack of document will then travel around the company to be signed by various authorizing managers. With all signatures gathered, the stack of document had to be photocopied to duplicate one more copy to be tagged together, and another copy to be filed up. The stack of original and duplicated documents will then be sent by courier to Chennai. Chennai’s Claiming department will then put the invoice on a queue to be processed. When the invoice was finally processed successfully, our Singapore office will receive instructions to issue a cheque to the receiving party. The whole process would normally take one to two months.

Most of the time, Ju could bear with the extended waiting time to pay the vendors. However, there were exceptional…

“Rose, I’ll need you to talk to Chennai about the Emirates Towers invoice,” requested Ju.
“Why? Is there a problem with the invoice?” asked Rose.
“The hotel has just called me and the reservations manager was threatening to release our booked rooms if they don’t receive the cheque by tomorrow.”
“The event is supposed to be two weeks later right?”
“Yes, but remember we need to pay a fifty percents down payment two weeks before the actual day, as stated in the reservation contract?”
“Oh… and Chennai is not releasing the cheque?”
“Yes.”
“When was the invoice sent to them?”
“About three weeks ago.”
“Okay, let me give them a call. What’s the number?”

Ju gave Rose the phone number and Rose made a call to Chennai to request them to speed up the payment process for that particular invoice from Emirates Towers. After a much heated conversation, with Rose having to give hundred and one reasons for speeding up the payment, and a faxed request letter signed by her, the Claiming department in Chennai had finally promised to instruct our Singapore office to issue a cheque.

With that promise from Chennai’s Claiming department, Ju had to give our Singapore Finance department a call to request them to escalate the issuing of the cheque and courier it to her within a day. On the same day, Ju would have to courier the cheque out to Dubai. Shifting our Claiming function to Chennai had made Ju’s work very painful indeed, but she was not alone.

Sally had been grumbling about the invoices that she had sent to Chennai but got lost in the Bermudas Triangle on the way. In every few months, a vendor will call her up to ask about a much delayed invoice, which will prompt Sally to call up Chennai’s Claiming department to check the invoice’s status, and the department will usually inform her that the invoice was not received by them, a.k.a. the case of a missing invoice. The infuriated Sally will then have to request for a new invoice from the vendor again.

With the IT help desk and Claiming department outsourcing deemed as successful, our company sent a team to Chennai to explore on the feasibility of outsourcing the maintenance of one of our B2B transaction platforms. After determining that it was an economically right thing to do, the contract was signed. I was then assigned the responsibility for reviewing the business transaction knowledge of the Chennai team.

Before the Chennai team could maintain the B2B transaction platform, it was mandatory for them to have full products knowledge. My job was to make sure that they had the adequate FX products knowledge to serve our clients well. My nightmare started from there...

“Beng, you stated in the product sheet that the global liquidity fund is not offered to British citizens,” asked the FX lead in Chennai team.
“Yes, you’re right.”
“But where did you get this piece of information from?”
“It’s written in the brochure.”
“But I can’t find it. I’ve searched through the whole brochure but I still can’t find it.”
“Did you check page two?”
“Yes, definitely!”
“Did you check the disclaimer?”
“Oh…”

Besides the inability to read disclaimers and foot notes, the Chennai team had another problem. They were unable to understand and apply the same theory from one scenario to another…

“Beng, could you tell me more about the currency swap?” asked the FX lead in Chennai team.
“Okay… a currency swap typically involves an exchange of coupon payments and principal. For example, Singaporean Company S would like to borrow pounds, and British Company B wishes to borrow Singapore dollars. Let’s assume Company S has a lower Singapore dollars borrowing interest rate than Company B, and Company B has a lower pounds borrowing interest rate than Company S. It means that if Company S borrows Singapore dollars in Singapore and Company B borrows pounds in the United Kingdom, but then they swap their obligations, each company can benefit from the other company’s superior borrowing rate in its domestic currency,” I explained. “Do you have any query on this?”
“Erm… so this is what it meant by ‘Sin and Pound’ currency swap?”
“Yes, you’re right.”
“Then can you explain to me, what is the meaning of ‘Yen and Dollar’ currency swap?”

After going through all the questionings in two months, the training for the FX lead and members in the Chennai team was over. I went through the post-training report sent to me from Chennai. There was only one conclusion after reading it. With that B2B transaction platform outsourced to the Chennai team, my job had just become more challenging.