Driving Shared Services Maturity

The 13th Annual Australasian Shared Services & Outsourcing Week in Sydney NSW, taking place 10-12 May,  will see a host of the great and the good in shared services and outsourcing from across Australasia gathered to address some the critical issues facing the shared services and sourcing space at present. One of the most sought-after presenters at the event will be Charles Gray, Division Director Financial Services for finance giant Macquarie, taking part in the plenary debate on "Driving Shared Services Maturity", and speaking later in the conference on "Offshoring Alone Is Not The Answer: Evaluating The Various Criteria To Maximize Your Strategy".

In advance of the event, SSON secured a one-to-one with Gray to discuss some of the issues which will arise during his presentation and the panel debate, gleaning invaluable insights into how to make offshoring work - and the importance of understanding what an organization wants to achieve when moving work offshore…

SSON: Charles, let’s get a brief introduction to yourself, first. Can you tell us about how you came to occupy your current position.

Charles Gray: I’m a Chartered Accountant and have worked for a number of different blue chip companies taking a traditional route from financial accounting through financial control. My main area of focus has been around the core elements of financial control and process improvement. I’ve been with Macquarie for six years and this is my third different role having previously worked in the leasing and then the funds management finance teams.

SSON: Excellent. Let’s move on to your presentation, then: you’re speaking on "When Offshoring Alone is not the Answer"… Do you think there’s ever a point where offshoring alone has been the answer?

CG: Purely just to say you will move activity offshore is an easy thing to say, but there is plenty of detail and subtlety behind it which people don’t always understand. Everybody has a war story they have heard about failed offshoring operations and generally people like to talk about the things which don’t succeed rather than the success stories.

The secret of success is paying close attention to the detail of what you’re doing and communicating extensively. At its most basic, offshoring means coming up with a process map, hiring a member of staff to perform a role and then giving them some training and detailed desk instructions. However this is probably about 10% of what is required to make offshoring work successfully. The attention to detail has to start with the recruitment of people because every single person you touch with your recruitment creates a perception of what your organization is about.

The attention to detail needs to continue with the onboarding of those staff, the way that you train them, the way that you engage them in the culture and give them a broader understanding of what the business is about that they’re supporting.
If a person is sitting offshore it’s difficult for them to create a meaningful understanding of why they’re doing what they’re doing, and what the environment is that they’re supporting. So the more work that can be done around that, the better to enable the individual offshore employees to understand the context. The employees must feel aligned and part of the organization that they’re supporting - without that, you will never achieve the buy-in of the employee, and therefore you’re extremely unlikely to retain that employee and the knowledge that you’ve invested in them.

The second key element is building what are the two key words for me in offshoring: "trust" and "confidence". That works both ways: it’s not just the people onshore receiving the work, who need to have the trust and confidence in the accuracy and the delivery of the work; it’s also with the person performing the tasks offshore who must feel that they can confidently ask questions when they need to.

This requires hard work and effort, including training and communication; it’s about taking people on a journey to get them to where they need to be to make offshoring a success. This isn’t about having someone at a desk creating a process map for six weeks and then sending them away and expecting everything to turn up every month, on time, accurate and at the right cost.

SSON: It seems like there’s a great deal of that activity which can only be done onshore, in terms of the training and the cultural assimilation elements. So what sort of proportion of the staff that will be carrying out process activity offshore do you need to bring over to HQ or other onshore facilities where they can receive that training?

CG: The short answer is, a lot more in the early days, and less once you start to reach maturity. Bringing a team over and putting them face to face with the team that they will be supporting onshore has benefit of forming relationships and building trust and confidence. Now, if you’ve got that trust and confidence then you can overcome probably 95% of the operational issues or hurdles that you might come across in your daily life.

SSON: In your experience do you think attention to recruitment and development is something that’s taken quite a bit of time for organizations to accept as a prerequisite of successfully offshoring activity? Because, for example, some organizations are still worried about high turnover rates in delivery locations, employees doing a two-year stint and then heading off somewhere else…

CG: It’s an interesting point, this. I think it’s an ever-changing scene in terms of what activities are being put offshore and the capabilities being developed in those offshore locations. I think the more attention people pay to this and the higher the appreciation of the subtleties involved, and of what they can achieve by moving work - which isn’t just the straight cost arbitrage in all cases – the better. Management need to deliver clear messages which help staff understand why they’re moving activity offshore and what they’re trying to achieve from it, and this is not always easy or straightforward.

As I said, this isn't just: build a process map, hire someone, shift it; it doesn’t work like that. And I think if people really want to make the investment and can input more management effort into it in the early days, people can rapidly move a long way up the skills curve. The higher you go up that curve, obviously the more value in terms of dollar savings you’re really starting to extract. Generally I have found that people tend to underestimate the ability of staff working offshore to deliver complex processes. If you make the investment, it can be done - it is a big investment in time and effort, but it will pay you back in spades if you get it right.

SSON: Do you think that a fear of that investment at a time when discretionary spending has been pretty restricted for many companies has meant that a lot of the mistakes that arise from the immaturity of the model have been repeated over the last few months as a direct result of the impact of the crisis and downturn?

CG: Undoubtedly we’ve seen cost-cutting in organizations and people starting to transition activity offshore. To simply ask someone within, say, your finance team, or within your operational center, or running your call center, to move something offshore is not an easy thing to do. You need to have a deep understanding of what you’re doing and what makes it work - and what’s likely to make it break. Without the clarity and understanding, you’re really walking around in the dark and you’re likely to trip up - and when you trip up, some of the mistakes you can make are irreparable. You need a coherent strategy.

You need to understand what you’re doing and why you’re doing it; what the timescales are; and where you’re trying to get to with it - and make sure you communicate the hurdles and your progress internally. People often expect to see Day 1 results and savings with this, and you’ve got to be able to confidently explain to your internal stakeholders what the challenges are, what the timeframes are, what the Year 1 costs are going to be, etc, and take people on that journey.

SSON: In terms of that timeframe: do you think the timeframe required to get to a kind of promised land - in terms of a successful, sustainable offshore activity - is coming down as the industry is maturing, and there are more experts in the field who can apply their knowledge to it? Or is it that added complexity is slowing things down somewhat? A recent SSON interviewee was saying that he thought there’s been a bit of a bell curve in terms of the speed with which you can implement something offshore because as the industry has matured you’ve then had new complexity in the form of added demands from employees, governments making extra fiscal moves to try to make the most of the money coming into delivery locations… So do you think there’s been a change in the amount of time required to get things up and running?

CG: I think there has. I think it does depend a lot on the complexity of the process that you’re putting offshore; but there’s no doubt that people offshore are getting more and more used to supporting onshore locations, and increasingly when we're recruiting we see an awful lot more people who’ve got experience of working on offshoring programs or transit ions in Canada or the US or the UK. So you are able to hire the knowledge and the experience a lot more readily than you were even three or four years ago. There is now a larger number of people offshore who’ve worked overseas and been involved in this type of activity, which obviously gives you a lot more speed to delivery when you’re setting it up.

SSON: OK, let’s move on. In terms of the effort in terms of training, education, cultural assimilation that a big organization would carry out: that’s a big investment. Now a lot of companies can view that investment being paid back not just in the efficiency and quality of their offshore operations, but in terms of breaking into the new markets where they’re actually setting up those operations, for their own expansion. Do you think that’s been a big driver both before and after the downturn; do you think a lot of companies have thought "we can kill two birds with one stone here; we can move into India and achieve efficiencies and also gain a toehold in a very big emerging market"? And if that is taking place on any big scale, is there a danger of "mixing the message" where what should be being focused upon is the success in process perfection that you‘re looking for?

CG: I think your question is well-informed because that’s the danger, for me: mixing the message. As I said earlier there’s the importance of paying attention to detail, starting with recruitment. What you’re doing every time you set up a shop offshore, whether that be a revenue-based operation or a back-office, is instantly creating brand perception in the eyes of every person that you touch. It’s about being clear in your own mind where the line is drawn between operations and revenue expansion, and it would normally require separate management teams to drive each.

What we have found with our offshore center is that with the way we have set it up, the quality of the people we’ve hired, the quality of the office fit-out, and the quality of the working conditions, through that we have started to create a strong brand for Macquarie in that region. We would therefore be optimistic that businesses continuing to expand across the world with Macquarie can compete off the back of a recognizable quality brand. From my own perspective of what that’s a spin-off benefit rather than a main driver of what I’m trying to achieve. But it’s an old cliché: if you focus on your own process then you should get to the right outcome for the organization more widely.

SSON: OK, Charles, let’s wrap it up with something simple - and this in many ways gets back to what you were talking about at the beginning of the interview: what’s the secret to successful offshoring?

CG: The secret for me is paying close attention to every aspect of what you’re doing when you set up. The analogy I always use is: when you’re starting out, it’s like building the bottom row of bricks on a very tall building. You’ve got to make sure that every one of those bricks is perfectly aligned, because you’re going to build a tall house on top of them. By the time you put the last row of bricks on underneath the roof, you can probably place them fairly quickly without undermining the integrity of the whole structure but it’s well worth spending a month on that bottom layer of bricks. If you get the first layer right - if you get the right layer of people at the beginning, if you create the right brand, the right recruitment processes, the right training, and you have the right communication going on to your stakeholder group - then you start to win confidence quickly. Establishing confidence and trust is the key to success.

Oz_SSWbrochure If you enjoyed this interview with Charles Gray, come hear him speak at the 13th Annual Australasian Shared Services & Outsourcing Week in Sydney NSW. This event is taking place from May 10 - 12. You won't want to miss it!