We are just a few minutes into an interview at Australia and New Zealand Banking Group’s Cherry Hills centre in Bangalore, India, when the lights dim. Fred Bertram, who runs the place, explains it’s just another blackout.
The building’s uninterruptible power system keeps one in every four lights running until the generator kicks in and all the lights come on. It’s a well-oiled routine, given the electricity supply in Bangalore cuts out three to four times a day. “And never a keystroke lost in anger,” Bertram quips.
“At home, we don’t have the uninterruptible power system, so everything blacks out for about 30 seconds and then the generator kicks in. If you’re watching television and it happens for the third time in one hour, you’re ready to throw something. It’s one of the things that nibbles away at you.”
Bertram is an expert on the joys and challenges of Bangalore. He came here two years ago, when ANZ decided to treat its operation in India as a strategic asset, rather than a historical anomaly. “Mike Grime [then head of technology and operations at ANZ] told me to become the most knowledgeable person in the bank on India. I think I’ve done that. Not in a Raj, expat type of way, but by absorbing everything I could, even if I [didn’t] like it. I have figured out how the place works.”
ANZ has chosen to be open about its Bangalore operations, which employ about 1800 people. The total is likely to reach 2000 next year.
The bank has told anyone who cares to listen that it doesn’t, and won’t, do call centre work in India. However, it will most likely increase the information technology and operations work done here.
ANZ freely admits Indian labour is cheaper, advising that the cost per Indian employee is roughly half the Australian equivalent. The bank even admits that going overseas has cost jobs. After sending 280 technology positions overseas in the last two years, ANZ has retrenched 126 people. Another 84 were redeployed and the remaining 70 resigned or were contractors whose deals ended.
What is not so well known about ANZ’s offshoring activity is the character of the bank’s Bangalore operations. Once a visitor has entered the Cherry Hills building, the noisy, grimy chaos of Bangalore’s traffic-choked streets is replaced by office conditions familiar to any white-collar worker. If it weren’t for the jewel-bright colours of the women’s saris, one could easily be in a newish, low-rise office block in
any Western capital city.
Bertram is keen to hammer this point home, so he routinely shows visitors the toilets.
“People can say anything they like but you really find out what conditions are like by looking in here,” he says, holding open the door to an admittedly spotless ladies loo.
When it comes to making a delivery centre work in this city, job conditions can make or break you. Depending on whom you talk to, staff turnover in India’s software services sector is running between 20 and 40 per cent. That’s what happens when revenues are jumping by 40 per cent a year and giants like Satyam, Infosys and Tata Consultancy Services are hiring tens of thousands of new employees every year.At ANZ, about one fifth of the bank’s Bangalore employees leave each year, versus 12 to 13 per cent in Australia.
The Indian workforce is mobile and it’s an uphill battle for a relatively small operation like ANZ to hold onto staff. It relies extensively on word of mouth and contracts that are favourable compared to what other workplaces offer. Bertram is withering about what he describes as the exploitative culture of India.
“There are many companies here that take pride in how small they have managed to get the desk size down in their battery-hen operations. I refer to them as slave ships. They are labour exploiters and they couldn’t give a toss about their employees,” he claims.
In service delivery centres where clients are European or American companies, it is not uncommon for people to work 12 or 14 hours a day. For many ANZ employees in Bangalore, the time zone of the bank’s head office is a big advantage. It means they can go home at 6pm, when it’s 10.30pm in Melbourne, rather than lunchtime in London, or the beginning of the workday in New York.
“It’s hard to compete against global brands. But we are finding the ANZ brand works. The street conversation is, ‘This is a place with good values that respects people and treats people well,’ and that goes a long way,” says Bertram.
ANZ’s IT operations in Bangalore go back to 1989, when Index Computing was established to run technology for ANZ Grindlays in India. Grindlays was sold in 2000, but ANZ had decided to create ANZIT, so the technology arm was retained.
In 2005, the Bangalore operation became simply ANZ. It became part of the bank, rather than an outpost. The bank’s IT operations were distributed across Australia, New Zealand and India and the number of staff in Bangalore went up dramatically.
In the meantime, the cost-cutting merits of offshoring had become firmly established across the finance sector and ANZ began looking at what areas of operations could be transferred to Bangalore. “Governance, policies, procedures... everything is done to ANZ standards. The only thing that is not the same as Australia is pay rates,” Bertram says.
Entry-level staff cost one-quarter of what they do in Australia, but the difference erodes as staff experience increases. “There is very little saving when it comes to senior executives,” Bertram says. “Pay rates at the high-end are very close to Australia. They are a very scarce resource here. Many have returned from working in the United States and they expect $US200,000 [A$231,795 or NZ$ 260,362.20] plus.”
“There are cultural differences,” says Bertram. “In India hierarchy is revered, they are less prepared to come forward and they are not nearly so likely to say no. You get this: ‘Can I have this tomorrow?’ ‘Of course you can’, and it never turns up. That is a traditional brand of India but we are very clear that this is an Australian organisation.
“We revere the culture here but we remember who we are. We are not here as apologists. We make sure that everyone knows about our standards and our values. We spend a lot of time explaining, ‘This is what our brand is and if you see stuff you know will hurt the brand, you must tell us.’ We don’t pussyfoot around,” says Bertram.
The ANZ model has its critics. Citigroup analysts compared the offshoring strategies of the five major Australian banks in a report published in May.
The authors marked down ANZ for pursuing a captive model that was not outsourced to a third party or developing into an independent organisation, which could eventually be carved out to generate a substantial financial return.
Bertram tackles the criticism head on. From a financial point of view, ANZ maintains its cost savings are twice what they would be if a third party supplied the services in a traditional outsourcing model.
Besides, Bertram says, the bank has been there, done that and has now taken back much of the activities it outsourced in the 1990s.
“Our view of outsourcing is you hand away too much of the margin. We are saving 50 per cent now. We could only save 25 per cent by outsourcing. Our analysis of the expertise in the market suggests we can do it better ourselves.”
As for building up the business to eventually spin it off, ANZ management has concluded the possible benefits do not justify departing from their model.
This operation is an integrated captive that differs from what Bertram describes as a “pure” captive model, which does work for businesses other than its parent.
Bertram says that ANZ chief executive John McFarlane’s “view is that third-party work is good for cost centre managers but not for the parent organisation. That’s because the centre’s managers get progressively consumed by what they are doing for external parties and how they are going to find more and what they are going to do with the money earned.
“That won’t happen here because we don’t do third party. We are not in the business of making extra money. John’s view is that if you can’t make $80 million in the long — term, don’t get into it,” Bertram says.
In October, Hong Kong and Shanghai Banking Corporation chief executive Michael Smith will replace McFarlane as the CEO at ANZ. Smith’s position on offshoring is not yet known, though HSBC has shifted thousands of jobs from Western countries to Asia in recent years.
Meanwhile, in Bangalore, Bertram is proud of what ANZ has achieved.
“We are building up a resource base that is ANZ’s — not IBM’s, not Accenture’s. This talent base is ours and that ownership, and the cultural connection, will position us well as we extend into Asia.”
Sidebar: Life in an offshore IT department
By the time technical analyst Nidhi Nikum has her first baby, she wants ANZ to have a creche. Judging by her career so far, one suspects she might get her way by sheer force of will. This would also help ANZ show it’s serious about work-life balance.
This is something of a novel concept in India, where long hours are the norm in the fast-growing software sector, and elsewhere. The field is still male-dominated and the women who work in it have relied upon strong family networks for child care. Nidhi Nikum, however, sees nothing wrong in forging new ground and has sensed an opportunity at ANZ.
Nikum, now aged 28, was one of only eight women in a class of 200 when she graduated with a degree in civil engineering.
“It’s a cultural thing. In the past women haven’t been encouraged very much. If parents had money, they’d spend it educating their boys.” Fortunately, Nikum says, she was brought up in a different type of environment.
After graduating, she went to a big Indian software company, as many engineering graduates do. Demand for staff at these companies is so high that in most firms the average age is 26 or 27.Nikum joined a company, where she felt she “had to work 14 hours a day. That was what was expected.”
After two years, she had to leave. “I realised I didn’t want to spend the rest of my life like that,” Nikum says.“When most people start out on their careers, they have no idea about anything, so they go to work for a well-known brand, one whose share price is going up. But after a couple of years, they realise you need to have a life after work.”
Uma Natarajan, 34, was running teams of up to 200 people at Accenture before she joined ANZ six months ago, in a project role. At Accenture, she worked 12 to 15 hours a day for corporate customers scattered around Asia-Pacific and the US.
Since she joined ANZ, Natarajan’s workday has shrunk to nine hours, meaning she has more time to spend with her three-year-old daughter. This is one reason why she likes working at ANZ. She also thinks the organisation has potential.
“One of the things I looked at before I joined was what part of the curve this organisation was at. It’s just starting off. I think it does have a vision towards operational excellence, not just in terms of work/life balance but also in service delivery,” Natarajan says.
S. Aradhana, 34, head of working capital at ANZ’s IT operations in Bangalore, notes there is still a glass ceiling, but she thinks it’s one that can be broken.
“We are considered on par with the men, though there are not many women, especially at the top level.”
ANZ hopes to change that by hiring more women. Word is getting around that the bank offers women some considerations that most Australians would take for granted.
“In many places, if your child is sick, you will not get a break,” Aradhana says. “You wouldn’t even speak about it. That’s not the case here,’’ she says.
ANZ's Bangalore assets
Manager, International Mobility
Marlene Rodricks originally intended to stay in Wales after completing a Masters degree at Cardiff University. Then she came home for a holiday and realised the job offers she was getting were better in India.
She came to know ANZ through her previous job as a marketing manager at a major hotel chain. “I was slave driven. I worked from 8am till maybe 1am, six or seven days a week. They weren’t my official hours but they were expected.”
Rodricks now works considerably shorter hours as an international mobility consultant at ANZ, helping to shift the bank’s people around the region and dealing with taxation and immigration issues.
She still has the travel bug and would like to work outside India, but says this is complicated in a world wary of terrorism.
“I think it is tougher for our generation to move jobs internationally than it was for our parents. Before September 11, it was a lot easier. Now we have visa issues with the US and it is also difficult in the UK, because of the backlash against jobs moving from the UK to India.”
Manager, ANZ Design
Rahul Dass has seen offshoring in action first-hand.
“We had a person in our team whose job moved from Melbourne to Bangalore. The way the bank dealt with that in terms of counselling and financial benefits and so on made the rest of us feel that it wasn’t a bad deal, as if we wouldn’t mind if it happened to us.”
Whatever your personal philosophy, it’s hard to deny the facts, Dass says. “Businesses do business to make a profit. Anything that will raise shareholder value is justified; it’s inevitable that your job will shift if there is someone who can do what you can do for a lesser cost.”
He says the way the Bangalore operation works with the rest of the bank has changed since the Indian division became part of the fabric of the bank, rather than an organisation working at arm’s length.
“Previously, there was a lot of confidential information that did not flow between the two [operations]. It now finds its way through various channels. People are more comfortable being frank with each other.”
Head, Corporate Social Responsibility
Four years ago, Tulsi Swamy, who runs ANZ’s corporate responsibility programme in Bangalore, returned to India from the US after deciding the job opportunities were better in her home country.
“Initially, offshoring was all about low-quality work, but that has changed now. The jobs are becoming meatier. The labour arbitrage is still the biggest differentiator for India, but the quality of the people is very good as well, so companies have upped their expectations.”
India’s information technology and IT-enabled services industry employs 1.3 million people and contributes 6 per cent of the country’s GDP. It’s growing fast - IT accounted for less than 0.5 per cent of GDP in 1994 - but it’s still a tiny slice of pie in an economy where there is not much fat to go around. Informed commentators estimate between 300 million and 350 million Indians do not have enough money to meet their basic needs.
“Before we started the corporate responsibility programme, there were plenty of people working at ANZ who were contributing to non-government organisations,” Swamy says. “It’s part of our culture. We give and we share.”
Manager, Learning and Development Technology
Subroto Bhaumik knows there are plenty of people in Britain and the rest of Europe who don’t like it when they hear an Indian accent on the end of the phone line. He knows this because he worked in a centre for inbound calls before joining ANZ’s learning and development division.
“I was used to irate callers,” Bhaumik says. And 14 or 15-hour shifts were also not unknown on his previous job.
“People in the call centre industry know those hours are how it is going to be. I moved away because I wanted options.”
Bhaumik is used to change. The mechanical engineer started his career as a copywriter and moved into sales and marketing, then into training that took him to a company supplying services to businesses overseas. After joining ANZ he was involved in a crash course on Australian culture.
“Sometimes, the Australian accent can be very thick, and I can’t follow. But all of the interactions I have had so far have been fine. Australians are quite direct in the way they deal with an issue. In India, we tend to skirt around an issue for a while. Doing things a bit quicker works for me.”
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