A Successful Outsourcing Transition

Unlocking the Potential of Tier 3 Locations: A Successful Outsourcing Transition

In 2015-16, we faced significant pressure to reduce operational costs for a multinational corporation operating in over 120 countries. The challenge was to find an innovative solution that would not only cut costs but also enhance operational efficiency and service quality. Our team decided to explore the uncharted waters of outsourcing to a Tier 3 city in India, a move that would later become a pioneering and award-winning success story.

This initiative marked the first successful transition to a Tier 3 location for large-scale outsourcing operations, showcasing the viability of such cities as a cost-effective alternative for corporate functions. Here’s how we made it work and why this project became a model for others to follow.

Identifying the Right Location

The first step was to carefully select a Tier 3 city that could meet the operational requirements of a multinational corporation. After extensive research, we identified a city in southern India that had the potential to support such an initiative. The city was home to over 40 educational institutions, providing a rich pool of talent that could be tapped into for the project’s workforce.

However, the success of such an initiative relied not only on finding talent but also on ensuring that the available workforce was equipped to handle the complexities of corporate operations. Typically, the education system in India is heavily focused on theory, with limited exposure to practical, real-world business environments. We knew that bridging this gap was critical to ensuring a smooth transition and operational success.

A Unique Approach: The "Train the Trainer" Program

Instead of following the conventional recruitment approach, we decided to partner with local educational institutions. We launched an innovative "train the trainer" program, where our team trained professors and lecturers to equip their students with the practical skills and knowledge needed for corporate roles.

By focusing on empowering educators, we ensured that students were better prepared for the workplace even before they graduated. This strategy yielded remarkable results. Our recruitment success rate soared to 97%, and the typical training and onboarding process for new hires, which usually takes around 90 days, was reduced to just 30 days. This not only accelerated the transition but also drastically reduced costs associated with onboarding and training.

Scaling Operations: From 40 to 1,255 Employees

We began the project with a modest team of 40 full-time employees (FTEs), focusing on Procure-to-Pay (P2P) operations. Over the next two years, the success of the initiative allowed us to scale the operation significantly. By 2018, we had a workforce of 1,255 FTEs providing services to over 120 countries, including non-English-speaking regions.

The scope of services expanded beyond Procure-to-Pay and now included:

• Accounts Payable (AP)

• Accounts Receivable (AR)

• Record to Report (R2R)

• Payment Processing

• Payroll

• Human Resource Shared Services

• Financial Reporting

The team, primarily composed of local talent, not only handled these tasks efficiently but also did so with an impressive level of quality and speed.

Key Achievements and Benefits

The success of this transition was measured not only by the smooth setup and scaling of operations but also by the substantial benefits it delivered to the client. Here are some of the most notable outcomes:

1. Cost Savings
   One of the primary objectives of moving to a Tier 3 location was to reduce operational costs. By shifting operations to this lower-cost location, we were able to achieve a 37% reduction in operational expenses. The lower cost of living and wages in the Tier 3 city, combined with our innovative hiring and training strategy, contributed to these significant savings.

2. Improved Turnaround Time (TAT)
   The introduction of a shift-based working model, with operations running from 6 AM to midnight India time, allowed us to cut the turnaround time (TAT) from two working days to just four hours. This extended working period meant faster processing and response times, greatly enhancing the efficiency of operations.

3. High-Quality Standards
   Despite the rapid growth and cost reductions, we maintained exceptional quality. The project achieved an impressive 99% quality rate throughout the two-year period. This was a direct result of the rigorous training programs and continuous development initiatives that kept the workforce up-to-date with industry best practices and client expectations.

4. Social Impact
   Beyond the immediate business benefits, this project had a profound social impact. By bringing corporate career opportunities to a Tier 3 city, we provided employment to a large number of locals who would otherwise have limited access to such opportunities. This not only helped develop the local economy but also uplifted the community, providing sustainable career paths for many.

5. Societal Contribution
   The project also made a long-lasting contribution to society by enhancing the skill sets of individuals in the Tier 3 city. By working closely with educational institutions and continuously developing the workforce, we contributed to the broader goal of inclusive growth in India, ensuring that smaller cities are not left behind in the era of globalization.

A Win-Win for the Client and the Community

The client, a multinational corporation with billions in revenue, not only benefited from substantial cost savings but also saw a marked improvement in operational efficiency. By outsourcing key functions to India, the company was able to refocus its resources on core business activities, particularly sales and growth initiatives, while the outsourced team handled day-to-day deliverables with precision and speed.

Additionally, the improved turnaround time gave the client a competitive edge in the market, as they were able to respond faster to business needs and customer demands.

Conclusion: The Power of Innovation in Outsourcing

This project is a testament to the potential of Tier 3 locations as viable hubs for large-scale corporate operations. By thinking outside the box and adopting innovative strategies such as the "train the trainer" program, we were able to unlock the talent potential of a smaller city, deliver exceptional business outcomes, and make a meaningful societal impact.

In the years since, this success story has become a model for other companies looking to reduce costs without compromising on quality. It serves as proof that with the right strategy and approach, even the most ambitious outsourcing goals can be achieved—while making a positive impact on the community.