The UK pensions administration company that does not offshore some of its work to India is becoming a rarity. The attraction is access to a seemingly endless stream of graduates (3m leave Indian universities every year) who are educated in English, and who can be paid a tenth of what a UK worker would be paid. Not only that, but many of these staff are prized for their diligent attitude to work that is unpopular in the UK for its perceived drudgery.

Wage inflation in India is around 10 per cent, so the cost advantages might not always be there, though administrators claim that even in 10 years’ time there will be clear savings and by then they will have a more experienced and productive workforce too.

This might appear easy, but western companies have found that offshoring works a lot better than outsourcing. Offshoring is where a regional office is created in India, outsourcing is where a specialist Indian firm takes on the work.

The unpopularity of outsourcing can be seen by a quick search on Google. If you type the words ‘India outsourcing’ into Google, the highest search match is for ‘India outsourcing services’ at 4.3m pages, while the second most common match at 3.8m is ‘India outsourcing problems‘.

This situation arose as the first wave of British companies often gave contracts such as call centres to specialist Indian outsourcing firms. Some of these contracts have now ended due to customer dissatisfaction in Britain, problems over quality standards, high staff turnover and problems over alignment of interests. The second wave of companies seeking cost savings in India have decided that best practice is to set up their own offices.

Of the UK’s biggest pensions administrators, Aon, Jardine Lloyd Thompson (JLT), Mercer, Prudential and Xafinity all offshore some of their work to India. One of the odd ones out is Hewitt. While it has offices in India that do administration for the US and the UK, it has chosen Poland as the offshore location for its main UK pension scheme administration services.

One company that feels strongly that it has avoided many of the problems associated with outsourcing to India is JLT. It set up an office in Mumbai two years ago. In keeping with best practice on offshoring, it started with the most simple administration and then added the more complex tasks such as actuarial, investment analysis and pension fund accounting work as it became more experienced and confident.

The whole operation is run by Bala Viswanathan, who was poached from Prudential’s Mumbai offshore office and who has previously set up offshore offices in India, Japan, Singapore and Hong Kong for Axa.

The logic of his appointment is that JLT wants someone in charge at its Mumbai operations who clearly knows what works and what does not work in offshoring.

Mr Viswanathan describes the hopes and plans of the Mumbai office: “At JLT, the strategy from the outset was that India would be the centre of excellence for transaction processing, allowing the team in the UK to focus on maintaining key relationship and service excellence through voice contact.”

One of the JLT’s maxims is that there is no phone contact between UK pension scheme members and those who work in the Mumbai office. There is only limited email contact too. Without looking at all the 3.8m pages on Google that refer to India outsourcing problems it would be fair to guess that a lot of them refer to the general dissatisfaction with trying to explain your finances over the phone to someone in another country that you find it difficult to build a rapport with, as they have different cultural and social reference points.

Another key maxim for the JLT Mumbai office is that it offers top quartile pay and HR practices in order to avoid some of the high staff turnover that has harmed the reputation of some outsourcing operations.

In terms of data security risks, the Mumbai office has passed the ISO 2117, which is talked of as the most evolved and stringent information security standard. In practical terms this means that those who data process cannot print or download from their terminals.

These high standards do not mean that offshoring to India is without its teething problems. It is common for UK pension schemes to baulk at even the discussion of outsourcing part of their scheme servicing or admin to India. For this reason JLT always presents offshoring to India to its clients as an option not a fait accompli. Where clients have objected, it has occasionally taken the measure of flying clients out to its office in Mumbai to assure them of the quality and security of their operation. At present JLT has 500 schemes with around 300,000 members administered from Mumbai.

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