Xchanging: Engineering Processes to Transform Businesses
Date: Sunday , April 10, 2011
Established in 1999, Xchanging India, the Indian subsidiary of UK based Business Processing and Technology Services Company, Xchanging, is bent on more than transforming the core model of providing business processing services; it hopes to revolutionize it with a strong 3500 technologically competent teams across Gurgaon, Mumbai, Pune, Bangalore, Chennai and Shimoga, Xchanging India today is outperforming several of its competitors in delivering mission critical, high volume domain specific processing to its customers in a wide range of sectors — banking and financial services, manufacturing and logistics, insurance, public sectors among others as well as horizontal offerings that cover areas such as procurement services, accounting, human resource and technology.
When Xchanging, a leading Business Processor formed an enterprise partnership with Deustche Bank, one of the prominent banks in Europe, it had brought an all new meaning to the word ‘business transformation’ that had been the buzz in the BPO industry for some time. According to this, instead of just taking outsourcing contracts on a simple fee-for-service basis, Xchanging would form joint ventures with the client to perform their back-office functions. Xchanging has operational control and the partner has boardroom representation. As processes are standardized, the EP can add third-party outsourcing contracts, benefit from scale advantages, and begin to generate revenues. “We are not just a business process outsourcing unit. We are more oriented towards outcome based outsourcing. It is not about adopting back end jobs and taking responsibility of operations accomplished at a lower cost but to share the risk, responsibility and performance with our customers.” says Nimish Soni, Managing Director for India. And has this worked? Definitely a yes, its success evidenced in the seven joint ventures that have been formed since then.
This is quiet a phenomenal achievement considering the recent upheaval the BPO industry witnessed in the last 2-3 years. So what makes it tick? “Continuous innovation, a healthy work culture and thinking long term sustainability,” Nimish is quick to respond.
Carving a niche for itself / Building Core Competency
Despite a myriad of service offerings, the company’s core competency continues to be the BFSI segment. Xchanging is one of the largest provider of policy checking, production, issuance and premium collection services, with over 400 insurers, reinsurers, managing agents and syndicates as customers, the company handles millions of electronic transactions annually in a global business-to-business network with a throughput of over $124 billion and provides certainty of payment managing an efficient transfer of funds between trading partners. Today, it is one of the large providers of commercial insurance business processing and technology services with significant expertise in Commercial Property and Casualty services.
Xchanging has a suite of offerings based on the integration of ITO and BPO for the Commercial Insurance and P&C Marketplaces. Its number of customers and over 1500 BPO and ITO staff make it one of the prevalent providers or Platform Based BPO to the Commercial Insurance Industry.
Its commercial Insurance and P&C specific platform based BPO offerings include, new business and underwriting to improve underwriting profitability, reduce acquisition time for policies, improve time to market and profitability for products, improve profitability on policies and risk exposure; policy servicing to reduce the overall administration costs and errors as well as improve premium collections; claims optimization for reducing the combined ratio, faster and more efficient processing, improved subrogation, and investigative services; brokerage services for rapid processing and placement of new business for Brokerages, account, and contract management.
Business Transformation: Driving Success
The BPO industry especially in India is a highly competitive one. Everyone is talking about value added services and providing outcome based services. If one takes into account the skill set and size, pricing models, there is hardly any difference gap in the top 5-6 BPO players in the country. So where does one set its uniqueness? In case of Xchanging it is not competence but rather execution, says Soni. Apart from this, the company has been making quite an impact amongst its customers by not only executing the required functions perfectly but in a way completely transforming the way a process is managed. One such example of transformation is its work for London market associations.
In 2005, when Xchanging embarked upon a program to move the London insurance market (the world’s largest) from a paper-based to an electronic environment for improved efficiency and lower costs. The key technology component that underpinned this initiative was a document management system called the Insurers’ Market Repository (IMR).
IMR is a key piece of infrastructure for the London Insurance Market. It supports the electronic processing of premiums, policies and claims through the Accounting and Settlement (A&S) and Electronic Claim File (ECF) solutions. The IMR enables its users to create, maintain and submit premium, policy and claims documentation direct to Xchanging and share documents with their trading partners, eliminating paper and increasing processing speeds. Xchanging developed and delivered the IMR over a period of years in partnership with the Trade Associations. Today it remains an essential feature of the Market change program championed by the Market Reform Group (MRG).
Following the successful implementation of the IMR, Xchanging, last July, signed another contract with the leading London insurance market associations — the International Underwriting Association of London (IUA) and the Lloyd’s Market Association (LMA) to build an e-Accounts capability on the existing infrastructure. This capability now further enhances the electronic submission of accounting entries to Xchanging by brokers and insurers. As part of the contract, Xchanging will also provide a Carriers’ Accounting Entries service. As a result, the creation of premium accounting splits, which is currently done by brokers, will be managed by Xchanging. The e-Accounts capability will deliver a number of benefits to insurers as well as brokers. It will enable earlier settlement of cash items through faster, standardized processes, increasing the flow of business to the London market. It will allow brokers to submit premium closing data to Xchanging using industry standard ACORD messages and largely eliminate rekeying data by Xchanging. Additionally, it will reduce the work load for brokers in reconciliation of accounting entries and support a common accounting process for bureaux / non–bureaux premiums.
Chief Executive of the LMA, David Gittings, adds, “This is another key step in making the London market more attractive for brokers to deal with”.
The e-Accounts project illustrates the market’s commitment to be the leader through technology powered processing. Xchanging designed, delivered and continues to operate the IMR for the London insurance market. The IMR is today the largest processor of ACORD messages – the global industry standard for message exchange. An average of 20,000 ACORD messages is processed on the IMR every day. With over 6,500 registered users worldwide and 250 connected brokers, managing agents and insurance companies, the IMR has delivered a fully electronic environment for faster, more accurate and reliable service to end customers. It has removed capacity constraints and standardized process across the London market to allow for growth. The IMR is a central part of the ongoing London market transformation program. This is just one of the many successful engagements of business transformation by the company.
Shared Services and Hybrid Model
Xchanging has one of the strongest Insurance practices in India with competencies spanning across premiums, claims, technical accounting and underwriters-brokers back office services. Its footprint is spread across six major cities and nine processing centers’ supported by a strong team of 1500 dedicated insurance professionals engaged in business processing and technology services. But companies operating internationally require a consistent standard of service — globally. Xchanging, today is one of only a handful of BPO providers able to able to meet these requirements through its global delivery capabilities through well balanced onshore, near shore and offshore presence. Hence, in times of any kind of natural disaster or regional disturbances any process can be transferred between the centers offering uninterrupted services to clients.
The company also brings tremendous experience in setting up offshore shared services and hybrid captives, most suited, for customers looking at achieving greater cost efficiencies while retaining operational control. It deploys its existing infrastructure in providing all back office and support services in achieving the lean offshore processing resulting in less management overhead for the customer. The company’s BPO offerings also provide flexibility to respond to changing business needs and industry dynamics, allowing its customers to scale their businesses quickly. A customer can start modestly and scale rapidly given the scale of business need.
At the same time, customers are also seeking solutions offering more than fixed price and labor rates based traditional outsourcing and off shoring. In short, a new outcome-based outsourcing value proposition. The company thus provides outcomes based outsourcing through its gain-share outsourcing, striving for maximum value and share it transparently with its customers.
Financial Shared Services Center Model
Xchanging offers services to its customers in a Financial Shared Services Center (FSSC) model with over 10 service delivery centers across U.S., UK, Asia Pacific and Australia catering to multiple language requirements
FSSC provides a whole gamut of finance and accounting functions such as procurement services, accounts payable, accounts receivable, fixed assets accounting, Bank & GL reconciliations, budgeting and reporting, statutory & tax reporting, payroll, pension and treasury operations to global clients. Global delivery locations, multiple language competencies, expertise in implementing technology enabling tools, access to global industry best practices, time tested implementation, operations, engagement models, robust quality and HR practices provide distinct edge. Xchanging provides finance and accounting functions to a variety of industries such as banking, insurance, pharmaceutical, logistics, retail, hospitality and real estate services.
One such example is the service Xchanging provides to the world’s largest property management and real estate service firm with an employee base of 20,000 plus operating from 58 countries. Managing over 55 client legacy systems; data processing, interfacing and consolidation through X-PRO (Xchanging’s enabling tool - an end to end Procure to Pay solution) proprietary system used for workflow management and interfacing between client legacy systems and GL system. More than 170 employees operating from multiple locations in India process 1.6 million invoices in six different accounting applications. 65000 vendor requests are processed annually in 5 different accounting softwares. 99.5 percent quality output has been maintained for the last three years since 2008.
Also worth mentioning is the Process Service Level Agreement with Premium Consulting Services Company in UK with 7,000 professionals in 120 offices throughout the world, rated as top global Human Resources consulting firms with revenues of over $1.2 billion, at 100 percent turn around time and quality. Xchanging successfully handles payroll for 300,000 pensioners every month, eliminating paper work across all the functions. Audit trail automated using X-Pro thereby reducing the auditing efforts tremendously. Directly works with the customer’s service provider to source inputs for accounts finalization.
Engineering Processes for Efficiency
Operating in a mission critical sector like BFSI apart from competency also requires high levels accuracy. But when processing million transactions a day in several centers across multiple countries, it becomes quite a challenge to monitor and track every transaction. Though a margin of one percent may generally be acceptable, when processing claims of worth $80-90 billion, even this error can transcend to a large amount. To avoid this, in 2003 Xchanging developed an efficient metric system that tracks every transaction right down to the computer from which it was processed. This metric system has provided quite an edge to the company when it comes to providing monitoring processes and quickly responding to any customer query. Other than the in-house metric system, the company also conducts frequent internal and external audits to keep a check on quality as well as data security.
‘And what’s the focus Xchanging has for its employees’? “Equally strong is Xchanging’s focus for its people, a congenial work environment, value infused culture, regular management employee interactions, harnessing entrepreneurial spirit in employees, unleashing potential through workshops and trainings, addressing every one by their first name at work and backed by ample support from management in terms of coming up with innovative ideas,” explains Soni. This friendly outlook coupled with technical competency is a winning combination, differentiating Xchanging from the others in the industry.
From Tier 1 to Tier 3 Cities: Spreading its Presence
It is a matter of great feat for Xchanging India that a majority of the company’s customers are those from reference and since 2005 there have been no major decline in the clientele. But a common concern for many customers is the rising cost of operations in major cities where the company operates and it is effecting cost in its SLAs. Thus, in order to ease the operational cost pressure on its customers, Xchanging India has identified a perfect solution in identifying Tier 3 cities as centers of operation. The company recently set up a 1000 seater facility in Shimoga, a small town in the heart of Karnataka. This center currently handles seven critical processes and employs local talent there by reducing OPEX. In the similar lines it is indentifying other cities like Solan in Himachal Pradesh among others. “These places will take anywhere between 10-15 years to develop into a fully fledged city like Bangalore and thus help us keep costs in considerable control also providing employment to youth of these cities who would otherwise migrate to bigger cities like Bangalore or Chandigarh for employment,” explains Soni.
The Road Ahead
Now a decade old in Indian BPO industry, the company has not only focused on international markets but indentified potential in domestic markets as well. The company is a cutting edge solution provider of technology services to BFSI sector in India, Bangladesh, Sri Lanka and Bhutan. With its expertise in SWIFT payment gateway for banks, Xchanging provides its services to over 160 banks in Indian subcontinent. Apart from BFSI new areas like healthcare, retail and manufacturing also are holding promise. To tap this opportunity the company Soni has envisioned a three pronged strategy — grow the existing platform, add new portfolios (like retail, banking and hedge funds) and continue to implement lean processing.
Though the competition continues to rise high, for Xchanging this is just the beginning for many more years of successful transformations to come.