The Future of Outsourcing

An exclusive look inside GE's back-office machine.

Birth of a BPO Provider

GE’s road to Indian BPO started in late 1997, when Bhasin and Tyagarajan decided to set up a processing center for GE Capital India’s domestic operations. At that time, the U.S. capital business was also experiencing a refinancing boom, which led to more applications than the back office there could handle. Offering its services, the Indian back office — then called GE Capital International Services — was initially met with skepticism; it was given very simple processes such as requests for address changes. As it turned out, the Indian operations reduced the errors in the processes it took over by 90 percent, says Tyagarajan, while doing the job for 50 percent less cost. “They loved the cost benefit, but they loved the results benefit even more,” he says. Encouraged, Gecis started offering, and getting, more complex work such as credit scoring and credit-card approvals.

Gecis’s first industrial customer, from GE’s healthcare business, came later in 2000. Starting with simple data entry, Gecis migrated to more complex processes such as handling services, from taking service calls to fix MR or ultrasound equipment, to shipping the parts that needed to be replaced. Around the same time, Gecis, then still part of GE Capital, took over the treasury function of GE’s entire European operations. “At that time, and probably even today, it was the single most complex piece we transitioned,” says Vivek Gour, CFO of Gecis, who led the move of the European treasury to India lock, stock, and barrel over eight months in 2000. Gecis took over the Asian treasury operations as well in 2001. Now, all of GE’s treasury operations are managed in two centers — in the Stamford, Connecticut headquarters, and in Delhi.

The project involved migrating the foreign exchange, hedging, cash management, and bank-relationship management desks to India — all treasury functions save funding, which is centralized in the headquarters. Gecis currently employs around 80 people, including currency traders, for this GE function. On any given day, the team would execute hedging and foreign-exchange transactions from US$400 million to US$1 billion, and cash movements from US$7 billion to US$8 billion, estimates Gour. Following the sale of 60 percent of Gecis to two private-equity funds last December — which also changed the name from the acronym GECIS to the word Gecis — this operation had to be carved out and plugged into GE Capital India for tax reasons.

All this time, the finance and accounting COE proved to be Gecis’s core competence. It now encompasses accounts payable, receivables management, accounting, treasury, closing and reporting, and financial planning and analysis. Last year, for example, the team in Dalian, China worked with CFOs of Asia Pacific sales divisions to bring down unsettled inter-company receivables and payables, in U.S. dollars and euros, from US$60 million in the first quarter of 2003 to just US$1 million by last December. The job involved setting up an online tool that improved tracking of in-transit inventory movement on a daily basis, and increasing the frequency of Asia Pacific’s reconciliation with US and euro operations.

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