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Just a quick note to the FSU* – this is the point you should be making on offshoring, both to the banks (and other ADIs) you are chatting with and to your members. Don’t try to scare the banks into keeping operations in Australia, show the concrete advantages.

If you help your members to do their jobs better (support services, mediation and assisting in wage negotiations) you are likely to be a valued, useful partner and will go a long way to help your members keep their jobs. Asking for more regulation, threatening strike action or conducting protest marches will not do it.

* the Australian Finance Sector Union

The FSU (the Australian Finance Sector Union) has launched a new website – Bank Check – as part of its campaign against offshoring. This is an interesting, and perhaps inevitable, move. Customers do deserve to know where their data is going and the banks need to do more to make a case for it, so that naked scare campaigns have less of an effect. I would prefer that the FSU were more balanced in their approach to this – there is the presumption behind the site that all offshoring is bad – but to expect that from them is to expect a bit much.

I am also interested that they concentrate on offshoring only, rather than outsourcing – where domestic outsourcing is done the FSU is ignoring it. This gap shows where they are truly making their case – a seeming belief that things are less secure if outside Australia. Granted, the legal protections can be less secure and there has been some publicity on data theft in India, but to implicitly say, as the FSU is doing, that overseas is bad and domestic is good is just plain wrong. Still – it is up to the FSU to protect the jobs of its members and for the banks seeking to outsource to make the case to their customers.

APRA today announced that the start date for their revised outsouring approach (discussed here) would be pushed back from 1 January 2007 to 1 April 2007. For details, see here (banks), here (general insurance) or here (life assurance).

Why is this? APRA do not seem to say, but my best guess is that the insurers are not ready and were not going to be in a position to state that their existing outsourcing arrangements were in “general compliance” with the new standards. For the banks, this is unlikely, given the paucity of the changes, but, as the application to the insurers is new, this was always going to be a big step.

If anyone would like to let me know otherwise, please do.

An important reminder this morning from finextra on some of the risks of outsourcing. Reporters from Channel 4 in the UK were able to buy confidential customer data in India from middlemen. In this intance it was from a mobile phone company’s call centre, but the previous one was from HSBC’s call centre.

Of course, there is no reason to suspect that this has not happened at company owned call centres before, nor that it could not happen when you are insourcing your call centre. The incentives to do it, however,  are increased when workers are being paid less and the legal system is known to be weaker. If you are going to outsource, just have very good security in place and be mindful of the operational risks – they are increased. There are no free lunches.

A few days ago I noted that there is a new standard for outsourcing to be used by Australian banks. Now APRA have their website back up and I have had a little while to read the standard (the updated APS 231) and compared it to the old, the changes are quite interesting.

In a sense, this is just an expansion of the old standard. Almost nothing is dropped – if it was a requirement under the old standard it is a requirement under the new – with one, interesting, exception. Read the rest of this entry »

Looks like APRA need to do a quick examination of their own systems and processes. Their website has been down all day today. They sent out an email earlier today announcing new prudential standards for offshoring which I was hoping to update you on; but it will now have to wait until Monday.

Perhaps they should offshore their website management – it might improve it.

If it comes up over the weekend, here are the links:

  • Prudential Standard APS 231 Outsourcing – http://www.apra.gov.au/Policy/Prudential-Standards-Guidance-Notes-for-ADIs.cfm
  • Prudential Standard GPS 231 Outsourcing – http://www.apra.gov.au/General/General-Insurance-Prudential-Standards-and-Guidance-Notes.cfm
  • Prudential Standard LPS 231 Outsourcing – http://www.apra.gov.au/Life/Prudential-Standards.cfm
  • The Premier of New South Wales, in an unwise fit of populism, has implicitly threatened Westpac that, if they dare to offshore some of their operations then this “would be taken into consideration” when their contracts are up for renegotiation.

    This sort of threat is both bad for business generally, but also bad for New South Wales – even the threat means that companies will have to price in some political risk if they are to do business with the NSW government in the future. Having a government trying to make companies make business decisions on the basis of politics is unwise, at best.

    See finextra or the ABC.

    Westpac’s plans to “perhaps” increase its offshoring is interesting. The published information seems to do everything but discuss which functions may be transferred – but if the number is fairly precise (400 in this case) the function they are looking at would be fairly certain. As both a customer and an occasional consultant to Westpac I just hope it is not a customer facing area.

    While I do not have a problem generally with offshoring I have experienced this from a customer’s point of view while trying to deal with the Royal Bank of Scotland on a private banking matter. It was difficult, to say the least. They did not have the capacity to deal with a situation that was not on their sheets and they had no real idea of how to contact an actual branch to talk to branch staff.

    If this is going to be done, it has to be done properly or the customers just feel like they are not why the bank is there. This is not good for any business.

    On the other hand, the FSU just seems to want to grandstand on this. The sooner they start trying to work in a globalised economy and understand that this is going to happen and working with the banks on this the sooner they will be consulted early. The banks do not talk to them because they know that the response will be “little Australia” and “poor, oppressed worker” headlines, rather than reasoned discussions.

    Update – NAB is joining in according to today’s Australian – no link to their site, but finextra carries it as well

    Further UpdateIndian bank workers have problems with this too. They differentiate for the western protests in this way:

    However the Indian unions say their protest is different from that of workers in richer Western countries who have lost jobs to India. RJ Sridharan, general secretary of AIBOA, told the Financial Times that India is a labour-oriented country “so we need more jobs that are secure” and that developed countries “have fewer hands to work”.

    . I think that idea would give the FSU apoplexy.

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