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Off-shoring for Strategic Advantage

​14 December 2016

Off-shoring for Strategic Advantage


IMA Asia talked with Agnes Lim, Chief Financial Officer, JLL, Asia Pacific, to find out the lessons learned from centralising and offshoring JLL’s support services.

‘When I first started looking at offshoring, I was not terribly fond of the idea. Back then, you heard horror stories of people who were offshoring and then brought back the services. But, at that time offshoring was on everybody’s mind; if you didn’t even look at it, then you were being foolish. How else were you going to operate efficiently? When your business expands, you have got to look at options apart from the traditional way of doing things.

Ten years down the road, JLL now has multifunction shared service centres in India and China employing over 500 people and covering finance, HR, data analytics, IT Systems support, marketing and communications. The company views its shared service organisation (SSO) as integral to its long-term strategy and a powerful tool in risk management, compliance, and technology enablement.

In 2007 JLL was looking at building up its platform in financial controls to support its double-digit annual growth across the Asia Pacific region. The company was geographically expanding its service offering and its client base. As Agnes remarked, ‘With that kind of growth, you cannot do a finance function country-by-country and expect everyone to understand how to do everything that needs to be done.’

Like many companies, JLL started its shared services activities with finance because of the many procedures that require standardization across all locations. They began their shared services finance function in Singapore, but found that while Singapore had good quality of people, it was not the most cost-effective place to do shared services. According to Agnes, ‘It is not so much about salaries as it is about the real estate. We need to house these people and this can be very expensive.’
JLL opened its first shared services centre in China with eight people. They chose Dalian since they could find people with good language skills to support Japan. The centre now provides services to JLL’s operations in China, Korea and Japan. Currently, JLL has close to 200 people in its China SSO and another 350 in its shared services centre in India to support the rest of Asia Pacific where English is the primary language of business.

Choosing the best approach

Like most organisations, JLL started with finance when they embarked on shared services. Agnes feels, in retrospect, that this may not be the best approach. ‘Although we had the buy-in from the CFO to centralise finance operations, finance does not stand-alone as a support function. It requires that everyone participate in the transformation.’

Creating a centralised shared service centre is not just about removing people in one location and putting new people in another location. A considerable amount of transformation is required in the process. The processes will change the way in which staff react to customers and the internal customers will change as well. Agnes gives an example, ‘Imagine that you have a finance person next to you to post an invoice or do a payment. Now you have to scan it or you have to put in a box or a consolidated delivery to shared services. The way in which we do the process changes and you have to have a lot of engagement within the business to have them buy into the change.’

‘I would do it differently in terms of the changes that are required in the business and would go with more than a single function. A single function is probably safe, but it also takes a longer time to arrive at where you want to be. It is a long, lonely, hard process to begin with just one function. If you do it with more services multiple locations and roll it out. Having that bench and that headcount is very useful.’

While shared service centres in India and, to a lesser extent, China, have notoriously high staff turnover rates – often as high as 35% over the course of a year – JLL has been able to keep its staff turnover in its shared service centres below 20% per annum. Agnes explains that JLL has a culture of continuous learning and rotation, and the mentality that shared services is a value proposition, not just a support function. ‘Shared services are empowered to make changes and recommend changes to stakeholders. They are part of the process change and not the end of the food chain.’

Since many of the shared services staff are millennials, JLL looks for things to engage and retain young people in their group. According to Agnes, ‘Because we are in real estate, we need to explore new ways of working, such as co-working, leveraging new technologies, and appealing to millennial workers in terms of career opportunities. We also ensure that they have continuous learning in the entire process – and not just training for the current job. We also have a flexi-working arrangement.’

“It is more efficient for us to grow our shared services in terms of skills and make it more of a value-added proposition then just scaling up based on decisions about headcount and cost.”

A key element of success is that our shared service staff are fully integrated into JLL’s operations. The company promotes a culture of cross-pollination. Staff in the China shared service centres, which are located in tier 2 or tier 3 cities, often move to tier 1 cities to become part of the local finance team. They also exchange staff on shorter rotations between Japan and China. Agnes believes that this approach is a career opportunity and eye-opener as they see how their colleagues work in other countries, and how they work in a shared services centre. With cross-pollination, you strengthen your team and get them to understand how it is to work in each other’s shoes.

Outsourcing as an option

While JLL has opted to largely keep its shared services in-house for all core functions, it has explored outsourcing solutions for its non-core functions, such as payroll. Initially, two outsourcing prerequisites were missing for JLL: processes were not standardised and their support functions lacked enough scale to be of interest to outsourcing providers. During the period when they were developing and standardising their processes and systems, JLL felt they needed more control and the ability to influence change. They did not want to have to debate changes with an outsourced provider.

JLL has constant discussions to find ways to make shared services more efficient. They definitely look at cost, but incremental cost savings are not the only consideration. While an outsourced solution may result in lower costs, they also want to maximize efficiency and achieve gains within the firm immediately, rather negotiate the opportunity with an outsourced provider.

Because JLL is expanding both organically and by acquisition, it needs a shared service function that understands the business orientation and compliance requirements in a very JLL way. A centralised shared service function helps to facilitate acquisition decisions more seamlessly than putting an acquisition through a third-party to manage. Plus, once the acquisition is made, the shared service organisation can support the integration, rather than sending it to an external service provider. As Agnes put it, ‘Our shared service function within JLL makes people more comfortable.’

A constantly evolving approach

JLL’s approach to shared services and centralising functions is constantly evolving. Rising real estate and employment costs in China are making lower-cost locations more competitive for shared services. JLLhas had to reconsider its strategy and decide whether to continuously move shared service locations to support cost arbitrage or scale up its shared services centres to be part of a JLL network of delivery centres.

JLL has opted for the latter. According to Agnes, ‘It is more efficient for us to grow our shared services in terms of skills and make it more of a value-added proposition then just scaling up based on decisions about headcount and cost.’
JLL views its shared service function as a business management strategy. In smaller locations, support staff must take on multiple roles and cannot be experts in all of them. The local support staff need to bemade aware of and trained in numerous processes and procedures. With a shared service function, the organisation has scalability and more rapid speed to market. Risk management tools and processes can be implemented faster, since only one team needs to be trained.

‘Shared services is a powerful enabler; it has the power to support our growth. The shared service functions are multifunction enablers of technology and help us deal effectively with the changing requirements of the customer. It is both an organizational advantage as well as an advantage to our customers.’

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