Letter from a Shared Services Centre

The FSSC used to seem to be a generic mailbox with the teams they supported the only forms of distinction. Although there were many people supporting the finance function, it felt more like we were dealing with a faceless crowd, who got in to work at a different time schedule from us, who was just a phone call away but with whom emails were the preferred mode of communication, and who were an extended part of the team that we never really felt any connection to.

I had imagined them (an unknown number) of colleagues working furiously away at their excel spreadsheets, opening, closing and editing those cellular sheets by pure expert navigation of the keyboard, without ever needing to lift their hands to use the mouse. I had envisioned an overworked, tired crowd filled with endless demands of reports to be churned out and delivered, all working desperately to meet seemingly impossible-to-achieve end-of-day targets. To speak the truth, I had not known what to expect to see at the FSSC, nor if it was going to be a massive report-generating factory that resembled a telemarketing company as shown in Slumdog Millionaire.

On the first day we stepped into the Chennai campus headquarters at Haddows Road, we headed straight to Asia building, 4th floor, and what lay before us astonished me. At least 400 people were seated in the massive office space, and since the dividing wall between FSSC and HRSSC had been recently removed, the space was magnified and almost doubled. It felt like I had entered a library of students busy at work, but instead of the monotonous strained looking faces I had expected, there was chatter and a buzz in the air that I had not previously associated with the FSSC. The huge expanse had an orderliness about it; departments were marked out by desk partitions and pillars showing off clocks representing time across the bank’s footprint. One of the first signs that greeted you was the poster showing the fire escape route, and every few meters you can see arrows hanging from the ceilings to point to designated fire wardens in case of an emergency. The thing which particularly caught my attention was the large electronic notice board in the middle of the floor, which screamed out in bright neon colors “HAPPY BIRTHDAY XXX FROM TEAM YYY”. I was amazed at the effort taken to highlight the employees’ birthdays and remember thinking to myself that maybe even with a few hundred employees on one floor perhaps it is not so impersonal after all.

In the next three weeks that passed, the 2008 finance IGs spent most of our time in the meeting room near the pantry where we sat listening to the management of FSSC go through a wide range of topics. We were brought through the reasoning for business processes outsourcing, the business proposition and shared-service centre model of FSSC, its history and evolution up the value chain, the different teams which form the FSSC and their operational BAU and also the difficulties which the FSSC top team faced in managing a shared services centre. We spent many sessions with the team heads as they presented the teams’ roles in supporting the Finance function, and even worked on a few sample packs to get a flavor of what their Service Level Agreements (SLAs) encompassed. During the third week that we were there, our coordinator KK arranged for us to have “first-hand” days with the teams relevant to our roles and interest.

Interacting with the management team at a more personal level, we were made more aware of some of the reasons for miscommunication between the FSSC and the teams they support, the “one-step-removed” feeling often felt by staff in shared service centers, and the various initiatives being launched to negate these hindrances to a successful working and supportive relationship between FSSC and its stakeholders, and how important it was to engage their staff to create an environment where the staff would want to stay. We were told that with Barclays, Shell and other competitors setting up shop in Chennai recently, the FSSC now had to be more competitive and change their strategy in retaining their valuable employees. With the aim to keep attrition low and Q12 scores high, it is not an easy task for the FSSC management to plan and carry out activities to generate goodwill among the staff and keep them connected and engaged. Aside from that, we were also reminded over and over again of the large risk-mitigating framework that is in place in case of any contingencies, which was rather impressive as I had never known so much preparation and pre-emption was involved behind. We also realized that there is an official voice of customer “C-First” platform through which we could give our feedback on the FSSC directly to its top team.

During our stay there we encountered varying levels of stomach upsets during the initial stages of adapting to the food and countless spices. We also went out and interacted with the FSSC staff and learnt more about their culture, and their warm and sincere hospitality was touching as much as it was surprising. I took away from Chennai a lot more than I had expected, and I think trips like this honestly make a significant difference to the teams we work with. In three short weeks, the FSSC has ceased to be just a 4-letter mailbox title to me, but is now a place where close to 700 staff operating out of Chennai work to meet and partner the Finance function in various changing projects and deadlines through a global array of time differences, and it will remain a part of the bank which will continually grow as the bank evolves.

Time for a wake-up call.

I need DRIVE.

I need friends who will drive me and motivate me to push myself beyond the limits set by others. I need people who I see myself growing together with for years ahead; friends whose constant aim to improve themselves and development of character spur me to better myself with each passing day.

The past 6 weeks have been repetitive and humdrum; I do the same data entry work everyday; I rotate between meeting friends, trying to catch up with what each of them are doing in their internships; but I feel so empty and unfulfilled; like a huge crater in the middle of the desert; dry and desperate for an oasis.

I am sick of conversations that lead nowhere; of constant discussion of the same old issues; I feel that with some people I am forever stuck in a rut; a same cycle of topics that I dreadfully want to stop discussing. I crave a new burst of enthusiasm and encouragement; I want to meet people who have so much passion in them for all the right reasons to make me want to burn with fire just like them. I need a goal with a proper target that I can focus my attention on and know that at any point in time, I am nearer to that goal than I was before.

I want to make every day an improvement to my life; not one day a waste that I will look back and waste more time regretting. I want to live a life, each moment moving forward with the exuberance and adrenaline rush that comes with knowing where I am heading, and so very excited at reaching there because I know I have come so far and put in so much.

I decided today to embark on a tangible project– research on poverty and income disparity in Asia; and how microfinancing has helped to eliminate a tiny bit of that. I hope anyone of you who has information on that will be kind enough to share your knowledge; let’s be iron sharpening iron. To contribute is to give a part of yourself, and in doing so, is to learn much more than you would have keeping it to yourself.

Dear friends, I honestly need encouragement and motivation from you, and if you think you would like to be that one person who would want to push me further, to help me and to help yourself, please, by all means do so. Thank you.

Oh oh, we’re in trouble; Is someone going to burst our bubble?

In 1997, I was in Primary 6, didn’t give a hoot about the world, nor the fact that the Asian Financial Crisis was hitting all the Asian countries in full force, wrecking havoc whose effects on certain countries like Indonesian have left them still recovering from the shock.

This year its 2007, I’m in University, and through my readings and courses as well as of course, my new interest in the world whose effect on all of us I can no longer deny, I read over and over again, about the 1997 crisis. It’s weird to read a Caucasian’s reports on the effects of the Asian Crisis, and weirder to find that it seems in the field of Asian Monetary Policy, there are more good writers from the Western part of the world than from Asian. Even my Asian Monetary Professor is American.

Apart from that brief digression, I really want to talk about the possibility of another crisis, another crash, but this time, perhaps not just involving Asia, but perhaps America (very likely) and maybe also Europe. I’m not advocating that such a scenario is good; but looking at the news everyday that mark yet another all time high on the stock exchange, in Singapore, China, and many other places, where the prices of goods are going atrociously high. In a time and age where the economy is booming, everyone is busy swiping out their plastics to make use of more and more credit, it seems the stage is set for a market correction. Maybe Crash is a word too harsh; corrrection may be more correct (pun intended).

As I mentioned a few posts ago, hedge funds are taking on dangerous amounts of debt, and together with the package, risks that they may be unable to handle.  Everywhere, it seems the press is screaming with news about inflation curbing, in the USA, Thailand, China; all the Central Banks are scratching their heads over whether to maintain or increase interest rates. If you were to keep up with the news everyday, you’d realize that every country seems troubled by any news that may hint at increasing inflation, yet at the same time, investors with money to act on these news are moving capital in and out of countries, hedging their bets that these interest rates increases or decreases will move currencies and bond prices in the direction of their favour.

Everything happens so fast, many are pumping in much money and taking on leverage to accelerate the growth of their wealth. Suddenly it feels like we’re trapped in an air tight bubble that keeps getting larger and thinner. Will it be another bubble that bursts? How can we identify it? Someone wise one said that you can never identify a bubble until it bursts, but by then it would have been too late.

Alas, writing the history of the future is harder than writing the history of the past (in Eichengreen’s beautiful words). Only time will be able to unravel the mystery that has left so many worrying about.

two thumbs up to hedgeweek.com

I got a shock when I checked my blog stats last night, because the chart showed that 156 people had visited my blog yesterday, out of which 120+ people read the post I wrote on “hedge funds leaning too much on leverage” (see below).

At first I thought the blog statistics screwed up, but apparently my blog was featured on hedgeweek.com. It’s seriously surprising, but extremely encouraging. Imagine that! My first attempt at writing about hedge funds makes me more motivated than ever. Now I intend to write more on Finance, and everything that I hope to share with you. Thank you HEDGEWEEK.COM!

Hedge funds leaning too much on leverage

Not since the time of Long Term Capital Management in 1998 where it lost $4.6 billion in less than 4 months has leverage been at the all time high that it is at now.

Hedge funds are riding high on the abled use of leverage (also known as debt) and the arising concern regarding their debt financing is due to their lack of controls over risks that they take.  As of present, the hedge funds manage US$1.3 trillion (that’s approx the current total amount of China’s foreign reserves), and after including all the borrowings, the hedge funds total up to about US$2.6 trillion.

With the leverage further increased by placement of funds in derivatives, hedge funds has made it to the top issues that requires discussion in the Group-of-Eight nations (G8) together with fellow issue of the explosion in global derivatives trading.

The Business Times states that Deloitte’s survey found that only 60% of its hedge fund respondents monitor balance sheet leverage, and only 50% of them monitor off balance sheet leverage (the extent of derivatives position). That highlights many a red flag that risk management policies are inadequate or insufficient enough for the dealing with a possibility of a possible risk crisis (i.e counterparty risk and credit defaults).

Those who remembered the Long Term Capital Management (LTCM) debacle in 1998 will shiver at the thught that such a major crisis may repeat. The then fear that LTCM’s forced liquidation of its company would lead to drastic fall in prices and hence creating a vicious cycle where other companies would have to liquidate as well was so huge that even the Federal Reserve had to step in to mediate the potential losses.

This entire debacle was the result of the credit risks and default risks undertaken by LTCM; the Russian defaulting of their government bonds made what was supposed to be a huge gain in LTCM’s positions (had the spreads of the bonds actually converged) turn out to be the biggest loss by a hedge fund in the market.

It’s slightly worrying, all this debt that is carrying the financial markets around. Leverage is good, but where it starts to hit highs never before seen, it is justifiable for us to get more than just a little tingle of worry.