“A Tangled Web”
by Frank Sentner, Director of Strategic Technology, The Council of Insurance Agents & Brokers (CIAB)
published in CIAB’s Council eDGE, July 18, 2008
see where Patra is mentioned (in bold)

Pictures like this, showing a mass of tangled, twisted phone wires and electrical cables on telephone poles and around junction boxes, are making the rounds on the Internet and purport to show where you call when you have a technical problem with your computer.  I’ve seen the infrastructure in the developing world, and I can vouch for the accuracy of the pictures.  But they do not accurately reflect the factors driving outsourcing to the developing world, also known as offshoring.

So what has generated the explosion in globalization and offshoring in the last several years? 

For decades, there has been a surplus of educated and very inexpensive labor in the developing world, particularly in the emerging markets.  In the late 1990s, the dot-com boom funded several new ventures dedicated to building global networks of broadband telephone and internet communications infrastructure.  When the bust came, most of these ventures failed, and their assets were acquired by more established firms for pennies on the dollar.

Thus was born the opportunity for cheap connections with the emerging markets and easy access to that surplus of very inexpensive talent.  At the same time, most computer systems were being enhanced to allow U.S. employees to work from anywhere, which means offshore talent can do likewise.

Notwithstanding, or perhaps because of, the poor infrastructure, the firms providing talent to meet our needs have built new office complexes with modern telecommunications and internet infrastructure and connected them to the newly available global broadband networks.

The Tata Group, a global conglomerate founded in India in 1874, got its start in textiles.  Today, it is a $28.8 billion Indian conglomerate with 96 companies in 7 business sectors, operating in more than 54 countries across six continents, and employing 289,000 people.  Tata Consultancy Services (www.tcs.com), India’s first software company, is one of the largest IT services, business solutions and outsourcing firms in the world.

According to Dennis Maroney, assistant vice president for TCS Financial Solutions, Tata is rated amongst the world’s leaders in innovation as well.  “Since recently joining TCS Financial Solutions from Microsoft, I have been extremely impressed with both TCS and TCS Financial Solutions’ breadth of world-class offerings, such as our business unit, which delivers award-winning banking, capital markets and insurance business applications,” he said.  “These solutions assist clients throughout the world to help them transform their operations in order to improve customer satisfaction and increase profit.”

Call centers actually represent only a fraction of the work being performed offshore.

Patra Corp. (www.patracorp.com) is a firm with trained and licensed personnel in India who perform policy checking, loss run ordering, certificate issuance and other insurance agency processes.  As Dave Tight, vice president for business development at Patra, says, the company’s India-based staff “don’t use the phone. All communications with our insurance agency customers are conducted via e-mail and by using the Internet to access our customers’ agency management systems to perform the work.  Our operations run 24 hours a day, which allows our team to service our customers around the clock.  If there is a problem or question, they call our implementation team in California and/or e-mail their team in India directly.”

In many cases, it is not even perceptible to the insurance firms benefitting from the business model that work is being performed offshore.  Naval Kapoor, CEO of I-Engineering, a software development firm specializing in web-based systems for the wholesale insurance industry, explained that system requirements are gathered for agencies and insurers by U.S. based personnel, but actual coding and testing is done by the company’s staff in India.

“In India, we have established one of the best development centers to serve the insurance industry. All of our employees are highly educated and were hand-picked by management. Our facilities are ultra modern, with all of the amenities you would find in a New York City Park Avenue office. We pay our employees a premium hourly rate and provide a full benefit program. As a result we get the best, who stay with us, are always on call at any time of the day or night, and take pride in each project they are assigned to,” Kapoor said.

Many Council member firms have their own operations in the developing world and substantial interests in these emerging markets.  Whether it is call centers, business process outsourcing, software development or the opportunity to sell insurance in these emerging markets, offshoring and globalization are major contributors to the U.S. economy, and without those services, the consequences would be severe. 

This genie cannot be put back in the bottle.  And anyway, all those tangled wires will soon be obsolete as those countries (and everyone else) move to wireless communications!