Setting Up A New Offshoring Office

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A High Level List of things to be done when setting up a new Offshore Business

A friend recently asked for my expertise around setting up a new operations centre in India – and I had penned my thoughts to help him through this journey. While the list is not comprehensive it does detail a list of must do’s including basic policies etc that need to be agreed before starting off an operations.

  • Office Space Identification
    • Which city – depends on the skills that you need for the work that you are doing. Voice operations are more common in the North of India, Data and Analytics in the South. Major Tier 1 cities to choose from are Gurgaon, Noida, Bangalore, Mumbai, Pune, Hyderabad, Chennai, Kolkatta etc. Tier 2 include Coimbatore, Mysore, Chandigarh, Jaipur- and many more. Amongst the Tier 1 I believe Hyderabad has the best real estate pricing.
    • Advisable to go through a property management company – JLL, Cushman or CBRE, three largest player in the market.
    • Bare shell, semi fitted or fitted property, there are also options for landlord owned fittings, negotiations are key- price can be reduced basis conversations. All depends on the CAPEX you have available, if you have oodles of money then a warm shell would be the way forward as you can choose the design and layout. If you don’t have enough CAPEX, go for landlord owned where everything is paid for by someone else, and you pay a higher monthly rental.
    • Are we looking at an STPI exemption or a SEZ, in which case ideal to work with your tax consultants like EY who can help with necessary permissions or business case to compare benefits? Many new businesses are being set up as normal units seeking no export exemptions as IT equipment cost in India is comparable.
    • Ideal space per FTE is 130sq feet for workstations and 90sq feet for running counters, depends what you want to do.
    • In terms of cost for fitment use Rs 750 per sq feet for renovations(already built unit), Rs 1500 for warm shell and Rs 2000 for bare-shell. (excl IT CAPEX)
    • Key to review amenities available at the office location – cafeteria, bus stop, parking space, clientele, mall/shopping, ATM, food court, hospitals, police station, fire station, crèche etc.
    • Office space plan to have adequate meeting room, training room and break out areas including medical rooms etc. May require minimal shower facility especially for Muslims who would need a space to wash post prayers, plus provisions if you promote cycling to work or have an in-house gym.
    • Preferable green office space with zone wise air conditioning and CFL lamps with times to preserve power and keep bills in check.
  • New office support requirements
    • Licenses, including Shops and establishment act and others (PF, taxation, etc.) best to employ a company to help with the same.
    • IT and infrastructure set up including back up data lines, redundancy testing, peak load testing and power back up, fire drills, emergency evacuation etc.
    • Agreements with partners – Housekeeping company, Security services,transport vendor, services companies like Tea, Coffee, Drinks, Water, Snacks etc. stationary partner, IT infrastructure support, IT equipment purchase, Telephony, Skype for Business, Office 365, VC, etc.
  • Transitions
    • Complete due diligence of all areas.
    • Identify areas that need to be migrated.
    • Review task mix – two types of transitions – 1) lift and shift 2) map, modify and shift. The former is easy as process is easy and well defined e.g. how to input invoices in a billing system. The latter is more complex and needs onshore experience though buddying and mentoring, or requires experts to travel offshore to train trainers and employees. (where judgment is involved)
    • Complete process mapping, preparation of process flows, training documents, online vs manual, self-learn vs class room, simulations, dummy transactions etc.
    • Prepare a transition plan for the next 12 months, set up transition team, steps to include onshore travel, process mapping, documentation, sign off, offshore training, hand holding, stakeholder review, train the trainer, etc.
    • Prepare SIPOC diagrams, RACI, Stakeholder matrix, identify success criteria, soft launch, correct, final launch lunch and business as usual attributes.
  • Work to be offshored
    • Agree on headcount requirements plus 15-25%, Managers 1:15 or other.
    • Agree on recruitment plan, dates for college visits, walk in’s etc. – experienced vs fresher’s, team structures, level of skill and qualifications, recruitment partners or complete in-house, creating a plan to wow candidates.
    • Employee referrals – how to award, process to be followed.
    • Onboarding, Induction, process to be defined, first 3-9 months post joining to be defined and expectations setting.
    • Bonds, agreements where onshore travel is involved to retain and ensure continuity.
    • Training, assessments, retraining, handholding, floor walkers, Red Hat support, exits etc.
  • Specific to HRM including training
    • Salary break up – components reflecting improved tax savings, meal vouchers, agreements with Zeta etc.
    • PF and Gratuity account set ups, payroll partner of in-house.
    • Leave policy – number of days 24+12 or others, break up CL, SL, PL or one big pot.
    • Leaver’s policy, notice period 1month to 3 months.
    • Travel policy, domestic and international, by day/activity or lump sum or actuals, also class of travel etc.
    • Performance Management process.
    • Rewards and Recognition process.
    • Capability Assessments and Development, Enhancement and Re-skilling process.
    • Soft skills requirements.
    • Disciplinary process documentation.
    • Code of conduct, SOX, Info Sec, ISO – documentation around expectations.
    • Communications plan – central repository, mandatory sign off.
    • Taxation, Salary Advances, Payroll data sharing, Meal Coupons.
    • Attendance and timekeeping.
    • Incident logger, BCP, Communication matrix, Succession planning.
    • Promotions, Transfer and IJP policy.
    • Exit requirements.
    • Criteria for salary raises, performance, and market gap assessment.
    • Grievance Handling.
  • Corporate communications
    • Town-halls.
    • Emails
    • Newsletters
    • Noticeboards
    • Social Media presence.(Linked In, Facebook etc)
    • Branding
    • Other cascades/ updates.
  • Audit, Compliance, Others
    • ISO 9001, 27001.
    • Asset Management and disposal.
  • Finance
    • Travel Management Process and System.
    • Reimbursements
    • Vendor agreements and payments.
    • Banking, Hedging rules, Taxation
    • Government and regulatory reporting.
    • P&L, transfer pricing regulations etc.
  • Other software
    • Work allocation and project management.
    • HRIS
    • Communication – chat etc.
    • Payroll
    • KMS
    • Scanning solutions.
    • etc etc.