Banks look beyond India for ITO
IT outsourcing is increasingly seen as a viable option for cutting costs and improving service delivery. Many
banks have turned to India but, says Basis Bay Services founder and CEO Dato’ Praba Thiagarajah,
some believe that more forward-looking service providers can be found in Malaysia.
 The benefits of IT outsourcing (ITO)
have not been lost on banks and
the financial services sector has long
forged relationships with external service
providers to help manage infrastructure
costs and develop new applications for
a rapidly evolving market. The crisis in
financial markets has intensified this search,
as cost reduction has become an even
more pressing priority.
Yet cost cutting alone is not sufficient
fuel for ITO in these times of change.
Banks have realised that their IT service
providers must offer a great deal more.
‘There has been a change in financial
institutions’ needs and they have shifted
more towards multi-sourcing and
collaborative outsourcing models,’ says
Dato’ Praba Thiagarajah, founder and
CEO of Basis Bay Services. ‘They are using
many par tners and have moved away
from ten-year IT outsourcing contracts to
shor ter deals, which is a major change. The
collaborative use of more than one vendor
and the use of hybrid models to bring in
skills have become features of the market.
‘There is a need for greater
transparency on both sides. Banks are
outsourcing to partners, not vendors.
Some require very unique skills but
are hard for banks to build in-house,
so transparency and partnership are
important in those areas,’ says Praba.
Basis Bay specialises in delivering
customer-focused ITO services and
since 1996 it has helped more than 300
enterprises manage their strategic IT
infrastructure and application needs.
Based in Malaysia, the company operates
from a growing network of locations across
the Asia Pacific region and Europe.
Since founding the company, Praba
has strived to keep Basis Bay at the
forefront of ITO in many sectors, not least
financial services. From those efforts, he
has recognised that
banks are looking for
trusted partners that
can not only cut costs
and improve efficiency
but also understand
the need to deliver
tangible business value
and commit to constant
innovation. Adapting
to meet clients’ needs
with initiatives such as
Software as a Service
(SaaS) is vital in a sector
that is undergoing
radical change.
‘We see much
more acceptance of
infrastructure as a service
now,’ says Praba. ‘SaaS
inevitably will be accepted.
We have made sure we
are geared up to suit the
model that banks want. The way outsourcing
used to be done left a bitter taste, but
building partnerships suits us perfectly.
‘IT is very dynamic and strategic, so I
find it strange that companies used to
outsource ten-year contracts that were
delivered in a big bang way. We have always
had five-year deals, we get to know our
customers and we move forward steadily.
‘We only up-sell, cross-sell and expand
our par tnerships when our clients understand our capabilities. We are always
open to collaborative models that include
other service providers.’
Malaysia matters
Cost reduction remains, of course, a
primary driver for a bank’s engagement
with ITO , but the need for flexibility
has risen to a level of equal importance.
Recent history has taught the industry
many lessons about how the market can
change and has launched the banking
sector into a phase of great transition.
‘In the long-term there will be more
consolidation so while cost is the
immediate need, in the long run banks
must learn lessons from the past and look
at responsiveness,’ remarks Praba.
He believes that this trend may well
play into the hands of companies such
as Basis Bay, not least because of the
advantages Malaysia has over other
possible locations for ITO . Praba
believes that flexibility for banking clients
is one of the chief benefits of working
in Malaysia as opposed to other
traditional locations.
While Praba recognises that India has
well-established and highly capable ITO
centres, Malaysia can match or surpass
them in many respects. Malaysia offers
significant wage differential with the US
and Europe.
So does India, which can play on its
established brand in IT outsourcing and
prowess in programming, but at the high
end of the IT skills range India has seen
wages rise sharply. Furthermore, Malaysia
can offer a great deal in terms of cultural
diversity and infrastructure.
‘Malaysia not only benefits from better
infrastructure but it is a real melting pot,
where distinct cultural differences mean
that English is widely spoken, as are many
Chinese dialects and other languages such as
Tamil and Arabic. There are cultural and racial
connections with India, China, Indonesia and
many other countries,’ says Praba.
‘Our infrastructure has developed
rapidly in the past few years and there are
purpose-built regions that have the
IT infrastructure to house global
companies. There are excellent data centre
facilities, including fibre optics to the kerb
and a dual-source power supply from
separate grids. There are very few places
like it in the world.’
Praba is referring to MSC Malaysia, once
known as the Multimedia Super Corridor,
which was created to launch the country
into the forefront of the information
age. MSC stretches from the Petronas
Towers and Kuala Lumpur International
Airport to include the towns of Putrajaya
and Cyberjaya. It is an IT city that has
been strategically developed to provide
infrastructure and telecommunications
of an international standard and is said
to house more than 1,000 businesses
including many multinational companies.
For Praba, the matter of power supply
is one of many crucial differentiators.
‘Brownouts are uncommon in Malaysia
compared with other countries in
Asia. Also, the government provides a
bill of guarantee as part of its MSC/IT
infrastructure offering and that is unique
to Malaysia,’ he says.
Praba also believes that the diversity of
systems exper tise in Malaysia may benefit
banks in particular.
‘Banks have proprietary systems. Their
core systems are more likely to be IBM
mainframes or Unix proprietary systems.
Even if they are moving their platforms
over in stages, they still need par tners
with mainframe skills to deal with their
core systems. At Basis Bay, we have those
skills and we can exploit that fact in
infrastructure support as banks move to
new environments.’
Eyes on the future
Praba firmly believes that his company
must have a strong understanding of
where industries such as financial services
are going in order to ensure that it
follows the same trends in developing
its service delivery. Proof of its forwardlooking
approach is not hard to find; one
such example is its recently opened green
data centre.
The new data centre in Cyberjaya is
par t of Basis Bay’s committed approach
to sustainable IT outsourcing, which
will become a greater priority for clients
across many industry sectors. The
70,000ft² data centre provides
co-location, hosting, disaster recovery,
service operations, network operations
and managed services.
Praba believes that ‘re-engineering IT
for a greener world’ will be an important
factor in the ability of ITO providers to
form effective partnerships with large,
global enterprises. It could prove to be
a prescient move as banks move towards
further consolidation of data centres.
‘Most companies in Asia have been slow
to get into the greening of data centres.
Especially for back up sites we encourage
the use of recycled or pre-owned
equipment. We also have a division that
has specialised in trading and refurbishing
pre-owned equipment since the mid-’90s.
‘Extending the product lifecycle is a big
part of what we do. Sustainability is the
driving concept.’
With such forward-thinking service
providers it is likely that Malaysia will
increasingly vie with India for ITO
contracts from the banking sector and
many other industries. Banks could do
well to move early to ensure they can find
their partner of choice.
‘We are flexible, we provide high-value
services and we can compete with the
world leaders,’ says Praba.
‘We can understand our cutomers’
pain points and we can ramp up quickly
as their needs grow. We look at common
goals with our clients, more like a partner
than a vendor.’
‘We have a long-term focus that looks
beyond cost arbitrage.’ |
