Posted on 17 Jul 11
I followed up with Mike Fieseler, Vice President, Business Development, Vantage Agora, after meeting him at Peak Performance earlier this year, to discuss the advantages of outsourcing. Vantage Agora provides outsourcing services that include personal and commercial lines rating, quoting, policy issuance, policy quality check, and more for Managing General Agents (MGAs), wholesalers, program managers and retail brokers.
Vantage Agora has been in operation since 2004 when they began helping insurers address many of their back-office operational issues, specifically in lower-paying jobs where a high turnover rate exists. Insurance companies also were looking to shift higher paid specialists from spending a great deal of time doing paperwork to selling and closing business. Vantage Agora worked with these insurers to improve the quality of output, save money in back-office operations, and free up individuals to do the jobs on which they should be focusing. In addition, Vantage Agora has been helping companies implement IT solutions with a focus on .NET, SharePoint, and Business Intelligence/Dashboarding applications enabling anytime/anywhere access (including mobile) to data and metrics which give a company and individual the ability to better manage their accounts and provide a higher level of customer service.
It was in 2009 that Vantage Agora as a company began truly concentrating its efforts in helping the insurance industry outsource back-office operations – everything from claims processing, endorsements, rating, quoting, and quality control. Headquartered in Texas with a domestic facility in Ohio and an overseas operation located in Bangalore, India, Vantage Agora has more than 80 employees. Mike joined the organization in late 2010, bringing to the company 20 years of experience as the buyer and provider of process improvement services. He started his career at IBM focusing on outsourcing activities and improving business processes and where he was recognized as one of the nation's top sales representatives. From IBM, he moved to a $400-million IT staffing organization where he put together a new line of business to develop and deploy solutions for clients. He also worked for a software company in the life sciences industry as VP of Business Development and later moved into business consulting where he met one of the founders and CEO of Vantage Agora, Sudhir Achar.
Annie George (AG): Your outsource facility is in India and in the U.S.?
Mike Fieseler (MF): “Yes. Our outsourcing services are located on the campus of one of the larger universities in Banglore, India. It’s a great facility with new buildings and a robust infrastructure that gives us access to talented people. We’re dedicated to a program of continuing education, which has resulted in most of the people in our delivery center having attained INS 21, 22, and 23 certifications - managed by people who will have their CPCUs this year. This investment helps us to offer our clients a stable workforce with a sound knowledge of tasks they are performing.
“In addition, several of our clients have asked us if we can also provide services in the U.S. which is one of the reasons why we recently opened a facility in Northeast Ohio. This will enable us to offer both overseas and domestic outsourcing solutions.”
AG: Let’s discuss the benefits of outsourcing.
MF: “The benefits really depend on the type of organization. If you’re focused on saving money, then typically with outsourcing of the back-office operations, you’re going to reduce your per-person cost by 25%-50%. Additionally, our clients see that the quality of the work increases, which is due to a couple different things. First, our employees are focused only on those outsourced operations – they are not interrupted by phone calls or water cooler conversations. They are trained in industry operations and excel on getting the task done quickly and accurately. Second, we’re able to provide faster turnaround, which saves money and can be a differentiator in closing a deal. Instead of looking at a 48-72 hour turnaround time by performing tasks in-house, the outsourced work is delivered to a client’s desk overnight.
“In addition, back office operations performed by our clients in the U.S. typically see a high level of turnover. It’s not unusual to see an average tenure in the 8- to 18-month range. That means that you are in a perpetual training mode – about the time someone is trained and proficient, they leave. Recent studies project this to get worse in the coming years with the greying of America.
“One potential benefit I’ve seen many people overlook is that they don’t necessarily have to replace a person with an outsourced job. You can also outsource tasks. A number of our clients have used Vantage Agora to perform tasks that keep their producers and underwriters from focusing their time on customer-facing activities. By turning the mundane tasks over to us, these people can stay focused on customer relationships, getting more work done, closing more business, and making more money,”
AG: “How do you address those who say outsourcing displaces American workers?”
MF: “Yes, in most cases, the jobs are moved, in our case to India. But you also need to remember that Vantage Agora is a U.S. company. We pay taxes here. The products that we use in our delivery center are from U.S. companies so it’s not like this is totally detrimental to the economy. We can also offer an on-shore alternative, but it’s more expensive than the offshore model and most people choose the offshore solution.
“A couple of other items to consider are that companies who hire us are able to reduce costs and hopefully this enables them to keep other people employed. As I mentioned earlier, we have had customers outsource tasks rather than people. There are cases where the faster turnaround and better quality have enabled them to grow and add people in higher-paying positions.
“Many times clients outsource positions where there is a great deal of employee turnover. As one of my clients said to me, ‘Mike, I hire people and they’re gone in 12 to18 months. I’m barely getting them up-to-speed where they’re actually producing and being of benefit to me, and then I have to hire someone else and start the process over again.’”
AG: Is the turnover because individuals don’t want to do this type work, because it’s too tedious?
MF: “I believe there are several factors. Typically, it’s a lower-paying position with no minimum educational requirement, which translates to limited opportunity to move up in the company. Many times there are few, if any benefits, including education for the tasks they are performing. Because of those things, we find that people don’t hesitate moving for something that pays a little more or just a change of scenery. The loyalty we had in the business world 15 to 20 years ago doesn’t exist anymore. And that’s from both the company side and from the employee.
“Frankly, the same issues exist in India that we see in the United States. We have tried to create an environment that addresses those issues. This has resulted in fewer turnovers than is experienced with our customers. Some of what we have done includes providing continuing Insurance Industry education and certification. The fact that we’re growing gives people chances for a true career path. We also have team-building sessions and support a number of community activities. We have tried to create an environment that people feel is an extension of their family, something that is important to Generation Y regardless of which side of the ocean they reside.”
AG: What would you recommend for a company looking to outsource some its operations?
MF: “I’ve been on both sides of the table when it comes to outsourcing. I’ve been a vendor of outsourcing services and I’ve been a buyer of outsourcing services. These have included multi-year engagements with total values in the $100 million range. I’ve seen successful projects and I’ve been involved as a third party in rescue operations where one or both parties were not satisfied. I have seen what makes things successful and what can lead to problems.
“Successful outsourcing starts with knowing your company. You need to understand your own organization, its strengths and weaknesses. You need to clearly understand your goals, your own drivers, and priorities. The areas best for outsourcing are those that are not the core competencies of your business and the areas that are more costly than they should be.
“Once you have determined that you want to outsource some activities, I believe the three most important things to consider are; selecting the right partner, then having a jointly developed Service Level Agreement in place, and finally, establishing an on-going communications plan with solid metrics.
“Choosing the right partner is an important step. When you decide to outsource, you need to select a company you know is going to be able to succeed, a company that has proven its ability with other firms. You probably want to choose one that specializes in providing services for not only your industry, but for companies similar to yours. A service provider that commonly signs engagements worth tens of millions of dollars is not going to focus on a company outsourcing their back-office operations of fewer than 50 people.
“Once you have selected a vendor, you need to establish reasonable expectations up front. If you need an eight-hour turnaround, state that in the Service Level Agreement (SLA). If 72 hours is acceptable, state that in the SLA. Make sure that everyone knows what is required, but be sure these requests are reasonable. Your service provider can’t provide you a completed package until you provide timely, accurate information to them with sufficient lead time to complete the task.
The SLA should include provisions for change. Just because you’re satisfied with 72-hour turnaround today, doesn’t mean you won’t need an eight-hour turnaround next year to stay competitive in the market. There has to be flexibility on each side. You don’t want the outsource company you select to come back and say, ‘This is what you asked me to do and that’s all I’m going to do. The firm has to be able to change its view as your company changes, as you enter new markets, as the insurance cycle goes from soft to hard.
“Once the SLA has been established, you want to make sure that you have tools in place to monitor the services provided and have frequent sessions with the vendor to review the status. Communication is important. We provide our clients a set of dashboards we’ve developed through the years that include metrics and ratios, and they have told us this helps them understand what is happening. These not only provide data about our services, but also many times are an extension of their ERP or AMS. The dashboard information is frequently used in the weekly status meetings. Also make sure you’re sharing pertinent information. If you know about changes that you’re going to be making, be sure there is adequate notice given. Everyone should be aware of items like product upgrades, known systems outages, reorganizations, and such that could impact working hours or access to tools. A key to successful communications is having a single point of contact with accountability and decision-making authority on both sides that is responsible for the success of the engagement.
“If this is your first time outsourcing, I would suggest moving slowly. Select a few tasks to use as a pilot, work with hand-in-hand with the service provider until you are comfortable, and then expand the operations you turn over to them. Concentrate on the communications and monitoring/management aspect during this phase. I believe if you do things in a controlled fashion, making changes where necessary, ultimately everyone will benefit.”
To find out more about how outsourcing can help your organization and the various products and services Vantage Agora offers, visit http://www.vantageagora.com/. You can also call Mike at 1.888.246.7211, or contact him via email at: email@example.com.