HP to cut costs with Bangalore back office

Hewlett-Packard (HP) is moving most of its accounting and some other finance-related back-office processes to Bangalore-based...

Hewlett-Packard (HP) is moving most of its accounting and some other finance-related back-office processes to Bangalore-based Global e-Business Operations, a wholly-owned subsidiary of Hewlett-Packard Europe.

Vivek Nagarkatti, president of Global e-Business Operations said: "We started off as the accounting centre for different HP entities. That has evolved into something larger, as a result of which we are handling other HP operations such as order processing and logistics, which are not part of finance."

Doing this work in India costs HP about one-sixth of the cost of doing it in the US, without sacrificing on quality, according to Nagarkatti. Key to HP's cost-saving strategy hire recent college graduates with basic training in accounting, and train them on HP's own internal processes and systems. HP may consider offering these back-office services to customers outside the company as well, Nagarkatti added.

The staff at Global e-Business Operations are connected by high-speed dedicated communications links to HP's centralised servers and databases in the US. "Communications is critical, as we are on real-time," said Nagarkatti. "The company uses three dedicated links with a bandwidth of 2Mbps, with another 512Kbps link for voice.

Global e-Business Operations already has worldwide responsibility for key accounting functions, such as fixed assets and intercorporate miscellaneous expenses. In other accounting functions such as vendor payables and intracorporate inventory, the Indian company has begun the transaction processing for some regions, with the eventual objective of handling these functions for all regions including the US, Europe, Middle East, Latin America, and Asia-Pacific.

Some accounting functions such as payroll will however continue to be localised because of regulations and tax laws specific to each country. Regional centres in Singapore, Belgium, and the US handle region-specific accounting.

Global e-Business Operations currently employs about 375 staff, of which about 60 are software engineers. The software engineers are developing workflow automation and imaging tools for use by the centre.

The company plans to increase the staff at the centre to about 800 by October 2002, with that number expected to increase to 1,500 by next year. The staff works on three shifts to match the time zones of the regions they are servicing.

Read more on E-commerce technology