Treasury Today Country Profiles in association with Citi

Airtel

Bharti Airtel Ltd, Highly Commended, Best in Class Benchmarking

Photo of Manish Kapoor and Alok Bafna from Bharti Airtel and Barbara Harrison, Citi

The telecoms industry is one of the newest and fastest growing markets in India but with business conditions that are constantly changing, benchmarking processes are a vital step towards increasing operational efficiency. Bharti Airtel sought to achieve its benchmarking goals by means of establishing a Shared Service Centre (SSC).

Photo of Manish Kapoor and Alok Bafna from Bharti Airtel and Barbara Harrison, Citi.

Manish Kapoor

Head of Cash and Bank

Bharti Airtel is a leading integrated telecommunications company with operations in 20 countries across Asia and Africa touching the lives of 252m people. Headquartered in New Delhi, India, the company ranks amongst the top five mobile service providers globally in terms of subscribers with annual turnover of $13.2 billion.

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“Historically, Bharti Airtel operated a de-centralised payment model, where over 57 Strategic Business Unit (SBU) bank accounts were used, based on one assigned staff member per SBU. As a result, Cash & Bank (C&B) operations were slow, due to the high administrative burden and large volumes of physical document flows in both local currency and cross-border payments,” says Manish Kapoor, Head of Airtel Centre of Excellence (ACE) Cash and Bank at Bharti Airtel.

Physical modes of payment, such as cheques and demand drafts, were intrinsic in the company’s payment methodology, creating an undue resource burden. “Additionally, the extensive bandwidth expended by the user department, along with C&B, to handle queries relating to remittance detail unique transaction record numbers and other payment related matters needed to be addressed,” says Kapoor. “In view of this, Bharti Airtel committed to building a best-in-class SSC for its key operations. Teaming with Citi and HDFC Bank, the journey to build the Airtel Centre of Excellence – Cash and Bank (ACE C&B) SSC began.”

This was a first for the Indian telecoms industry, and as could be expected for such a proposition, the start of ACE C&B faced an array of challenges. For example, the company needed to realign the end-to-end composition of its key activities across a wide scale of 57 SBUs covering national and international operations, a monthly transaction base of 90,000 and a payout of $1 billion. A proficient solution was designed to enable ACE C&B to deliver the key priorities, given stakeholders’ expectations and the competitive market. This required a highly controlled and risk free payment processing environment; trade partner satisfaction with proactive payment information broadcast; cost reductions by accurately meeting forecasting levels and reducing administrative activities.

According to Kapoor, “A highly motivated team was established to handle the pressures with ease, whilst adhering to all internal and external compliance requirements. At the initial stage, banking partners were re-evaluated based on multiple parameters including their solution, regional capabilities and dynamism. Citi and HDFC Bank were chosen as partners after extensive deliberations.

The major activities selected for realignment were vendor satisfaction, forecasting efficiency, payment methodology, payment information system, controlled environment, efficiencies of scale and master data management (MDM) clean-up. Through the solution, Bharti Airtel successfully created a strong SSC model ACE and was able to achieve centralisation of all SBUs in an extremely aggressive timeline of less than one and a half years. Benefits include 97% accuracy in fund forecasting releasing the working capital of $30m; substantial reduction of interest cost from INR 6.6m to INR 0.3m per month; reduction of customer queries by 88% – queries reduced from 225 per day to 28 per day; electronic fund transfer rejections were halved from 1.75% to 0.91%; integrated utility software has lowered the clerical error rate to zero levels; cutting edge technology for end-to-end image based, 100% paperless environment with host-to-host payment methodology. Says Kapoor: “Now that all Bharti Airtel ACE C&B operations are consolidated and stabilised under the umbrella of ACE C&B, they are ready to take on the additional challenges of developing C& B operations for its recent acquisition – Zain Telecom (worth $10.7 billion).”