Both Franklin Templeton Investments of San Mateo, Calif., and Invesco of Atlanta have moved, or plan to move, some operations into the cosmopolitan Indian city of Hyderabad, the sixth-most populous city in India.
This past January, Franklin Templeton cut the ribbon on a new 380,000-square-foot campus that will be used as a technology and operations support center for the firm's worldwide operations. With more than $552 billion in assets under management, the firm has a presence in 29 countries, including Canada, Scotland, Poland and across Asia.
The new facility caps off a plan begun in 2003 to build and operate a proprietary facility in Hyderabad for the Franklin Templeton International Services (India) Private Limited unit. The firm partnered with Ness Technologies to get the facility operational. Franklin's operations unit already had offices in the cities of Mumbai and Chennai. The center provides various services including fund accounting, transaction processing, data analytics, equity research and software development.
The new technology and ops center in Hyderabad includes a cafeteria, gym and recreation center. It cost Franklin $40 million to build and will eventually support as many as 1,800 employees, 15% of the firm's total worldwide staff.
About 442 miles from Mumbai, India's largest city, Hyderabad is the capital of the Indian southern state of Andhra Pradesh and one of the nation's most developed cities. It boasts a financial center, is an emerging hub for both the information technology and biotech industries and is home to 6.1 million people.
The commitment to build out an additional operational infrastructure in India is testament to the firm's belief in the potential of the country, its highly skilled workforce and Franklin's desire to efficiently deploy resources as the firm grows.
But don't call Franklin's initiative "outsourcing." Franklin Templeton executives prefer to call it "global sourcing," meaning that the firm will build wherever in the world it can best achieve efficiencies. "In managing our global business, we must continuously analyze the best way to build out our resources," said Stacey Johnston, a company spokesperson. "In doing so, we consider what skill sets are required, where growth opportunities are located and the overall value we can achieve by building resources in a particular geographic location."
The technology and operations center is Franklin's second India-based division. In 2002, Franklin Templeton Asset Management (India) Private Limited acquired Pioneer ITI AMC Limited, an asset management firm with $800 million in assets. Since then, the firm has grown to $5 billion in assets and transformed it into one of the largest private sector asset managers in India.
From Houston to Hyderabad
Franklin isn't the only investment management firm building an operation center presence in Hyderabad.
Earlier this year, Invesco, which includes the Houston-based AIM Investments subsidiary, began a multi-year project to build and staff a "global enterprise" technology and operations center in Hyderabad that will support the firm's global businesses and complement existing centers in North America and Europe, confirmed Ivy McLemore, an AIM spokesman. Although Invesco will own and operate the center, as well as a second ops center now being built in Prince Edward Island, Canada, the India-based hub will initially be built and operated by a local partner firm whose staff is hired to work for the eventual owner. From the start, Invesco's own operating platforms and procedures will be in place. The firm currently has operations centers in 19 other countries
"This will increase our ability to operate in all three time zones, which helps with follow-the-sun processes,'" McLemore said. "We chose India because of the tremendous pool of skilled and trained processing staff that is available and its English language base." Certain processing functions for AIM's mutual funds will be handled in the new facility. "Invesco and AIM continue to take advantage of opportunities for operational consolidation and new technologies to improve cost efficiencies for the benefit of fund shareholders," McLemore added.
Other investment management firms are also reconsidering venues and seeking better efficiencies.
Fidelity International Limited, the Bermuda-headquartered subsidiary of Fidelity Management and Research Corp. of Boston, recently announced it would move its seven-member team of traders for Japanese equity securities out of Tokyo and relocate the team to Hong Kong by the end of 2007. The move allows the Fidelity unit, which handles all non-U.S. investment business, to consolidate and realize the benefits of scale, said Peter Yandle, a London-based company spokesperson. The Hong Kong office already handles the trading activities for 10 other regions. All other trading activities will stay put in Tokyo.
Fidelity International's move follows a similar move by U.S.-based AllianceBernstein. A company spokesperson confirmed that the firm had moved its equity trading desk to Hong Kong from Tokyo at the end of the first quarter of 2007.
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