Since July 2007, the U.S. sub-prime mortgage problems and the increases in credit spreads over government bonds have triggered concerns about a global credit crunch, and caused global stock market volatility.

However, financial institutions in Asia are in a relatively good position with respect to the credit crunch since they have less exposure to sub-prime mortgage instruments than those based in Europe or the US. Some foreign capital is being redirected to Asian property markets, seeking to benefit not merely from the natural appreciation of real estate in dynamic economies, but also from appreciation of Asian currencies against the US dollar, particularly the RMB.

Foreign investors have shown no sign of scaling back Asian real estate investment activity, especially given the relative scarcity of investment grade properties. The combined value of the quarter’s ten largest investment deals in Asia amounted to US$9.3 billion.

In Singapore, a total of S$15.69 billion worth of investment transactions was recorded in the third quarter, a y-o-y increase of 94%, reflecting continued strong local and global investor interest in office properties as well as Singapore’s positive economic fundamentals. The main market drivers were office transactions and continued activity by developers adding to their land banks. At S$40.95 billion, total investment sales in the first nine months of 2007 have already exceeded the total for 2006 as a whole by 34%.

Investment activity in the office sector more than quadrupled q-o-q in the third quarter, with the S$6.83 billion in transactions accounting for 43.5% of investment sales. With rents at an all-time high, REITs and foreign funds remained keenly interested in prime office properties. The sale of Chevron House (formerly Caltex House) to Goldman Sachs for S$630 million (S$2,783 psf) set a new benchmark for office transactions. The sale ranked tenth in the list of the top ten largest investment deals.

CapitaLand divested its interest in Wilkie Edge, a mixed development including office space, to Capital Commercial Trust for S$182.7 million. CapitaLand also acquired the remaining 50% stake in One George Street and The Adelphi from its partner in Eureka Office Fund Pte Ltd for S$715.75 million. K-REIT and Suntec REIT each paid S$941.5 million for one-third stakes in One Raffles Quay. The deals took number 6 and 7 in the list of top ten investment deals in Q3 2007.

In the second quarter Japan’s real GDP growth fell 1.2% y-o-y, entering negative territory for the first time in three years. However, the consensus opinion is that the negative growth is largely a reaction to the high pace of expansion over the previous two quarters, and the economy is likely to expand at a moderate pace. Although the US subprime crisis influenced the Bank of Japan’s decision to keep the overnight call rate at 0.5%, the BOJ remains optimistic about the economy in most regions.

Despite some volatility resulting from the potential global credit tightening, investment market sentiment remained largely positive in Hong Kong, supported by strong economic fundamentals. Local investors continued to dominate the market while institutional players value the market’s transparency and liquidity. Notable en bloc office transactions in the third quarter included the sale of Oterprise Square for HK$2.07 billion and a 45% stake in AIG Tower in a structured deal.

Investment interest in Seoul’s major districts remained intense in the third quarter, with many investors seeking properties through transactions due to the limited supply of buildings on the market. However the sales of Seoul City Tower and Daewoo Center, both located in the CBD, established new benchmarks for capital values. With the steep rise in capital values in major districts, investors increasingly considered opportunities in secondary areas including Sangam Digital Media City, Pangyo IT Valley and Bundang-gu.

The series of macro-economic and regulatory measures introduced to curb investment activity through the end of June 2007 did not lead to any significant reduction in interest among overseas investors in China.

In Beijing, Singapore-based serviced residence management firm Frasers Hospitality bought a luxury residential project, Tower D of OFFICE PARK, located in the core CBD from Sino-Ocean Land Holdings for RMB 980 million. Czech real estate investor ECM bought the 768,485 sf Metropolis Tower, which is Tower C of the Zhongguancun Financial Centre, for RMB 1.06 billion.

Despite additional government measures to curb foreign investment in real estate, Shanghai’s investment market remained buoyant in the third quarter. China Real Estate Opportunities invested approximately US$708 million to acquire a portfolio of mixed-use projects including City Centre in Changning and Central Plaza in Huangpu, and Hong Kong-listed Tian An China Investments and Capital Strategic Investment established a JV to acquire Novel Plaza for US$105 million. Other major deals included Grosvenor’s acquisition of 28 duplex apartments at the Lakeville Regency and Pacific Star and SEB’s purchase of Cross Tower.

Despite continuing macroeconomic control measures, positive sentiment prevailed in Guangzhou’s investment market in the third quarter. Attractive investment yields underpinned investor interest in the city’s office and retail sectors. Increased overseas participation in land acquisition and development and the growing financial strength of domestic companies have resulted in escalating land prices, as record accommodation values were paid in a number of districts over the quarter. A villa project adjacent to Nanhu Lake was reportedly transacted for RMB 2 billion on an en bloc basis.

Different religions took their birth at different times and at different places and that is the reason, they could not turn one religion and now the people in each religion have started declaring that their religion is the best and all others in other religions are not on the right path but are misguided people.If we read religious books of all the religions, we come to the conclusion that all the religions are accepting that God is one and only one though He is called with different names. All the religions accept that we all have been sent on this earth by God Himself and He directs all the events of our life. All the religions believe that God Himself writes luck and destiny each of us and we are to live as per those directions and when our time is over, God recalls us and we die. All the religions believe that after death each one has to give his accounts and the people who had been doing something wrong during their life time are punished and are sent to Hell and all those who had been doing good works during their life time are sent to Heaven. These are the minimum concepts which are available in all the religious books available on this earth.

The world has got one God and they have got the same type of faiths, but they are not uniting as one family. If we have an eye on this world, this world has already been divided on the basis of religions. Some are called Muslim countries, some are Christians countries and some countries could be called Hindu countries. These units have become political and now one group is not in a mood to accept the supremacy of the other. They are competing and we are observing that the people who are having power are invading the other weak countries and they are trying to establish their supremacy. The people in each religion are not worrying about the path of their religion, but at present they are having a desire that their religious group may get supremacy in the world. The people in other religions who are weak know that they are under danger and the people of other religions may attach them any time and they shall be establishing their own supremacy over them. We also know that when people of one country attack another country, they collect other countries with them who also belong to the same religion. So now we can say that the next phase of wars shall be between people of different religions and nobody knows which religion shall get supremacy over the world.

Much had been said and the wise people had been trying to tell the people of the world that all the religions had been established just to meet one God, but all these uttering has been ignored by the people of this world and they are competing with each other.

There had been a time when Muslims had been ruling the world and then a time came when the Christians could establish their imperialism throughout the world. It had been accepted that this sun was never setting down and had been shining all the time over British Rule. Now time is coming when the Christian world, who is laced with arms shall rule the world and all others shall have to accept their supremacy. At present the war heads are determining the supremacy and the countries which are not having war heads shall not be having any place and they shall have to accept the supremacy of powerful countries. We had seen that when one force was invading Afghanistan and then Iraq all the people of the world kept silence though such invasions are banned under the International Law. Though after victory the powerful countries did not occupy the countries they won, but they are operating through ‘remote control’ and all the people of the world are having fear that they too shall be coming under this ‘ remote control’ one day or the other. So we can say with safety that the religions are not playing the role of correcting the people of the world, but today these religions are dividing this mankind and out of these divisions undesired wars are taking their birth and the people who are weak are turning terrorists. The man on the whole has entered into the zone of danger and none on this earth when there could be attack on their country and none knows when he could be killed by the terrorists or by the rioters. The religions which could have brought peace in the world have brought all the dangers and now none is at peace in this world. Therefore, we shall pray to God that He must come down on this earth and should give this man a right direction. If this man is allowed to go on the present path, there are chances that the world would be controlled by the powerful and all others shall turn slaves or they would become terrorists. And then peace shall be impossible in this earth.

The strength of Australia’s banks, especially the big four, is better than first seems, judging by comments in the International Monetary Fund’s latest report on the Australian economy.

Buried in the Fund’s latest report is a big vote of confidence in the health and stability of the Australian banking system.

The IMF also reckons Australia’s big four banks are so well capitalised that they could withstand a surge in home loans going bad and still maintain their capital levels at the minimum required by regulators.

That’s a big difference to the US, UK, Ireland and several other countries where plunging home prices, mortgage sales and falling property values have wreaked havoc on capital levels and forced big capital raisings

The information in this report from the IMF is likely to underpin the analysis and commentary in the RBA’s semi-annual Financial Stability Report to be released later this morning.

Australian banks and their health have been questioned by investors and commentators since the credit crunch erupted over a year ago, with nerves getting very frayed last week as the US financial system shook under rising pressures and soaring short term rates for cash.

As well a shortage of US dollars (hard to believe) caused short term interest rates to spike in the UK and Europe and forced the Fed into over a quarter of a trillion dollars US in currency swaps with central banks around the world (including Australia).

Some commentators fret about the level of debt in Australia and the house borrowing boom and the still high levels of prices and have warned of a debt binge driven slump.

But not so the chaps from the IMF.

They did admit that “Australia’s banking system is sound, but some vulnerabilities remain.” The banks were on the rollover risk in wholesale funding markets overseas with banks being forced to pay a lot more for new funds as existing loans rollover and have to be renewed.

But the IMF said “The authorities’ response to the credit market turmoil has been timely and fitting, with the RBA providing liquidity support and APRA intensifying its monitor of banks.

“The four large banks remain profitable and well capitalized, but the turmoil highlighted their vulnerability to rollover risks arising from short-term wholesale funding.

“The planned introduction of liquidity guidelines will be helpful to reduce the risk of disruptions arising from loss of access to offshore funding.

“Requiring the publication of more detail on the maturity structure of banks’ funding, especially from offshore markets, would also encourage banks to reduce their exposure to rollover risk.”

“APRA plans to introduce liquidity guidelines with a focus on improved disclosure and stress testing.

“The aim should be to encourage banks to reduce the risk of disruptions from restricted access to wholesale markets by diversifying their funding sources, lengthening the maturity of their funding, and holding sufficient liquidity.

“The staff advised that requiring banks to publish more detail on the maturity structure of their funding, especially from offshore markets, would impose additional discipline.”

(That’s a good news story on moves by the key regulators to force the banks to upgrade their disclosure on liquidity and funding.)The IMF said that “Banks are exposed to households, but appear resilient to an increase in default rates on mortgages. Households have become increasingly indebted, with debt reaching almost 160 percent of disposable income and debt-servicing costs at about 14 percent of disposable income.

“As more than half of banks’ loans are mortgages, banks’ asset quality would likely deteriorate with a large increase in interest rates, rise in unemployment, or fall in house prices.

“Staff analysis show that a very large increase in default rates (to 10 percent of all housing loans) would be required to reduce capital ratios of the four major banks below 8 percent.

“Moreover, staff estimates suggest that house prices are only moderately overvalued (5-15 percent) and that continued strong immigration and household income growth could increase equilibrium house prices.”

The IMF points out that to get a 10% default rate on all housing loans would require “a default on about half of mortgages with loan to value ratios of over 80 percent”.

House loans with an LVR of 80% or more are among the most stretched, but at the moment Australian banks have an arrears rate of 0.2% for impaired assets (including housing) and small banks a rate of 0.50%.

But in the most interesting stress test, the IMF says that its staff “using extreme stress test scenarios applied to the large banks suggests that they could suffer a significant fall in profits from an increase in funding costs associated with loss of access to offshore markets for 90 days, but that their capital would remain adequate.”

“This scenario is more severe than anything that Australian banks have had to face to date. As a result of the loss of access to offshore markets, banks have to refinance their offshore liabilities due in less than 90 days domestically.

“In the most severe case where all wholesale funds (domestic and offshore) due in less than 90 days have to be refinanced at an interest rate that is 500 basis points higher than before the shock, the aggregate capital ratio for the system only falls to 8½ percent.

“The worst affected among the four large banks has the capital ratio drop to 7½ percent.

“Banks’ profitability suffers a more serious hit, which is not surprising, given their heavy reliance on short-term wholesale funding. Nevertheless, it takes a 500 basis points increase in interest rates on liabilities to generate losses for banks.”

In other words, if that was to happen now, wholesale interest rates would have to rise to well above 12% (indicating mortgage rates above 15%) for three months for there be any significant damage to bank capital levels and the amount of capital in the financial system as a whole.

“That assumes the banks can’t get any money from offshore in that period, which hasn’t happened so far.

Even when the stress tests were applied at even more intense levels, the IMF team said the results showed the resilience of the system

“Even in a more extreme case where the interest rates on all deposits (including checking) also rise by 500 basis points, the aggregate capital ratio drops to 5¾ percent for the system, and to 5 percent for large banks.

“While this is a significant reduction in capital, the fact that the banks are able to maintain their capitalization ratios above 5 percent under a shock of that magnitude (and under a number of conservative assumptions that were made) underlines the resilience of the system.

“All four large banks were analyzed individually, and were shown to be sufficiently sound to handle a large interest rate shock. Small banks, however, were only looked at as a group.

“Some of these banks have smaller deposit bases, rely more heavily on securitization, and could be more vulnerable to certain shocks. Nevertheless, given their small size and the strong aggregate results, they are also not likely to present a threat to systemic stability.”

No matter where you live, politics probably plays a part in your day to day life. You might not immediately deal with political issues, but you can be sure that politics plays a part in what you do! Whether it is office politics deciding who gets that raise you’ve been hoping for; city politics determining where you are allowed to park downtown; county politics dictating your quarterly property tax or even nationwide politics deciding how your schools are funded, politics plays a part in your daily life.

It is important then that you understand what politics really is. Politics, at its core, is defined by Wikipedia as the process by which groups of people make decisions. At its core, politics sounds quite simple. What makes it complicated are the individuals involved in making the decisions. Because human beings are not perfect, the political system is never going to be perfect. This is something that most people don’t understand about politics. You can put all of the pomp and circumstance into politics that you want, in the end; it is more about human beings getting their way than about the process itself.

It has been said quite often that politics is a dirty business. In the United States Congress, for example, politics has taken on an air of hatred and manipulation. Many citizens of the United States feel that they are left out of the process of politics and that their elected representatives are more interested in scoring personal points than in working toward the betterment of their states and districts. In the last few decades special interest groups have taken on an entirely new role and lobbyists have become particularly vilified.

This disillusion toward politics is nothing new. Plato—the famous Greek philosopher—believed that all political systems were corrupt at their cores and that societies leaders should be chosen from an elite group of individuals who were began leadership training at birth. Aristotle argued that man is inherently political and that personal and political ethics are often the same thing.

One of the most famous political philosophers, Machiavelli advised that leaders of politics be brutal and manipulative and do whatever they could to retain their power. Machiavelli is studied today and his work is considered to be one of the leading authorities on how to behave in politics. Is it any wonder then, that the political systems of so many nations look corrupt?

The heart of politics is good: it is how laws are made and how individuals are judged by the societies that surround them. Without politics, nobody would know what was allowed and what was not allowed when they left the house. Unfortunately, many people view politics as a way to get ahead or to gain some sort of power over the people they live and work with. It is because of these “bad eggs” that politics has become regarded as an evil and ugly business.

The currency of a nation is of great importance to the financial growth of that country. Every currency has a value relative to the other currencies on the planet. Thus currency trading can be described as the trade that uses the purchase and sale of large quantities of currency to leverage the shifts in relative value into profit.

Also it can be stated that currency trading provides really good opportunities and percentage returns, which is virtually impossible in a low leverage market.

Until recently, the currency trading market was quiet closed to the small investors. Banking conglomerates and large multinationals were the main movers of this market place. But in the recent years, however, new technologies have opened the doors to investors of all stripes to participation in the currency trading.

Thus making it difficult to miss the enormous benefit of this ‘new’ market for the individual investors. Higher returns with lower risk, given the same amount of market knowledge have a very small downside.

Why Currency Trading:

There are two reasons the relative value of a currency fluctuates. The first is because of a real market. The outside investors or visitors, who wish to buy things within a country, are forced to convert their domestic currency into the currency of the country they are buying within.

In similar terms, as money leaves the country, people must sell their currency for the foreign currency they will need to spend or invest abroad. Thus currency trading comes into picture.

The second force for currency fluctuation is speculation for currency trading. As investors feel a given currency will act strongly or weakly, they will buy or sell accordingly. This speculation can have drastic consequences on a national currency and consequently on a country’s economy.

To understand better we can take the help of an example. During the East Asia Crisis in 1997, as nations in Asia began facing economic downturns, speculators used currency trading to realize enormous profits and in the view of many analysts, it helped to exacerbate the problem.

Currency Trading, in many aspects, has many real benefits over equity trading like the stock exchange. The spreads for currency trading are extremely low, making the cost to a trader very low as well.

The volatility of the currency market is extremely high, which means that a trader dealing with currency trading can generate enormous return on a given exchange. The ratio of volatility to spread can be said to be approximately 500:1 for the Currency Trading market, as compared to 100:1 for even the most ideal of stocks.

The Internet has made currency trading possible for ordinary people to trade currencies right from the comfort of their home. Initially the banks and financial brokers performed currency trading only. Online currency trading enjoys the best liquidity in the world and the trades are worth more than that on several stock exchanges of the world put together.

Actually, the orders for currency trading on the online source surpass that of the bond and stock markets put together.

The main reason for currency trading by the means of the Internet is hedging for speculative purposes where people make profits worth billions of dollars in a matter of a few minutes or hours. Moreover, the currency trading market operates continuously throughout the world except on holidays.

Always keep in mind that as a currency trader, you must buy a currency whose value can rise and sell the currency, which can depreciate. You must keep purchasing for long intervals, that is buy at a low price and then sell the same at a higher price.

Having a short position implies selling a currency that can fall and then purchasing it at a lower price. Most trading is speculative bases on events that can happen.

However, political developments also influence the trend of the currency markets. As a wise trader in currency trading, you must study the macro and micro economic factors that influence currency markets across the world.

This includes a detailed study and analysis of the inflation rate, the rather fiscal and monetary policies, and the interest rates of that particular country.

Thus currency trading is an important aspect of the nations financial growth.

Who wants to be a president; the President of the United States? Social Security reform is the winning ticket. Research supports the thesis that Social Security reform would provide all the lubrication necessary to get our economic ball bearings rolling in the right direction. Economies do not grow, or increase employment, when job providers are taxed and regulated unmercifully, throttling their energy, creativity, and profitability. Consumer spending pushes the economy; we need to do more than hand out a few hundred bucks.

The objective of the exercise, Barack, is to permanently place more disposable income in consumers’ wallets while providing incentives for employers to hire more workers. There are three areas where the impact of reforms would be beneficial to all, irrespective of political sentiment. Social Security reform would benefit the most people, most quickly. Next on the list, Hillary, would be elimination of income taxes (federal, state, and local) on: (a) all forms of retirement income, and then, (b) all forms of investment income. Third, and particularly important for job creation, John, would be the elimination of all income taxes and nuisance fees on businesses.

Who wants to be President?

Social Security will be the easiest to implement quickly while producing unprecedented increases in disposable income, business cost reductions, and job growth. Here’s a rough outline of a brainstorming plan. Throw out the politics and focus on the program— phase one deadline, January 1,2010.

Change Social Security funding to a mandatory, private program, for all employed persons, and add a voluntary program for those who are not employed. All employees would contribute to deferred fixed annuities, purchased from new divisions of qualified financial institutions. Existing Social Security credits would be the initial deposit to the contracts for all participants under age 60.

Employer matching contributions would be eliminated and participant contributions would be cut to a mandatory 3% of total compensation (including deferred comp, stock options, etc.). Both changes would be phased into the system by participant age group over a five-year period, youngest first. The five age groups would be 13-year periods starting at zero to thirteen (obviously for voluntary accounts) and ending with ages fifty-two through sixty-five.

Phase one would involve qualifying providers, assignment of workers, issuance of contracts, elimination of employer matching contributions, and elimination of income taxes on social security payments. Employers would be required to appoint at least one person to coordinate the transition.

Contributions to the annuity contracts would begin upon issue; the Social Security Administration (SSA) would have five years to move credits to participants, starting with the youngest group, and would be responsible for shortfalls to retirees for five years.

Under the new system, there would be no penalties for early retirement, but tax free annuity payments would begin at age sixty-five whether or not the person continued to work. Participants could voluntarily establish retirement accounts for non-working spouses and children, and could elect to deduct an additional 1% of salary for each account. A new Federal Administration for Social Security (ASS) will select, qualify, and monitor provider companies and their investment portfolios to assure that only high quality, income-generating securities are used to fund benefits.

Companies showing a surplus would be able to invest up to 25% of the surplus in stocks that qualify for the Investment Grade Value Stock Index (IGVSI). Only fixed life annuities would be available, but there would be 50% of cash value, family-only, death benefits up until the time of retirement. After age 65, the death benefit would be reduced 10% per year for four years. There would be no loans, withdrawal privileges, etc.

The ASS would be represented on provider company boards, would monitor annual audits of firm financial statements, and would supervise the selection of all non-company directors (60% of the board). Each provider company would be encouraged to use non-market value portfolio assessment techniques, such as The Working Capital Model, to monitor income portfolios. Retiree associations would also be represented on company boards of directors, and board member compensation would be capped at a reasonable number, plus 45% of ASS related expenses.

Annuity providers would be assigned a fair share of the huge Social Security Retirement Income Account (SSRIA) participant pool; every dollar contributed would be invested. All providers would use the same mortality tables and base interest rate guarantees in their calculations and would be precluded from any form of advertising. Companies would be required to focus 100% of their efforts on the SSRIA.

Annuity providers would be allowed a .5% investment management fee so long as the Annuity Investment Portfolio generated no less than the 3.5% income level needed to fund a guaranteed 3% contractual cash value growth rate. 50% of any excess realized income would be added to retirement accounts in the form of dividends.

The remaining 50% would be apportioned between three separately managed accounts for: retirement benefit support contingencies (20%), universal health care and disability benefits for annuitants (50%), and post retirement death benefits (10%). Half of the remaining 20% would become “surplus”. The balance would accrue equally to the employees of the insurance company— the mailroom staff receiving the same dollar amount as the CEO.

These changes would produce: a whole new sub-industry of jobs, increase disposable income, reduce the Federal budget deficit, provide universal retirement benefit eligibility, stabilize the market for plain vanilla corporate and government debt securities, reduce corporate expenses and product price levels, and subsidize health care for senior citizens. Annuity providers would have significant incentives to minimize costs, but their investment portfolios would be closely supervised to prevent excessive risk.

Politicians at all levels just love for us to hate big business, and have no compunctions about taxing and regulating employers in every manner imaginable. The impact is higher prices, lower job creation rates, and the need to move many operations to lower cost environments. Many small businesses simply refuse to hire additional employees. Regulatory procedures and company defense measures add billions to the costs of goods and services.

Social Security benefits are grossly inadequate yet we continue to tax all forms of retirement benefits. Politicians ignore the simple solutions to these problems and none seem to care about Social Security reform. It’s just too big an issue to be so shockingly ignored, but the last politician with any courage— well, I can’t remember who that was either.

One of the misnomers about an offshore bank account is that it is only for the very wealthy. An offshore corporation plus offshore bank account is more economical than one might think. An offshore bank account is an account that you open in a country or jurisdiction outside your own. Thus opening an offshore bank account is a good place to begin on the freedom road and such an offshore banking relationship can provide the foundation of what follows. The most obvious legitimate reason for opening an offshore bank account is the cash-flow advantage of getting interest on deposits paid gross, without the withholding tax usually imposed on non-resident bank accounts. One of the numerous benefits of opening an Offshore Bank Account is that they are often situated within tax havens, which means that the individual pays less tax.

Offshore Bank Account

Most offshore bank accounts come with a cash card that can be used to withdraw funds anywhere in the world. Offshore Bank Accounts the Ultimate Protection Seeking to protect you money in an offshore bank account once someone has laid a claim to your assets just won’t happen, its already too late. An additional benefit of an offshore bank account is that if you are not willing to leave a high tax nation you can benefit by moving money to a tax free secure and private haven. Asset security and privacy is what the offshore bank accounts and the financial world are designed to accommodate.

Opening an Offshore Account

To actually open an overseas bank account, you must firstly do some research – which country and which bank will be most suitable for your needs. Although you may not need any of these things; opening an offshore account can be as straightforward as just having a checking or savings account. Most people who open an overseas bank account want to enjoy the significant tax breaks that this will give them. A passport, a driving license, and a untilty bill are all you need to open an offshore account.

Privacy

Offshore privacy can no longer be taken for granted. Having a offshore bank account may be something you can explore in regard to banking privacy, being insulated from predatory lawsuits, building your assets and to legally avoid excessive taxation. This is a popular choice for people who are very particular about their privacy and anonymity. For maximum privacy and asset protection, however, the best advice is this: Establish an offshore corporation to own your offshore bank account. The Anonymous Panama Corporation adds in a nice thick layer of privacy protection. Right now, a secure, private bank account is reserved for your personal use in countries with some of the strongest bank privacy laws on earth.

Investment

An offshore account is an excellent way to diversify investments and take advantage of global tax savings. Sure you have to report your earnings in most places and pay taxes, but you can still open up an offshore bank account for greater investment possibilities, protection from domestic lawyers who might want to sue you for your life savings and for greater financial privacy. And, you must report any interest payments or dividends you have received from any offshore investments made using that account. You can have instant access to the world’s best investment opportunities, including currencies and precious metals without concern about your home nation’s legal restrictions.

Legal

The proper way to open an offshore bank account is through an experienced law firm offering offshore legal services. As a matter of principle the rights to privacy can be suspended when a criminal investigation is underway. Don’t rely on banking secrecy being upheld if you are engaging in illegal activites. Some countries like Panama are more tolerant than others.

Services

Typically a tax free haven is offered by countries that have little or no means of exporting goods and services to offset the imbalance they would otherwise have in terms of their overall currency exchange. You may want to consider other services the bank offers, such as different types of accounts, credit cards and safety deposit boxes. There are advantages either way here – a larger bank may offer greater security and more services, but with higher fees. Many offshore banks offer a full range of private banking services, but have certain terms and conditions that need to be met by their clients. An offshore corporation combined with the quality banking and commercial services found in Panama consistently meet the needs of diverse types of clients.

International

If you’re in regular receipt of international transactions it can make sense to establish an offshore company structure in a jurisdiction like the Seychelles where no tax is levied on income generated outside the jurisdiction and where such a company is not required to fill out annual financial or activity reports. Such a company can then open and hold an account which can be used for international personal OR business transactions. If you’re moving overseas you have a number of choices available to you – you can let your current bank know and they may change your account type to be an international account. You can then use this account to pay bills back home and conduct international transactions.

Visa

The way these programs work is Visa and MasterCard do not know who the actual card holder is – no date of birth, no address, no tax id numbers etc. So a subpoena to MasterCard or Visa would produce very little and since the bank is in a country with bank secrecy this avenue is going to be a long burdensome process that would be unlikely to be pursued and could only be pursued by a government in a criminal matter. The more private way of doing this is to get a Visa or MasterCard debit card from another bank, not your Panama bank.

Bank ATM Debit Card

Some people obtain an ATM card from another unrelated financial institution. These cards typically have no name imprinted on them which right away adds to your privacy protection. These cards also do not leave a trail to your real bank. Money can be transferred to the ATM card by wire from your Panama or other bank account and then withdrawn as needed. Some people are fond of using these cards to cover corporate expenses like travel, entertainment and other business expenses. Usually the ATM card purchase requires a copy of a passport.

Offshore banking has many advantages, some of which include the access to politically and economically stable jurisdictions, and the lower cost and higher interest rate. You can use a foreign bank account as an integral tool in an aggressive, two-pronged offshore wealth strategy. In other words, an offshore private bank account is not just a place for safekeeping cash. You might think it is a bit odd at first to open an offshore account when away on holiday but if you are going to that destination anyway on holiday it makes something nice to do one day.

Inflation is something that every investor should know about. The wise investor understands how inflation erodes their purchasing power and he or she takes steps to mitigate the damage.

Inflation is when the price of goods and services rises at a rapid rate. This destroys your purchasing power. Ever heard that a dime doesn’t go as far as it used to? That is due to inflation.

In theory, stocks are able to take handle the effects of inflation. This is because revenue and earnings usually increase at the same pace. However, for this to happen prices have to rise. Many companies face global competitors that offer different inflationary pressures, which prohibits the increase in prices at a rate to keep up with domestic inflation. In other words, not every company can afford to increase the prices for their goods and services.

When the economy is looking at inflation, the Fed usually increases interest rates to slow growth. This cools off the economy, but isn’t the best news for companies. Higher interest rates entice consumers to reduce spending, which takes money away from many sectors.

Stocks are often toted as good protection against inflation. In broadly diversified portfolios, stocks do help mitigate against inflation. If you invest everything you have in stocks, you are probably fairly protected against inflation. However, most diversified portfolios have cash and fixed income securities. These are vulnerable to inflation.

Let’s look at some numbers. Whenever you are thinking about your percentage of return, think about inflation as well. For example, if your stock investments give you an average annual return of 10% and the annual average inflation is 3%, the actual return you have from your money is really 7%. Think of it this way — what you are making now will actually buy less in the future — so you may need a little more than you anticipate. That is why you should factor in inflation.

But if you have a 6% bond and inflation is 8%, you have a negative return on your money.

I’m not saying don’t invest — but if you are nearing or already in retirement, inflation is something you should take seriously. While many people assume that all of your portfolio should be switched to fixed income securities, that might not be the right way to mitigate inflationary pressures on your portfolio. Even in a low inflation environment, it is often wise to keep a portion of your portfolio in stocks to counteract the loss of purchasing power.

Remember, there are stocks out there that are pretty good bets. Large, existing companies that have excellent and solid histories are good options. Think your blue chips here.

Don’t go out and change your portfolio right away. If you don’t see a problem, keep doing what you are already doing. But keep an eye on your portfolio. When planning your investment goals, keep inflation in mind. Keep an eye on your fixed-income securities. Plan ahead.

Are you looking for a personal offshore bank account. Maybe you are looking for a corporate offshore bank account. Generally speaking, any bank account opened outside of one’s native country can be considered an offshore bank account. The appeal of an offshore bank account is much more apparent during tax time, when assets and income must be reported to the IRS or other government revenue agencies abroad. This is why some companies and wealthier individuals prefer to open an offshore bank account in small sovereign states which allow account holders to remain virtually anonymous. For many years, an offshore bank account was indeed a convenient way to hide profits from illegal activities or underreported business earnings. Many people consider opening an offshore bank account for very legitimate financial reasons.

Bank

There is usually not much difference in service or benefits between the bank on the corner and a bank located in the Cayman Islands. These banks which are well established institutions offer an online corporate offshore bank account, with offshore credit card or debit card, and which can be operated via the internet, fax or phone. All bank accounts can be opened via courier post. None of the shelf offshore corporations have ever been in use or ever held a bank account.

Account

These banks which are well established institutions offer an online corporate offshore bank account, with offshore credit card or debit card, and which can be operated via the internet, fax or phone. The offshore banks were not obligated to report the existence of these accounts, and the account holders could legally pay little to no taxes to the host country. In recent years, however, the rules governing an offshore bank account have become much stiffer. Any bank account containing over $1,000 USD must be reported as income to the IRS, even if that bank account is in the Cayman Islands or Ireland. This is why some companies and wealthier individuals prefer to open an offshore bank account in small sovereign states which allow account holders to remain virtually anonymous.

Panama

One of the greatest advantages of having an offshore bank account in a favorable jurisdiction like Panama is that no one needs to know it exists. With a Panama bearer share corporation, wires moving through the wire system are not associated with any natural persons for more privacy. There is no capital gains tax in Panama on stock market trading gains making Panama a superb offshore stock brokerage jurisdiction. Bearer Share Corporations (Sociedad Anonima) Asset Protection with a full range of effective strategies including Panama Foundations and Corporations Providing corporate nominee directors and resident agent Offshore Bank Accounts in Panama with online banking Anonymous ownership of real estate anywhere Anonymous ownership of boats and planes anywhere Real Estate Investment (Panama real estate appreciating 58% per annum) Panama Passport Program Panama Residency, Citizenship, Visas Stock Trading Accounts in Panama with secrecy Offshore Visa, MasterCard from Panama Bank and other countries Offshore Merchant Accounts for high risk or low risk accounts. Bank secrecy laws in Panama call for prison sentences and/or fines for any bank employee, officer or owner who divulges any information about a bank account or account holder(s). The only way the bank can legally divulge any information about you or any bank account associated with you is by court order from a court in Panama.

Banking

It is important that the proper jurisdiction be selected when deciding which jurisdiction to use as an offshore banking jurisdiction. It may also be far more appropriate for an individual to consider structuring their offshore banking affairs through an offshore company so that they can gain greater confidentiality in their banking affairs. Offshore banking accounts are generally opened under the name of offshore companies or corporations. Offshore banking accounts need to be opened with an initial deposit to activate your account.

Tax

Companies incorporated in the Great Britain must pay tax on their worldwide income regardless of the country in which this income is generated. With the exception of charitable companies, there are no tax-exempt companies in the United Kingdom. Offshore companies or offshore trusts are not the illicit hideaways from tax authorities as sometimes presented. The tax-free status of the jurisdiction being used is always a major consideration. When selecting an offshore jurisdiction for your foundation one must take into account the following: freedom from taxes including inheritance taxation, anonymity of the foundation, ease of passing assets to beneficiaries, ease of operation and reasonable cost. Our overriding aim is to minimise your tax liabilities whilst maximising your company’s income.

Companies

As more and more people worldwide discover the risk-free benefits of placing their business and personal financial-affairs well away from their own countries, offshore companies are being created on their behalf at a rate of over 150,000 per year. Many owners of offshore companies tend to operate the companies directly by themselves. It is absolutely critical that any client seek the information necessary to make a strong decision when opening an offshore account and forming offshore companies. Offshore banking accounts are generally opened under the name of offshore companies or corporations. To assure complete privacy, the shares of International Companies are often held by a discretionary trust.

Offshore banking has been routinely and legally used for many years by individuals and organizations worldwide. As with any type of bank account you have a choice when it comes to determining which offshore bank account best suits your needs and requirements. An offshore bank account will allow you to safely and privately explore, with few restrictions, the far reaches of the vast and diverse financial universe; from the bond markets of Korea to the stock exchanges of Eastern Europe; from ultra-private Liechtenstein trust arrangements to the most successful funds; from unique commodity investments to Caribbean corporations; from Israeli nanotech start-ups to age-old European blue-chips; from the mysterious and secretive world of offshore mutual funds to tax-free Swiss gold accounts; from Isle of Man Insurance contracts to Danish multi-currency investment accounts; from uniquely structured tax-free Austrian funds to Bulgarian mortgages; and much more beyond.

As 2008 draws to an end, the signs for the global economy in 2009 are, to say the least, inauspicious. But this downturn won’t affect all geographies equally – and this holds true for the shared services and outsourcing space as much as for the wider economy. In order to get a better-defined picture of how different parts of the world are reacting differently to the biggest shock to the financial system since the Wall Street Crash, the Shared Services & Outsourcing Network convened a series of regional roundtable debates. The first – getting the view from Asia – took place at the end of November and was chaired by Deloitte’s Hugo Walkinshaw; as the transcript shows, for mature SSOs at least while the impact of the crisis has yet to play itself out fully, there are certainly opportunities strewn amongst the challenges…

Attending were:

Hugo Walkinshaw (chair)

Principal Shared Services Asia Leader

Deloitte

Chen Theng Aik

SVP & Head Asia Pacific Operations

DHL

Rodrigo Martins

General Manager GBS Asia

General Electric

Erik Moller Nielsen

GM Global Service Centres (Philippines)

Maersk

Hugo Walkinshaw: In terms of how specifically your SSC is adding value – and I’d like to ask Rodrigo to kick us off on this one – what differences are you seeing as a result of the current climate in terms of new things you’re being asked to tackle, or things that were going a little slowly or were not so pronounced that are suddenly coming to the surface?

Rodrigo Martins: We are actually seeing an increased interest from businesses in joining our shared services organization. In challenging times like these, the value that a shared services group brings to the table is even more evident. From all angles you look at our group there is value – from the high quality of being an organization specialized in processes that are critical to running a business (no less important under the current economic conditions, by the way), from a cost savings standpoint given the scale in which we operate, and from our ability to provide services utilizing our infrastructure of people, processes and platforms already in place.

For all of these reasons I see a general increase in demand for our services. It is also important to notice that we are constantly concerned with productivity, constantly looking for improving quality and efficiency in everything we do, and in times like this it is even more important. On a more tactical level, we have been providing our businesses with more and more tools and analysis that make it easier for them to control and better manage their cost base. From our perspective we are helping our customers, the GE businesses, and from their perspective this is a value-added service that they are receiving from us.

Hugo Walkinshaw: So most of that is essentially focusing more, and putting greater emphasis, on things that are already current. Maybe there are a few conversations there around should this business unit, or this process, come in or go out, and the current conditions are basically forcing the pace on those decisions?

Rodrigo Martins: Exactly that; more of the same, at least for our organization. I believe businesses see the value in what we are doing so they want to come on board more and more. They see that we have scale and that we are capable of rendering good service at a competitive cost and that is good value for them at the end of the day.

Hugo Walkinshaw: And in terms of being asked to provide wholly new things, or to go in new directions: are you seeing any of that yet?

Rodrigo Martins: I don’t see that in GE. Probably because being an established shared service organization we already have most, if not all, typical shared services offerings. We do have one service, which is relatively new to our group in Asia, Customs. This service helps businesses deal with imports and exports around the world. But the service is not new; it was introduced a few years ago in the Americas and is now being rolled out globally.

Chen Theng Aik: Because of the state we’re at now, we’re still contemplating our migration of activities to the SSCs in the higher-cost Asian countries. Our officers have been told to watch headcount, and headcount replacement, very carefully, and it’s getting tougher for the business units, so there is a lot more interest for two reasons. One is, pure wage arbitrage and our ability to continue to leverage that, so there’s increased interest in moving more activities over to us, and what was traditionally considered taboo – not to be transferred over to shared services – could now all be on the table. With our SSC in Malaysia, there’s a large wage arbitrage from the higher-cost Asian countries.

Point number two is that because things for the businesses are getting tougher and tougher, their headcount is being looked at very carefully, so any volume increase, or even replacement after resignations, is also getting tougher and tougher. When they have their own headcount freeze, or headcount restrictions, it becomes more attractive to migrate over to us. We end up being asked to do more work which would traditionally have been carried out within their home-country organizations.

Hugo Walkinshaw: So a bit more of a burning platform for country MDs to have to deal with, to accelerate the transition timetable.

Erik Moller Nielsen: I’d like to echo what Chen just said, and actually Hugo you just used the words we use: it’s a “burning platform”. We’re looking at anything and everything, and we see a widening of the scope and depth of what we’re being asked to handle. For example in the back-office support for SAP, we are increasing the percentage of the end-to-end finance process that we’re handling in the service center, and we have a Six Sigma project going on now to take it up to 70 per cent. But we’re also being asked to look at almost more things that we can handle at the moment from claims settlement to quite sophisticated KPO work, so we’re moving up the value ladder, for sure, at the moment. We definitely see more offshoring coming our way.

Hugo Walkinshaw: Well it’s definitely good news that at least someone’s busy in these times… The only things I’d add to what you guys have said is that, firstly, specifically within our shared services environment – and this plays a little bit towards Rodrigo’s point initially – we are making much greater and more frequent use of the SSC for almost daily operational data, as everything is moving so fast and swinging so hard in terms of decision-making around recruitment, costs and so on. We’re putting a lot more emphasis on the basis of ad hoc management information coming out of the center. I’ve noticed that we’re partnering much better with the center and that they’re being forced to be much more reactive and responsive about producing data.

Secondly, looking at companies that haven’t gone to shared services yet, I think we’ve initiated five new shared services feasibility studies in the last eight weeks, so I get a sense that out there those companies who haven’t yet taken the plunge – or who have taken the plunge and now have European or US centers – are now looking to Asia as an offshoring location, with a real sense of urgency and momentum. We’re also seeing a lot of interest from large local companies who are, I guess, cash-rich and who are looking to make this kind of reorganization and structural investment while things are slowing down and they’ve got time on their hands. So even for the people who aren’t in shared services there’s definitely the sense that this is the way to go as a response around control and cost.

SSON: It seems as though there’s a bit of a cross-section of the space here: on the one hand we’ve got Rodrigo who’s doing a great deal more of the same sort of thing, and on the other we’ve got Erik who’s actually instituting a whole load of new processes. Hugo, to what extent are the companies approaching you to investigate launching new shared services initiatives planning a broader, wider shared services than might have been the norm over the last few years?

Hugo Walkinshaw: I think it’s people who’ve been sitting on the fence about even starting shared services, and have been going down the route of “our culture is not to do that, and not to offshore, and not to make redundancies” and I think they’ve been forced off the fence by the economic conditions. I think it’s people taking the plunge and realising they need to do some desperate measures, rather than a move towards a broader, more sophisticated footprint. I think the reason there’s been a bit of disparity thus far on the panel is a reflection of where we all are on the shared services journey. My takeaway actually is that what’s keeping us busy is doing things we were expecting to do, and hoping to do, had planned to do, or were already doing a little bit – but doing them at a much greater pace. I don’t think there are a lot of brand new initiatives – yet – coming up in the shared services space.

Erik Moller Nielsen: I would absolutely echo that. I think this is the push that has come lately, to push in the development that was happening slowly anyway. Some people in the organization (and we have a mature SSO, about eight to ten years and six sites in operation) were looking at the SSCs at having been set up to provide maybe rather basic processes, and being maybe a nice-to-use but not a need-to-use, but in the current climate with business volumes going down this is a resource they want to tap into, if not for anything else other than the labor arbitrage initially – but then we know that once it’s been shifted over to us we can optimize the process down the road. We’re being asked now to look at data mining, market analysis, and we’re going to be setting up a group of fifteen in January just to look at that, and there are many many other things coming our way, so it’s all positive – and keeps us really busy.

Hugo Walkinshaw: Those particular bits at the end – the data mining and market analysis – are not things which your everyday shared service center traditionally does, so I think your comment about going up the value chain is spot-on. You may, I suppose, already have had that in your sights on the value-chain, though, and this is just accelerating your decision rather than being a brand new idea that’s come about as a result of the crisis. So let’s move on, then: in terms of priorities for the next six months, can everybody name their top one or two? Erik, what’s going to be your main focus for the next two quarters?

Erik Moller Nielsen: It will be on the talent side, because now we are looking for different people on some of these issues; for example with the claims settlement we’re looking at, we need to find people with a legal background. Initially it’s an HR challenge; secondly it’s about site-capacity and site planning (and we’re well into that). Thirdly – and going with the site capacity – it’s workstation utilization: how can we push it up so that we use each desk more than once, maybe even more than twice every 24 hours? In that connection, our challenge is that most of our work is really time-sensitive and urgent, with turn-times down to half an hour, but we are hoping that we can convince our internal customer that he can save a lot of money if we can extend the turn-times on some of this work and therefore do it at night – it means we save costs and don’t have to expand the sites.

Hugo Walkinshaw: That’s an interesting dynamic; if you’ve got unutilized capacity at certain times of the day or night, then obviously it’s a more cost-effective solution to use that rather than adding floors and increasing the overall cost. I guess you’re in the right part of the world to be running 24/7 shifts.

Chen Theng Aik: I think our big focus will be on two areas. One will be on getting our unit costs down even further; in the past, our internal business partners were pretty happy with our unit costs because of the big wage arbitrage, but now things are getting pushed further and further they’re saying “we’ve got this great wage arbitrage and we’re pleased with that but – can you get costs down even further?” So that’s getting a lot of focus – not that it didn’t before, but now it’s with even greater intensity.

The other thing is that we’re now moving into a lot more customer-facing activity than before, so all the collection activity, the customer query activity, dealing activity that traditionally we haven’t touched too much on any great scale; now we’re moving more and more into that domain, and in some countries which haven’t fully tapped into shared services yet, we need to look for a different talent pool and train more because previously it was traditional accounting we were looking for.

Hugo Walkinshaw: Just on the cost-reduction: it’s interesting that you say that, because that was one of the first responses from management here: “it’s great – a good service – now more please – can you do it cheaper?” So we’re kind of suffering under the same burden. Practically – and I don’t want to get into too much detail – when I look at it I’m stuck with a facility cost that I can’t really negotiate around, I’m stuck with an IT infrastructure that’s got a sunk cost that’s depreciating; the only flexibility I’ve got on reducing cost is around greater efficiency and, not cutting wages but swapping people out and bringing in more junior people. Which is quite radical. I just wonder, in terms of those sorts of areas, are you going through a similar thought-process? Are those the kind of things you’re looking at for cost-control?

Chen Theng Aik: For us one big area that we’re looking at is to increase our span of control for our team leaders, our managers, and so forth, because there is a huge disparity still between the wage levels of team leaders and managers and what we call the associate level. So the increase in the number of associates that is needed is great, and we’re going to increase the span of control – so for the same number of team leaders and the same number of managers, can we lead bigger teams? I think that’s where the fixed costs get spread out and hence the unit cost comes down. That’s what the business partner is looking at. The other area is that we do currently use an external consultant for some project migration work and we’re now reducing our reliance on this external source and bringing more and more of our own resources into the project migration effort.

Hugo Walkinshaw: Absolutely: reduce those pesky consulting fees… The organizational span of control issue is a good one. I think we’ve seen where we have one or two more senior, experienced people moving on and taking bigger roles in new shared service centers we’ve ended up pushing more junior people up the pipe to give them more opportunity to reduce the cost of the role rather than shopping around for new people who might be as expensive or more expensive than the originals. Span of control is a good angle.

Rodrigo Martins: The question here is whether or not priorities have changed, and the answer for us is that they haven’t. From an operational standpoint, the priority for us is to continue consolidating activities into regional centres; one way of reducing costs is through scale and we have been going down the path of consolidating our activities in the regional hubs that we have here in Asia for quite some time. Another operational priority is automation and standardization of our processes. So what is not automated or standardized is being marked for action. Our ultimate goal is obviously productivity and quality in everything we do.

Hugo Walkinshaw: So you still see opportunities around automation and IT optimization?

Rodrigo Martins: Absolutely. As a matter of fact we are currently implementing a new version of Oracle, and we are taking advantage of that to convert some of our legacy IT platforms into one financial platform across all of our shared services in Asia. So by itself this generates the opportunity for a lot of standardization and productivity gains for us.

Hugo Walkinshaw: And I would say that reflects the nature of your business as you’ve grown hugely by acquisition, so you’ve picked up a very diverse portfolio of businesses and I suspect you’ve got a reasonably diverse patchwork of ERPs around the place.

Rodrigo Martins: Yes – but it’s interesting because this Oracle implementation I’m referring to is only within our own shared services organization. Having said that, some of the other businesses that need a more robust platform may want to use our system. It’s quite a unique situation; maybe specific to GE.

Hugo Walkinshaw: That is an interesting one – but it sounds like it might be a debate in itself!

Erik Moller Nielsen: Before we move on: like Chen we’re also looking at the span of control. Right now we have ten associates per team leader but in some experimental places we’ve moved to 15. We’re going to see if we can do that everywhere. And the organization will also roll out in the first quarter a new and flatter structure, so that in each department we will accept only three layers, from the departmental head or the process head to the associates. Then on cost-savings, because we’ve had quite huge productivity gains through process optimization this year, we’ve decided the extra capacity we have gained from that means that we can close one of our six sites, so we’re closing the site in China and from February/March next year we’ll only have five sites in Asia instead of six.

Hugo Walkinshaw: So, along the lines of Rodrigo’s comment about consolidation and getting more scale into a smaller number of locations – which is actually helping the span of control.

Erik Moller Nielsen: Yes, and the 700-plus people we have now in Guangzhou will be replaced in our other five centers that have a lower FTE cost and can handle things just as efficiently.

Hugo Walkinshaw: OK. Let’s move on to look at talent and people: what do you see happening with the economic climate in terms of your ability to find and retain the people that you need?

Chen Theng Aik: I think much like any other location that’s popular for shared services, Malaysia is no different in that what happens is, our more experienced guys tend to be poached quite often: that will continue to be a challenge. As we train people up and they get two or three years of good, solid experience, we always run the risk of losing them to new centers that open up and grow quickly and come looking for experienced hires. So that emphasis is always there, to continue either to do a lot of job rotation or increase their scope so they can have their internal career progression without needing to look elsewhere.

The other area is linked to a point I made earlier: we have traditionally been focused on the more standard accounting processes, but now we are moving into the more customer facing side: the billings, the queries, and the collections, so we do need to develop that kind of talent pool that can handle customers, take calls, do credit collections. Those will be my two main areas of focus in terms of talent over the next few months.

Hugo Walkinshaw: That’s really interesting for me, because the initial assumption when you look at this topic is that – given the crisis and the fact that people are losing their jobs around the world – you’d think that maybe there’d be a bigger pool available on the market because, perhaps, university leavers might have less opportunity within industry and we might have more access, and other people might not want to jump ship if they’re with a company that can offer stability given the circumstances that we have now. So my initial reaction was that talent would be a slightly easier problem to deal with.

However, having spoken with a few people, and now having just heard that from Chen, it actually sounds like it’s business as usual: that there are more players coming into the shared services space and actually it’s just going to carry on being a competition for the talent.

Erik Moller Nielsen: There is still competition for talent – but we think we can manage reasonably well here in the Philippines. We see high attrition in India – and that’s not unusual there – but this year we are below our target of 15 per cent in Manila, and we don’t see this as a challenge for the entry-level positions we’re hiring for, even over a two- or three-year horizon. We find that also – given a bit more time – we can hire for the more specialized positions, having just hired a Black Belt candidate and so on. It’s not a major issue – it’s certainly not stopping our expansion, let’s say.

Rodrigo Martins: The focus for us related to people is to retain and to develop. One of my priorities for next year is to put further structure into our career plans: make sure that we heavily promote our folks into GE businesses. Obviously I agree with your point that in crisis situations you tend to have an increased outside talent pool available, but you’ve really got to take care of the people you have in-house first.

Hugo Walkinshaw: You’re right: you’ve got homegrown talent and it’s about trying to keep them, and I think the instability of the current environment is going to influence a few people over the next three to six months, but at some point the recovery will start and it’ll be slow but once people start seeing that recovery and that there are other organizations out there putting shared services in, they’ll be coming for your best people again. So I think there may be a small window of people sitting tight because they’re feeling more secure in any port in the storm, but I don’t think it’ll last very long, and I think that’s where focusing on development and retention will be crucial.

I think the only other observation I had around the talent pool was that there have been some organizations – particularly in financial services – that have effectively disappeared, that have been subsumed into other companies or they’ve just collapsed, and there were a couple of interesting articles coming out of India about outsourcers that have had to close down facilities at fairly short notice because for example you’ve had one bank buying out another and the buying bank already had a facility and didn’t need another one, so you were seeing hundreds or in some cases thousands of people being demobilized, and therefore there was a lot of capacity being released from the outsourcers, if not the shared service centers. I don’t know if any of you with operations in India – or potentially in Manila, which is where a lot of the banks have back-office operations – have seen any of that happening?

Erik Moller Nielsen: We haven’t seen any of that happening yet.

Rodrigo Martins: Well, we have operations in India and in Manila and although I assume that this must be happening, I haven’t heard anything directly.

Hugo Walkinshaw: I think it’ll be interesting to see how the outsourcers handle that, particularly in India; I was talking to some guys from one of the big American banks who recently announced a bunch of lay-offs and they were observing that this was going to have an impact on their outsourcing providers, rather than on their in-house captive centers. I’m thinking in particular about the Lehman Bros, the Merrils, that had facilities that are now obviously going to be affected. Let’s talk a little bit about outsourcing as that leads nicely into that subject. I imagine all of us to some extent, somewhere, somehow are using some kind of third-party outsourced services. I’m interested in two points of view here. One is, how do you see in the short term your strategy around using outsourcers changing, if at all; and the second one is, do you think there’ll be any impact for the outsourcing industry based on what’s happening right now?

Rodrigo Martins: Looking at the outsourcing that we do, the focus is to assess the value of what you are getting for the money that you are paying, taking special consideration to quality, not only cost. Placing higher scrutiny on the services that are being provided and the prices that are being charged by the outsourcing firms: this is what we have been doing all along but I believe that in tough times the scrutiny tends to increase. Also we give a lot of importance to strong partnerships, which in times of hardship are expected to help.

Although this is may not be generally the case for our group, I would suspect that some companies would now prefer more variable capacity, as opposed to fixed capacity, and thus will be looking for opportunities to outsource rather than develop capacity in-house.

Hugo Walkinshaw: My initial response also was to think that people will be wanting to use outsourcing more for exactly that reason. They’ll be saying “right, it’s much easier to make a cost-reduction, so I want to get another 20 per cent cost-down, and I want to make it somebody else’s problem so I’ll give it to a third party because also I get the variability”.

Erik Moller Nielsen: We’re not working with a hybrid model of outsourcing any further; the third-party outsourcing is done straight from our business units – but I’m sure that the current climate we’re facing now will lead to an acceleration of that. Usually we get a chance to bid for it, but sometimes it’s just going straight to a third party. I know third-party providers are knocking on the door of head office! We have an interesting benchmarking exercise ongoing at the moment, and we’ll get the results soon, where we’ve been benchmarking three of our centers against third-party BPO providers to make sure that we’re not off-line, and that we’re competitive on services and cost-levels.

Chen Theng Aik: I think my situation is quite similar to Erik’s in that we’re mostly captive; once in a while from the business there is the opportunity to try some outsourcing.

Hugo Walkinshaw: I have another thought on outsourcing which you can take away, which is: I’ve always been interested in some of the outsourcers – particularly the larger ones – regarding their funding model, in terms of how they actually manage to take on some of the contracts. They sign the deal and then go through a period of anything from six to eighteen months in transition, and very often their fee-income doesn’t start until they go live, so they actually have to fund a large amount of the design and implementation – and I’m interested as to whether those outsourcers still have access to the same amount of funding and credit that they used to considering the worries of the banking industry. Are the deep pockets going to continue to support this kind of funding model?

But let’s move on: finally, in terms of the here-and-now, what are the things that shared services leaders should be looking out for in terms of quick wins, and immediate priorities? What are the two or three areas to watch out for, for the other shared services leaders out there?

Chen Theng Aik: I think it’s all about getting to the next level and not being complacent and saying things like “yeah, we run a pretty good show, with a pretty good cost-base, and we don’t do anything else”. I think all the things that we’ve said here today need to be taken up to the next level of intensity in terms of cost-downs, in terms of business process improvements, in terms of increasing span of control: I think it all has to be all-guns-firing on all those points. At times like these no-one can afford to stand still.

Erik Moller Nielsen: I’m not sure about quick wins, but I think key focus areas right now would be to maintain a truly low-cost operation, to keep the third-party outsourcers at bay; and secondly to keep your key talent that you have – without that, it’s very hard to run the process and optimize it. And you need to keep maximum agility, whether it’s shrinking the organization, or increasing rapidly: I think to stay nimble is the key right now.

Hugo Walkinshaw: I think again I can see those thoughts being at the forefront of almost every business unit’s mind, and the interesting thing for me is that from a shared services perspective we’re probably the nimblest part of the business. Our day-to-day trade is being nimble, being a service provider, and it’s a challenge we wrestle with in all business environments, so I feel actually that shared services is better suited to this kind of environment than almost any other part of the business.

Rodrigo Martins: I fully agree with you. And I would add to that: remember why you exist in the first place… Just because we’re in the middle of an economic crisis now, there’s no need to reinvent everything. Remember why you exist and keep focused – of course, be aware of what’s going on with the crisis, but don’t get distracted by it. Focus on the day-to-day execution of your goals; and manage what is in your control.

Hugo Walkinshaw: I think it’s actually a tremendous opportunity. I know it’s difficult at the moment to see too many bright lights and rosy pictures, but actually almost all SSCs must be feeling a lot more empowered; there’s a lot more focus on people turning to them for help with the business, there’s expansion of scope, there’s new opportunity: the only situation I can see where it’d be a problem being in shared services is if you’re in a place where your organization actually completely fails, and then frankly you’re in real trouble. But I would say it looks like you’re in a massive high if you’re in a shared service center as long as your organization’s still going. We had a bit of a discussion internally around this and we think it’s a good place to be right now. It’s time to shine.

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