Russell Investments has dramatically reversed its 2006 decision to outsource administration of its 220,000 super member accounts to IBM.
Russell will re-employ 70 of the 199 positions it outsourced to IBM shortly after purchasing Towers Perrin’s asset consulting and administration businesses in Australia in 2004.
The 70 directly-employed staff will be drawn out of the Australian Member Administration Centre of which IBM had assumed operation from Russell. Based in new premises on the top three floors of 135 King Street, Sydney, they will perform customer-facing tasks, such as manning the member contact centre, group life insurance and claims processing, employer client servicing and project management of process changes.
Meanwhile, backoffice functions such as benefit calculation and website design coding will progressively be taken back from IBM, to one of three India-based providers with which Russell globally already has a relationship. Russell’s director of product and consulting services for Australasia, Siva Sivakumaran, said two outsourcing firms had been shortlisted, and he expected the headcount involved to be similiar to the 70 being directly employed in Australia.
Russell’s managing director of superannuation, Steve Schubert, said the Australian industry was clearly moving to a greater role for intra-fund advice, such that the 25 people currently providing it through Russell’s own Member Connect call centre were insufficient.
“We are able to do some of what we want to do, such as recently we were able to call our master trust members who we detected were in danger of surpassing the contribution cap limits. But with the economies of a larger team, we’ll be able to do much more,” Schubert said, noting that the numbers of those providing intra-fund advice would need to “double or triple” once new regulations around it were in place.
However he said greater member engagement came at a cost – a focus of the Cooper Review – and the move of backoffice functions from Australia to India was aimed at reducing overall costs, so that the investment back into the member services program could be increased.
IBM could not be reached for comment yesterday, although it’s thought the loss of Russell will severely reduce the scale of its super admin business in Australia. The other major client of that business is Watson Wyatt, whose comparatively modest book of 41 corporate funds and 66,000 members was shifted to IBM from the now-defunct Citistreet in January 2008.