Monday, January 31 2005 13:20 Hrs (IST) - World Time -

Chennai: Chennai-based Congruent Solutions Private Ltd has become the first overseas company to provide back-end services to a retirement funds consulting firm in the United States.

Congruent has tied-up with California-based employee benefits consulting firm Associates in Excellence to provide back-end services including processing works for the 401 k plan, a popular retirement plan in the US, from Chennai, Bala J Raman, Co-founder and President of Congruent Solutions said in Chennai.

Congruent has also developed a web-based self-service platform for Associates in Excellence, which would allow several US companies and its employees to join the benefits schemes or track their investment portfolio on the Internet platform, he said.

For the last many years, US retirement funds companies have been looking to India for their back office functions, but were hesitant to part with sensitive financial information. "We are the first company outside the US to sign a contract for outsourcing processing works for a retirement benefits company in the US," Raman said.

It is estimated that 1.5-2 lakh people work in the US in the technical compliance area in the 401 k industry. The salary cost for these employees is in excess of $ 6 billion every year. "Our estimate is that around 10 per cent of these jobs will be outsourced in the next five years, translating to 15,000 jobs in India," said Bob Thurlow, President, Associates in Excellence.

Indian companies need to provide 100 per cent accuracy when it comes to pension fund process.

Raman said to ensure the accuracy, six employees of Congruent has passed the certification exams conducted by Chicago-based National Institute of Pension Administrators (NIPA). "This was the first time that NIPA held its certification exams outside the US," he said.

With more and more US retirement funds consulting firms expected to outsource the back-end works to India to cut costs, Congruent will have the "first mover advantage", Raman said.

Congruent Solutions has also established an US subsidiary to address the growing potential in the US market.

Currently, Congruent employs over 80 people and the headcount will be ramped up in the coming months, in line with the increased business.

"By outsourcing productions to India, corporations are lowering costs for consumers, keeping inflation low. This raises corporate returns on capital and boosts share prices. Naturally, those who have taken the 401 k plan will stand to gain," he said.

"We are in the final phases of developing our strategy for luxury coach segment," Huber said. "By the end of the year, we will be a two-business unit company, I do hope, -- Mercedes-Benz business and commercial vehicles business."

In a response, he said that a feasibility study carried out by the company suggested that the impending foray would definitely be viable in the medium term.

Despite the company's performance in India in 2004 being higher than it had originally expected, Daimler Chrysler said that the growth is unlikely to be sustained and added that it is keen to tread a steady path.

"We won't see that (growth seen in 2004) each and every year. If we maintain growth in volume and turnover in the 10-15 per cent region, I would be more than happy", Huber said.

The company's basic strategy is to have profitable, stable growth, strengthen the organisation, and increase the quality of processes.

"If you add 50 per cent to your volumes, it puts pressure on headquarters and also on dealer network", he pointed out. "We also have to maintain our growth in quality of operations."

Daimler Chrysler has an assembly plant in Pune and it sources parts from overseas, including its headquarters at Stuttgart, and also from suppliers within India. It has a global procurement center at Pune and an R & D center in Bangalore.

The company exported hardware components and engineering services worth $ 100 million from India in the year 2004 and Huber estimated that the growth in the current year would be in the region of 10-20 per cent.

"Mid-term prospects are even higher," Huber said. "There is much to grow to it. In the next 5-10 years, there would be a tremendous growth in that figure."

The company's top management back home in Germany believes that passenger car and commercial vehicles market in India would see tremendous growth in the next 5-10 years.

Huber said that the company expects that producing and selling passenger cars in India, commercial vehicles for India and sourcing from India for global operations would see tremendous growth in the medium term.