Franklin Resources expanding in India

BOSTON — Franklin Resources Inc., the nation’s fourth-largest mutual fund company, boosted its head count by 229 workers last quarter, with more than 90% of that growth coming from India, where it opened a new facility last month. Franklin, which opened its first office in India in 1996, opened a 380,000-square-foot facility in Hyderabad on Jan. 23. The facility, which includes a gym, cafeteria and recreation area, cost more than $40 million to build. The facility will serve mainly as a support center for Franklin’s operations and technology groups around the globe. It now has nearly 1,100 workers and can accommodate up to 1,800. It also has room for expansion. Workers in India now account for about 15% of Franklin’s head count worldwide. The San Mateo, Calif.-based company has offices in 29 countries and customers in 167. “As the business grows, what we’re looking to do is to fund our growth in a scalable way in low-cost centers like India,” Ken Lewis, Franklin’s chief financial officer, said during a recent call with analysts after the company released its first-fiscal-quarter 2007 results. Franklin chief executive Greg Johnson, who was in Hyderabad for the opening, said during the call that while the company isn’t doing any direct phone service at the site, “just about every other type of operation that can go there — accounting, legal, technology — everything today is represented there.” Franklin isn’t alone Franklin, whose brand name is Franklin Templeton Investments, isn’t the only U.S. fund company with a presence in India, which is the world’s second-most populated country after China. Boston-based Fidelity Investments, for example, employs more than 4,500 workers in India, according to spokesman Vin Loporchio. That works out to about 11% of its worldwide work force of more than 40,000. Fidelity’s employees in India perform mainly back-office business processing and information technology work, Mr. Loporchio said. The Hyderabad operations, formally known as Franklin Templeton International Services (India) Private Ltd., is one of two business units that Franklin has in India. It also has a Mumbai-based asset management company, Franklin Templeton Asset Management (India) Private Ltd., which manages mutual funds. Vijay Advani, executive vice president of global adviser services at Franklin, went to India in 1995 and helped set up a joint venture there in 1996, according to Jennifer Bolt, Franklin’s executive vice president of operations and technology. Franklin has since acquired all of the joint venture, she said. The vast majority of the $5.3 billion in assets that Franklin manages for Indian investors is in mutual funds. That represents about 7% of the roughly $73 billion Indian mutual fund industry. Franklin also recently secured two locally managed Indian-equity mandates from some U.S. endowment funds, Mr. Johnson said during the call. Although he didn’t identify them, the chief executive said they were “very prestigious institutions.” In addition to a plentiful supply of college-educated workers, India offers Franklin something else: A foothold in a market that has strong growth potential, said Ms. Bolt, who also attended the Hyderabad opening. “In places like India, China, Brazil, these developing countries are maturing with their economies, [and] a middle class is being created,” she said. “And we still generally believe that there is no better investment vehicle than a mutual fund.” Still, getting those people — many of whom have never invested in the stock market — interested in mutual funds takes effort, Ms. Bolt said. That is one reason the company set up its Franklin Templeton Learning Academy, a training program for financial advisers begun in Asia in 2005, she said. “The level of education that’s required just to get people comfortable with letting you manage their money is a huge investment upfront,” Ms. Bolt said. “It takes years.” Although some may lament what they see as U.S. jobs going abroad, Ms. Bolt said Franklin has a duty to provide the best possible service to its clients at the best possible prices. “The good news is that companies like Franklin are able to scale by leveraging global resources in a way that we wouldn’t have been able to do in the past,” she said. “Frankly, what is offshore when you’re a global company?” Ms. Bolt asked. “There is no such thing.” As a global manager, Franklin also has a responsibility to ensure business continuity, and the Hyderabad facility helps in that regard, Ms. Bolt said. Over the past decade, Franklin has endured the 1989 San Francisco-area earthquake and the Sept. 11, 2001, terrorist attacks on the World Trade Center, in which it lost 87 employees. “You’ve got to be able to move work anywhere to get the job done,” Ms. Bolt said. Kathie O’Donnell can be reached at kodonnell@crain.com.