Company Description: Genpact is a leading global provider of business process outsourcing (BPO) services and Information Technology (IT) services, with a strong focus on the finance and accounting, supply chain management, and infrastructure services segments. BPO represents about 75% of revenue, ITO about 25%.
CEO Interview: “Tiger” Tyagarajan, CEO of Genpact Ltd.
How important is the need for vertical (end market) knowledge in the capture and execution of BPO work? Has this capability grown in importance for your outsourcing clients? Has it expanded the market opportunity? Has it led to increased differentiation among BPO providers?
It is important to build horizontal capabilities, for example, G&A processes such as finance and accounting (F&A) and procurement, however, vertical industry focus is also important as we drive deeper relationships with clients.
Vertical and domain expertise continues to be a core element of our growth strategy which drives differentiation and deeper relationships. We will continue to invest and build targeted vertical industry and horizontal domain expertise. We have identified key growth industry verticals such as CPG, retail, pharma, healthcare, manufacturing, capital markets, insurance, banking and financial services. Each of these verticals will be run by an experienced business leader who will own it from front end sales all the way through to service delivery. A lot of the work we continue to do is industry-specific, for example, core banking and insurance operations, spare parts and warranty management for manufacturing companies and patient-level data analysis for life sciences companies, among many others.
Clients value insights and experience in their specific industries and their competitive environment, an intimate knowledge of their business models, and deep domain expertise in the context of their industries, for example, in finance and accounting, reengineering, analytics or risk management.
We also leverage this unique combination of vertical and deep horizontal process knowledge.
Depending on the specific G&A process and industry, 60–90% can be common and gives us cutting-edge expertise, which itself is a huge advantage. It enables best practices to be leveraged across industries, such as applying practices in collections from BFS to manufacturing and CPG, since many companies tend to get confined to operating models, mindsets and benchmarks from within their own industry.
Having our teams vertically focused has expanded relationships. As an example, our three-year contract extension earlier this year with global CPG leader, Kimberly-Clark, for comprehensive finance and accounting services, and high-end analytics. We will continue to help Kimberly-Clark increase the efficiency and effectiveness of its F&A operations. Based on our CPG industry experience, Genpact will also be partnering with Kimberly-Clark to develop a comprehensive analytics solution for trade promotions, a key element of sales and marketing efforts for CPG companies.
Do you see commoditization, and therefore pricing pressure, for traditional finance & accounting (F&A) arrangements?
F&A is a broad category from transactional offerings for processes such as accounts payable to very high-end services for processes such as general ledger, tax accounting, financial planning and analysis and closing the books for companies. While you may have commoditization of transactional efficiency what differentiates us is the ability to take an end-to-end view and drive business outcomes as well as higher value add services. For example even in transactional processes like A/P if you look at the end-to-end view of the entire Source-to-Pay process you can drive significant value by reducing total overall spend—this cannot be commoditized. No we do not see pricing pressure in F&A.
Do you see an increased acceptance of outsourcing in continental Europe? Is the opportunity there still constrained by issues around data privacy and job security rules?
Europe as a geography continues to perform well for us. This is due to more acceptance from the market but also for us due to the strategic decision to invest in the front-end business development and relationship management teams back in 2009. Also, we do not have much exposure to the BFSI sector in Europe, where the concern for the data privacy is probably the highest. Although within BFSI, concerns are limited when a service provider has European delivery. We do not see data privacy being a major challenge for non-BFSI sectors.
Job security has always been a big issue in Europe. However some countries particularly in western Europe are beginning to lead the way towards change.
Do you see “cloud”-based solutions meaningfully changing (threatening) the BPO model for the larger enterprise clients? If so, how long before this impact has a notable impact on demand? Or, is “cloud” a new tool that can be used to drive incremental growth for Genpact? What are the opportunities and challenges of “platform”-based offerings for Genpact and how big an opportunity could they represent over time?
The fundamental premise of the cloud and offerings business process as a service are that processes are reasonably standardized. As we all know processes across divisions, countries and companies are far from standardized.
As cloud becomes more pervasive, it becomes a focal point that drives the standardization agenda.
However, it will still require major change management, managing exceptions, redesigning processes, all of which are services and solutions that Genpact is well known for.
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What we are finding is cloud-based offerings to be more easily adopted by:
› Emerging market enterprises that are growing rapidly—therefore do not worry about legacy systems and are willing to go toward standardized processes from the beginning.
› Large global companies that have made the decision to enter new markets (products and geographies) by setting up an entire division with many processes being designed straight on the cloud.
› Point solutions that have cloud-based standalone offerings like T&E, and Talent Management.
In all these cases Genpact becomes a service provider of services wrapped around the cloud with the process expertise, business domain knowledge and the ability to build insights from data being used from a common cloud platform.
How large is the opportunity for analytics/big data? Can it be used to drive “downstream” work?
Or, is it just a high-growth, stand-alone opportunity?
Technology advances and proliferation, including social media and cloud computing, have enabled clients to easily collect, store and access large volumes of data about their customers, end users, operations, competitors and suppliers. This explosion in so-called “big data” has produced greater demand for insights. Smart Decision Services combines insights drawn from the data with our in-depth understanding of business processes and outcomes in areas such as sales and marketing effectiveness, risk management and reporting, and supply chain effectiveness. The intelligence we provide is exactly what clients are looking for today, as they face an environment where they must drive top-line growth and profitability without adding costs. Sharply defined Smart Decision Services engagements in analytics, reengineering and risk management that deliver fast payback and specific outcomes for our clients being a gateway to enter into a new relationship. These often lead to more activity and dialogue on other long-term annuity engagements.
At the same time in the longer term, annuity engagements where we run different processes for clients highlights our ability to build insights from the data we are processing. This allows for higher value being delivered for the client and deepens the relationship.
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Nicole Black[email protected] 704/715-7382
Marci Ryvicker, CFA, CPA
[email protected] 212/214-5010
Bishop Cheen
[email protected] 704/383-0473