Presented by

Swatanu Mohan SatpathyAnirudh PundirBharathi Venkit Sharma

Agenda

Company Background

Why India?

The BPO Industry

Firm level considerations

Vendor client relationship

Potential landmines

Issues for Genpact

Company Background

Parent company – General Electric

Priorly – General Electric Capital International Services

GECIS set up in 1997 as fully owned subsidiary of GE

July 2004 – GE divested 60% stake to 2 PE players

September 2005 – renamed ‘GENPACT’

First CEO – Pramod Bhasin

Headquartered at Gurgaon, NCR

Currently the largest BPO with over 100,000 employees

Liberalization in 1991

Large technically skilled workforce

3,000,000 English literate university graduates/year

Labor arbitrage

GDP growth of 7% - one of the best

Closing time in US = Opening time in India

provided business cyclicity

Why India?

Per hour cost

Software developer $60 $6

Data entry agent $20 $2

Why India?

$2bn by 2000

70:70:70 rule

2,000,000,000

1997 1998 1999 2000

70% non-core work outsourced

70% completed at off shore

development center

70% sent to India

Why India?

GE outsourced $10mn projects to TCS, Infosys in 1994

Costs doubled in 3 years, so set up GECIS

Started with 20 employees, 14 telephone lines

First project “WHITE MAIL”

Handled GE insurance queries

GE US backend was Indian front end

By 2004, handled all businesses backend

Finance, Insurance, Enterprise apps, SCM, IT infra

Revenues – US$429mn, Employees – 15000+

700+ processes handled globally

The BPO Industry

Farming out the responsibility to another party which would otherwise have been performed internally

Outsourcing – Full transfer of responsibility to third party

Off shoring – Transfer only the functioning, but retaining control

BPO sector mainly of manufacturing, services

Global size in 2000 - $119bn

Outsourcing contributors

North America 59%

Europe 27%

Asia – Pacific 24%

The BPO Industry

Evolution of BPO industry in 4 stages

Phase I

- Recruits sent abroad to execute end to end projects at clients site

- Billing in US$, Indian companies made huge amount of money

- Indian engineers very happy

Phase II

- Activities disaggregated

off shore( programming and coding)

on shore( stabilization, optimization)

- Off shore costs cheaper as salaries in Indian Rupees

The BPO Industry

Evolution of BPO industry in 4 stages

Phase III

- Setting up of captive facilities i.e. low cost offshore units

- Functioning moved from s/w to transaction activities (Biz. Process)

- More cost saving for parent companies

Phase IV

- Global expansion – units set up all across the globe

- Certain locations were centre of excellence in a particular field

- Clients projects broken down into segments and each handled by

that particular center of excellence

The BPO Industry

Why was it so important inspite of

job losses for the home country ?

Globalization – cross border trade and investments pre-requisite

for economic growth

Development of service sector – Services as means of

income was not looked upon so widely

as it began to be seen now

Firm level Considerations

Cost reduction – outsource standardized process

e.g. Reconciliation of bank statements

Efficiency improvement – the way process is carried out

e.g. Introduction of new technologies for HR

process alignment to firm’s strategy

- required sharing and openness between firm and BPO

- build credibility on both sides

Process transformation – altering business processes,

creation of new revenue streams, strategic collaboration e.g. harvesting hidden sources of value in a Supply Chain

Firm level Considerations

Michael Corning, Senior VP, Global Client Development says

BPO made economic sense : save 30 – 50% op cost

BPO improved productivity : Six sigma, 3 – 8% improvement

BPO improved process excellence : less competitive

processes were outsourced by firms to BPOs

Spirit of partnership : Flexibility achieved

Vendor Client Relationship

“Sticky” : sensitive and confidential client processes

Regular reinforcements of mutual interests

Monty Singh, Senior VP, Lean Six Sigma and transitions says

“ Comfort level with the partner is a bigger driver ”

Potential Landmines

Client Acquisition

Sales pitch in response to a client or vendor’s own

Determine the scope and nature required services

Negotiation of Master Service Agreement(MSA)

Statements of Works(SOW)

Commencement of work and ramping up scale

Potential Landmines

Vendor Selection

- Location Risk : Currency, Regulations

- Migration Risk : Interruptions in mission-critical tasks

- Operations Risk : Variance in time, cost and quality

- Capability Risk : Risk in scaling up

- Strategic Risk : Legal requirements in case of breakdown

- Client Expectations : Customer experience management

Potential Landmines

Attributes considered by potential clients while considering a collaborator

- Process excellence

- Global delivery

- Analytical approach

- IT expertise

- Domain expertise

- Stable workforce

- Scale

Potential Landmines

The 5 P’s

- Privacy : tax issues, privacy issues

- Pricing : full time equivalent(FTE), based on time/material

- Product : accounting, operations, decision support

- Performance : business related metrics, service related metrics

- Protection : deal integrity/corporate governance, data integrity

Issues for Genpact

Client acquisition once it was free from GE

Loss of employees = transfer of knowledge base

Stability of operations

Shift from captive to independent service provider

How to come out with IPO in NYSE?

Quality functional deployment(QFD) – prioritize industries and sectors as per divisions and segments

Genpact Virtual Captive – special force dedicated for individual clients, specially trained personnel

Thank You