Without further ado, let's dive back into our discussion with Genpact's President and CEO Pramod Bhasin, who graciously abandoned his golfing buddies to spend time with us. In Part I, we talked about how Genpact survived the Recession; in Part II we delve into how Genpact is striving to retain a unique identity in the industry as a pureplay BPO provider, in the face of increasing competition and the convergence of Cloud, SaaS and BPO delivery models....
Phil Fersht: Pramod, there is a concerted drive from the service provider community, particularly those with an IT services heritage, to diversify into BPO by pushing "productized solutions", whereby you have the IT componentry underpinning the BPO. My view is that BPO is critical for these offerings, providing the "personalization" that can mould them effectively into client scenarios. Is Genpact pursuing a similar "product" strategy, or do you have a different angle here?
Pramod Bhasin:You and I are in exactly the same spot on this one. IT companies are going into our industry and I am convinced that it is more because of their ability to access customers than it is with "convergence of BPO and ITO". I am pretty sure about that. Why do I say this? If you look into how companies are running their business process areas, they are running them very separately. It is not that they are running them to get any great traction, which is where you might say there is real convergence between the two at a meeting point across the board. Of course, there are areas, which have meeting points. There are areas like healthcare claims and insurance platforms where you can process a lot of transactions. There are the HR and payrolls platforms that one can use. So, yes, you can have this kind of convergence.
But I think that the vast amount of movement that we do on the process side is very, very different from the IT side. I think that is obvious when you look at the skill levels, and how these people need to be managed. I also think, Phil, that much of it will be left up to the technology companies because there are more of them. Ninety, ninety five percent of the companies in our space are technology companies. So, of course, they are going to say, “That it fits right in with what we do.”
I do think though - and it doesn’t happen enough - but is happening more and more, that there is increasing recognition by companies that managing business processes is still too much of an art. I think that there is increasing recognition also, and it always been there, that people say "if we automate, we’ll eliminate and that’s the only cure". Whereas, now there is a greater recognition that there are many capital light, efficient solutions for making business processes much more effective and efficient. Those need to be pursued vigorously.
Most companies can’t tell you how good or bad their business processes are. And yet, their health depends upon it. How much money they make depends on it. How they make their money depends on it. This is an astonishing statement in a world where companies have existed for centuries with business schools and everything else. Yet every company tends to be willing to find a simpler process for accounts payable all by itself, that is brand new in their own way. Everyone reinvents the wheel a thousand times. If you ask someone at a C-level how good of a value processes are, they can never give you a quantifiable answer. All they can give you is “good”, “somewhat good”, “not good enough”, “could be better”. That is really a killer switch for a company. Surely, all of us need to know, “I have process XYZ and how well it is doing, what it is expected to do. Is it 50 percent, 80 percent, 90 percent, how well is it doing? That is the real weird thinking of the world.
We want to build a science and it is a real unique opportunity. We then erect a form firmly in the middle of that space that we think is a large vacuum in the world and we want to be among the best, if not the best in the world at managing and improving business processes. This includes analytics, technology tools, enablers, platforms, call it what you want for processes and expertise. That is what fundamentally companies want. Point solutions are over for them. If not, I hope that it will be. They are saying, “I may put a technology tool in here but leaking on the other end of the system is destroying any benefit that I get.”
Phil Fersht: How can customers achieve process innovation with BPO?
Pramod Bhasin: As long as we can do it at the right level, we see enormous recognition of what we are trying to do, in terms of innovation. They may say, "We are not ready yet, we are trying to solve far too much right now, this is too slow in coming", (lots of things like that), but the fact is, that all of them recognize and say, “This is what I need. I have no means of assessing how well or badly my processes are running. Maybe you can give me something that allows me to do that. This is the only way that I can anyway.”
The point that we make to them is that good work versus average work is not 15 percent. It is five times that. That is the amazing part about this. It is like what they talk about in cloud computing. The benefit of cloud computing is not incremental savings. Maybe there is an analytic solution, but unless you can look at it end-to -end, and we can help, then we are missing the boat.
I use simple examples. One person processes 4,000 invoices per month for the UK subsidiary of a pharmaceutical company. We make it to 6,000 and everybody is delighted and say how wonderful and what a great job, except if you look at the same company in the US, they process 20,000 a month. The difference is huge and that is because nobody looked at how good their processes truly are.
Phil Fersht: We're seeing the very first seeds of companies looking at integrating delivery components like SaaS, Cloud and BPO to create new levels of cost arbitrage and efficiences. How is Genpact approaching this?
Pramod Bhasin: It is a fascinating area, everybody is shooting at it, everybody is trying to sail it out. I don’t know how many are trying to get it out - or will. We will find out that answer anyway and I hope that many of us will be successful. We are doing the metrics to align the arrangement to work off of the cloud with the ERP platform. As an example, we just signed an alliance with Netsuite, for example, to do exactly this. We think that we can take this platform, wrapped with our BPO offerings, to our clients. I think that we have a better chance of doing that than the technology companies, because we understand processes much more than they do. At the end of the day, the platform is going to be the common factor that will be provided by companies that make platforms really well.
And so, on the ability to wrap finance and accounting, HR support, payroll, back office, in a box: we are already doing this an aggregator in some recent deals. In India, for example, we have become an aggregator of Cloud Computing power by building the F & A, the contract and process management with the company and its various other suppliers, for its entire IT infrastructure delivery.
On top of that we are building HR systems now to deliver HR off a platform, off the cloud, getting increasingly into gain-sharing. We are really coming out and asking "how much of a slice can we take". That is the amazing part. Companies will look at that and, in fact, to your point on the relentless economy, they like it because they don’t have to pay me unless I deliver something. So, this whole wrap-around of Cloud with software applications, combined with BPO offerings, will continue.
The Betting's open as to who wins, we feel very comfortable that knowing business processes as well as we do, that we can do a lot. Now, IT companies are stepping in fast. They say that, "Look, we bring in the Cloud, all of the technology capabtilties, and now we have enough business process capabilities also". But they are different skills. So, I worry that people who try too much integration manage to get themselves blown up in small pieces all over the place. Where will it strike first? Maybe to small-to-medium scale enterprises, so one of the experiments that we are going to get into is how do we tackle the SMEs."
In the final part of this interview, we ask Pramod about consulting, the future of labor arbitrage, and his advice for budding sourcing execs today... stay tuned