Anyone close to business services over the last decade would have crossed paths with one little guy with a huge brain: Genpact’s Shantanu Ghosh. While everyone is familiar with Genpact’s current CEO NV “Tiger” Tyagarajan, and retired former CEO, Pramod Bhasin, Shantanu has frequently been the guy cobbling together the internal teams and the solutions to make it all happen.
I have had many conversations with Shantanu over the years and each time I have come away inspired by someone who is so intimately involved with so many clients and issues in the process delivery industry – he really lives and breathes this stuff.
So when we had the chance to hear his inner-most thoughts on the future drection of the services business, we couldn’t resist sharing them with you…
Phil Fersht (HfS): Shantanu, you’ve been one of the brains behind Genpact’s rise to the pinnacle of the BPO industry in the last few years. Please tell us a little about your background and how you got into this business. Did you always want to be a process guy?
Shantanu Ghosh (Genpact): Thank you very much for saying that Genpact has reached some stage in the BPO business. My background is that of a functional finance expert. I spent my early years in accounting at Pricewaterhouse, then a decade with Unilever in various functional finance roles. Then I spent five years with GE, first at the business level and then at the corporate country level as the CFO. I had reached a stage in my career where I had done the whole functional side of the game, and I wanted really to drive a business. Genpact at that time was just contemplating becoming an independent commercial BPO organization, and moving to the company has provided a huge opportunity for me to come and grow the finance and accounting service line as a general manager. My belief was that in early 2005 the BPO industry was at the cusp of a breakthrough and I wanted to be part of the action. Also Genpact provided an unique opportunity for paid entrepreneur ism.
Phil: You talk a lot about performance enhancement at the enterprise process level, and it sounds very impressive. But what do you really mean, and is it something realistic to which many of today’s businesses can aspire?
Shantanu: Phil, our fundamental belief is that that all enterprises are basically a conglomeration of different value creation processes. Source to pay, record to report and order to cash, the supply chain processes, customer acquisition, the claims process in insurance, etc.
I think the way businesses compete are on the strength of their products and the strength of their operating performance. And operating performance is a direct function of how well those end-to-end processes run. There is a lot of empirical proof on that area. I do think performance enhancement at the enterprise process level is something realistic to which businesses can aspire to. If you look at moves toward global business services for back-room processes, if you look at what people have done with manufacturing processes…clearly there is an increasing awareness, understanding and intent to drive process performance to a level where it becomes a competitive differentiator.
Phil: The operational challenge behind finding these new thresholds of performance, about shifting the corporate mindset from one of cost to one of value, is something a lot companies claim is their biggest challenge today. How do you think clients can learn from past experiences and start to offer best practices to others?
Shantanu: The performance of different enterprises in this area varies significantly. It’s obviously far easier to focus on cost, and much tougher to focus on the other dimension of performance which is value or effectiveness.
In terms of best practices, a value-driven model needs three primary things. First, the tone must be set at the top. Value is often driven between different functional silos across the value chain, and it’s very hard to achieve that with a bottom-up traditonal budgeting approach. Second, you need to create an empowered organization that can look at driving value across end-to-end enterprise processes … As evident by the increasing trend of Global Business service groups. Many organisations have tried to do this in their existing federated, siloed organizational model, and that obviously produces muted or mixed results. Third, value creation is not one shot process, it is a long-term, multi-year journey that includes being able to understand where one’s performance is, being able to objectively compare it and benchmark it against others, being able to create a roadmap consistent with organisational constraints of money and leadership bandwidth and change appetite, and then having the tenacity to walk on that roadmap.
Phil: Can you give us some examples of failures?
Shantanu: Many of the failures are when there has been a one-dimensional view of how can I get the most efficient, both in terms of cost as well as maybe cycle time and all, without actually being clear on the desired business value or business impact.
A classic simple example on this is in the collections or order to cash area. If you only optimize on the dimension of cost, you will try to maximum the number of accounts one particular agent can call in a given time frame and the minimise the time needed on each call. Whereas, if you optimize on the option of value, then suddenly you will think about what kind of analytics and technology you can use to try and figure out who to call, when to call, how you take the analytics upstream to ensure you are not on-boarding customers with credit limits issues, or fixing the billing process to eliminate the need for a lot of calls etc. It completely changes the game of how much outstanding debt you have, or how much you have to write off in bad debts and those benefits are order of magnitude higher than just cost. The second most common reason for failure is to underestimate the change management issues… Organisational habits are tough to break and all standardisation and optimisation initially looks like an impediment to flexibility and reduced control for frontline and operating people in the businesses.
Phil: Our research shows that change management is topping enterprises’ agenda in 2013. Why do you think this is? Why do you think so many want to change, but they struggling to put together programs to help themselves? What works or doesn’t work for clients, when we get into these change issues?
Shantanu: I’ll tackle these very interesting questions at two levels, First, why change management tops companies’ agendas today is that they are more looking to drive value rather than only plain vanilla cost reduction. And driving value means cutting through traditional company hierarchies, cutting though traditional organizational models of functional silos. That’s a big change. That’s not the way people are used to working. So the first fundamental barrier to making change happen is the fact that it goes against how people have worked for many years, many decades. The second piece is that driving change requires a burning platform. Many failures we’ve seen are due to the fact that the organization and the leadership team have not been able to either acknowledge or articulate a burning platform for the troops to rally around. Change is always painful. Change means you have to learn new things, you have to do things differently, you have to let go of people, you have to change your ways of working…none of it is easy. And for people to go through that process, you need to believe in something bigger, something better; you need to have a vision that fires you up.
Phil: So… what’s next for Genpact? You’ve made the Winners Circle now – you are one of the big, glitzy, top-tier providers in this space. Are you ready to declare victory and rest on your laurels, or are we going to witness a whole new impetus and focus on where your firm wants to go next?
Shantanu: Phil, we believe that we are just at the start of our journey. We are a small company, just about $2 billion in revenue. We’ve been in the commercial space for less than a decade. We’re in a market and in an industry that is hugely under-penetrated. We have a fundamental belief that this industry will double, triple, quadruple in size over the next few years. We feel very privileged to have had some role in defining the way the industry works, and that we can continue to drive that definition.
There are two aspects we feel very deeply about. One is helping our clients succeed by competing through smarter processes. So, everything we do is focused on how our customers create competitive advantage through the power of their operating model in the marketplace. The second thing we believe is that the market and the industry have really started shifting fundamentally from a pure cost equation to a cost plus value equation. It would be naive to think that the shift has happened significantly. But there is enough evidence for us to be very encouraged that the shift is happening and it’s really one way…it’s not going to change. And we believe we are uniquely positioned to both drive and benefit from that particular shift.
Phil: So the final question… you are awarded $10 million. What will you be doing in six months time?
Shantanu: Well, I’ve had a fabulous eight years in Genpact, but it’s been very busy, so if you give me $10 million, I’ll possibly be on a very expensive long holiday. But seriously…if I had $10 million to invest, there are so many areas of competency that we could invest in to benefit our business and customers. Whether it’s in the Analytics space, or in the regulatory compliance space, given the changes that are happening or twenty other such interesting areas; if I had $10m to experiment with, I would put that into our new products innovation funding in a couple of those areas.
Phil: Hmmmm…. good answer Thanks for your time today with our readers, Shantanu. It’s been quite a journey for both you and Genpact and we’ll love to hear more from you further down the road.
Shantanu Ghost (pictured) is Senior Vice President and Global Head, Enterprise Services, Solutions, Transitions and Lean Six Sigma. You can view his full bio here.