During Part II of our interview with Genpact’s CEO NV “Tiger” Tyagarajan, we talked about the shape and pace of change we expect to see in the sourcing industry:
It’s completely dependent upon leadership and the leadership’s ability to drive change. It’s about the confidence they have, the risk they want to take and what they have at stake.
NV “Tiger” Tyagarajan, President and CEO of Genpact, October 2012
In Part III, we ask Tiger his views of the "57%", the percentage of enterprise customers who feel their provider does not understand their business. So back to the discussion...
Phil Fersht (CEO, HfS Research): Tiger, we recently published data that showed 57 percent of buyers today feel their provider and their staff don’t understand their business. What we really need to understand is what percentage of buyers actually care whether they provider understands their business or not.
How important is this? Do you look at a client and think, “They will be wildly profitable for us” or do you prefer to think, “We can grow with them - they have a real vision for their future and they want to take us on that journey.”
NV “Tiger” Tyagarajan (CEO, Genpact): Phil, we've been debating this question over the last 24 months. This question becomes incredibly important as you grow bigger. In 2005 the BPO industry was nascent. When we came out of the blocks no one knew us. Then they looked at us and saw we were different, so they decided to try us. People took the risk; we had good success and we got known. But we grabbed everything that came our way because we were small.
We learned through that process. We saw what worked in terms of growth and value creation for the client. In one of our early engagements we did help desk work for a large global corporation on consumer technology products they sold. Very quickly we realized what they really wanted was how many cents per call; how many cents per minute. That’s all they cared about.
We explained to them their value proposition should be different. They should create customer satisfaction; that is a big wow! The goal should be to get the customer back to buy more products. We had enough examples to show them this could create value. But they wouldn't budge. All they cared about was “finish the call fast so we don’t have to pay you much”.
Finally we said we can’t work with you. We ended the relationship.
Today we evaluate four things:
- Is there real leadership buy in to drive transformation?
- Does it have a connection to where the company is headed strategically? We have seen situations where the people we are dealing with are driving an agenda. They want to take all the cost out. Then we meet the senior leadership. All they are talking about is new product innovation. They don’t care about cost; this is not their focus. At some point these disconnects between agendas that are connected to the strategy of the company cause things to fall apart. We ask them to explain their agendas and how they relate to the strategy of the company.
- What’s the culture of the company to drive change? We are perfectly fine if the company is slow in changing. Fifteen years into GE’s journey we are still growing. We know long-term growth and value creation is great. We are patient. The desire to get to the end and to discover a new horizon every time has to be there.
- Are you going to be a partner in this journey or are you going to flip things across the wall and say, “Now you manage it and that’s it.” We don’t believe the latter will work. Because whatever we do is dependent on input we get from the organization. If we don’t have the ability to partner with the client, our ability to drive improvement and value creation is limited. Therefore, we prefer not to engage.
But it’s tough to say no to a client.
We have a process by which the senior levels evaluate every opportunity. We want to find a way to say yes or no quickly.
If we have done a good job for one client in an industry, others come to us. Pharma is a good example. It is reasonably risk averse. It is also highly regulated, so the companies are careful. They prefer to work with people who have done it before for people like them. They move as a flock.
It’s OK to say I am not going to play in this industry, geography or domain area. Deciding where you are going to play is one of the big choices you have to make. Once you make that choice, that drives your investment, your M&A, your resources and your intellectual capital. You look for the biggest leaders, the smartest people. Companies that do this well are successful.
Stay tuned for the final installment where Tiger gives his opinion regarding the branding of "outsourcing" and BPO...
NV “Tiger” Tyagarajan (pictured) is Chief Executive Officer for Genpact. You can view his full bio by clicking here