{"id":1594,"date":"2010-11-14T21:05:00","date_gmt":"2010-11-14T21:05:00","guid":{"rendered":"http:\/\/localhost\/projects\/horsesforsources\/genpact_future_111410\/"},"modified":"2010-11-14T21:05:00","modified_gmt":"2010-11-14T21:05:00","slug":"genpact_future_111410","status":"publish","type":"post","link":"https:\/\/www.horsesforsources.com\/genpact_future_111410\/","title":{"rendered":"The speculation over Genpact\u2019s future spells crunch-time for the future of BPO"},"content":{"rendered":"
\"\"<\/p>\n

Who's prepared to step up to the plate?<\/p>\n<\/div>\n

No one single provider can claim to have impacted the world of BPO with such verve and focus over the last five years, than that of Genpact.<\/strong><\/p>\n

During the \u201cboom\u201d years of Finance and Accounting BPO adoption, between 2005 and 2008, the Gurgaon-headquartered firm aggressively pursued nearly every large deal on the table, with a no-nonsense approach of lift-shift-transform BPO at aggressive pricing, bolstered by the GE Six-sigma and LEAN heritage and branding.\u00a0 However, the mindset-shifts of the Recession, combined with a more knowledgeable buyer, more credible competitors, and the ability of several Indian-headquartered and Western providers to compete more aggressively on price, have conspired to create a much more challenging environment for any provider competing for BPO business.<\/p>\n

Most importantly, serious questions are now being asked of the leading service providers jostling for marketshare and position in the BPO business. \u00a0Some providers are growing frustrated, and beginning to question whether they got their approach to BPO right. And the current speculation<\/a> over Genpact \u2018s future is forcing many of the BPO wannabes to gaze deeply into their navels to decide whether they want to get really serious about BPO. \u00a0There’s been a lot of chest-beating, a lot of marketing, a lot of huff and puff right across the industry… now’s the time to see who’s really going to step it up.<\/p>\n

Our view at HfS Research is that if any of the emerging service providers want to have a billion-dollar-plus BPO business that touches all industries, horizontal processes and<\/strong> provides a platform for that next phase of growth, once the low-hanging IT projects start to dry-up, they need to decide whether they have the appetite to swap-out a sizeable portion of their stock to acquire Genpact.\u00a0 Because if they don\u2019t, another party eventually will, and there aren\u2019t too many billion-dollar BPO firms left which will provide instant top-tier status and massive BPO global scale.<\/p>\n

And if that acquirer doesn\u2019t come from the sub-continent, if could well eventually come from a Japanese, European, or a Western business.<\/p>\n

Here\u2019s why the issue over Genpact’s future is so important to the future direction of the BPO industry:<\/strong><\/span><\/em><\/p>\n

Recent BPO market entrants are primarily IT services providers, which focus on rapid \u201cpenetrate and radiate\u201d strategies.\u00a0 They are approaching BPO with the same strategy, and finding it much more resource-intensive, slower-going and lower-margin work. <\/strong><\/p>\n

When you look at the huge success of the leading offshore providers in the IT services market over the last decade, they based their growth strategy on starting small and doing whatever the client wanted to grow their \u201creal-estate\u201d within their back office.\u00a0 IT services providers such as Cognizant, Infosys, TCS et al. would quickly increase their presence within major global enterprises from 10 to 50 to 200 to 500 to even 1000 FTEs working on software support and development work – and with alarming pace.\u00a0 These providers were smart enough to realize they would quickly gain institutional knowledge<\/em> of their clients\u2019 processes and make it almost impossible to be displaced in the future.\u00a0 They \u00a0brought offshore IT work into the corporate mainstream and branded India as the leading destination for low-cost programming work.\u00a0 To quote the CIO from a large German corporation recently \u201cVe prefer to use Indian firms for programming \u2013 that\u2019s vot they do\u201d.\u00a0 Kind of sums it up, right?\u00a0 However, BPO\u2019s different\u2026<\/p>\n

The leading offshore IT providers are quickly realizing BPO\u2019s a very different ball-game and may be forced into making a much larger investment than they ever intended, if they want to develop any BPO business of\u00a0significant\u00a0scale.<\/strong><\/p>\n

With the exception of a few transactional-based processes such as invoice and payables processing, order management, indirect procurement, the growth in future BPO areas is dependent on talent that can\u2019t be picked up a en-masse from University training programs, or from infiltrating the campuses of neighboring lower-tier competitors with drive-by recruiting sweeps.\u00a0 With much of today\u2019s BPO engagements, providers are creeping from 5 to10 to 15 to 20 staff in their clients\u2026 it\u2019s at a completely different pace and scale,\u00a0 as the requirements are often more customized, more specific and it\u2019s simply harder to find, train and retain the talent they need.\u00a0 They are simply not finding anything like the margins and growth that their IT business have enjoyed over the years.\u00a0 However, if they want to have a shot at winning the larger-scale engagements today, they will simply finding themselves running out of time to get a foothold in that game, if they persist with a \u201cpenetrate and radiate really slowly<\/em>\u201d strategy.<\/p>\n

The Bottom-line:\u00a0 There aren\u2019t many entry points left to get into the top-rung of the BPO business.\u00a0 Genpact may well be the last lever to pull.<\/strong><\/p>\n

All the leading providers have, or claim to have, both horizontal and vertical BPO capability.\u00a0 They know that having deep processing competency is incredibly \u201csticky\u201d for growing deeper client footprints, and can help them develop institutional knowledge and comfort with clients, to remain with them for many years to come.<\/p>\n

However, gaining BPO competency and scale isn\u2019t like IT \u2013 there simply aren\u2019t the hoards of dying European and tier 2 providers eager to get picked up. \u00a0\u00a0There\u2019s really only Genpact left standing at the top-end, Xchanging and WNS in the mid-tier, and EXL, OPI and a few select others as the only really viable pureplays that will give an immediate leg-up in terms of immediate BPO scale and competency.\u00a0 Moreover, the old \u201clet\u2019s hang around and pick up a juicy captive\u201d won\u2019t wash anymore.\u00a0 Everyone\u2019s run the rule-book over all of these, and there aren\u2019t many worth considering, that make a lot of financial sense or provide suitable client scalability.<\/p>\n

So this brings us back to price-tags and sensible investments.\u00a0 There haven\u2019t been many past BPO investments that have been very successful \u2013 all have involved painful transition and slower-than-expected business growth – a fact that has put off a lot of firms making aggressive acquisitive BPO plays in recent years.<\/p>\n

However, Genpact is another proposition entirely.\u00a0 It has massive BPO footprints across many major enterprise clients. \u00a0It has global scale, industry competency and a good operational track record with clients.\u00a0 It really does<\/em> represent one of the last major entry points for ambitious providers to make a \u201cbig bang\u201d play into the BPO space.\u00a0 The big question we ask now is \u2013 who has the appetite<\/em>, and who is serious enough<\/em> about this business, to make it.<\/p>\n","protected":false},"excerpt":{"rendered":"

Who's prepared to step up to the plate? No one single provider can claim to have impacted the world of…<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[48,835,61,64,81,838,836],"tags":[396],"ppma_author":[19],"yoast_head":"\nThe speculation over Genpact\u2019s future spells crunch-time for the future of BPO - Horses for Sources | No Boundaries<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.horsesforsources.com\/genpact_future_111410\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The speculation over Genpact\u2019s future spells crunch-time for the future of BPO - Horses for Sources | No Boundaries\" \/>\n<meta property=\"og:description\" content=\"Who's prepared to step up to the plate? 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