Genpact bpo case study

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Genpact bpo case study

  1. 1. Presented bySwatanu Mohan SatpathyAnirudh PundirBharathi Venkit Sharma
  2. 2. AgendaCompany BackgroundWhy India?The BPO IndustryFirm level considerationsVendor client relationshipPotential landminesIssues for Genpact
  3. 3. Company BackgroundParent company – General ElectricPriorly – General Electric Capital International ServicesGECIS set up in 1997 as fully owned subsidiary of GEJuly 2004 – GE divested 60% stake to 2 PE playersSeptember 2005 – renamed „GENPACT‟First CEO – Pramod BhasinHeadquartered at Gurgaon, NCRCurrently the largest BPO with over 100,000 employees
  4. 4. Why India?Liberalization in 1991Large technically skilled workforce3,000,000 English literate university graduates/yearLabor arbitrage Per hour cost Software developer $60 $6 Data entry agent $20 $2GDP growth of 7% - one of the bestClosing time in US = Opening time in India provided business cyclicity
  5. 5. Why India? $2bn by 2000 70% non-core work 70:70:70 rule outsourced 70% completed at off shore development center 70% sent to India1997 1998 1999 2000
  6. 6. Why India?GE outsourced $10mn projects to TCS, Infosys in 1994Costs doubled in 3 years, so set up GECISStarted with 20 employees, 14 telephone linesFirst project “WHITE MAIL”Handled GE insurance queriesGE US backend was Indian front endBy 2004, handled all businesses backendFinance, Insurance, Enterprise apps, SCM, IT infraRevenues – US$429mn, Employees – 15000+700+ processes handled globally
  7. 7. The BPO IndustryFarming out the responsibility to another party whichwould otherwise have been performed internallyOutsourcing – Full transfer of responsibility to third partyOff shoring – Transfer only the functioning, but retaining controlBPO sector mainly of manufacturing, servicesGlobal size in 2000 - $119bnOutsourcing contributors North America 59% Europe 27% Asia – Pacific 24%
  8. 8. The BPO Industry Evolution of BPO industry in 4 stagesPhase I- Recruits sent abroad to execute end to end projects at clients site- Billing in US$, Indian companies made huge amount of money- Indian engineers very happyPhase II- Activities disaggregated off shore( programming and coding) on shore( stabilization, optimization)- Off shore costs cheaper as salaries in Indian Rupees
  9. 9. The BPO Industry Evolution of BPO industry in 4 stagesPhase 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 companiesPhase 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
  10. 10. 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 growthDevelopment of service sector – Services as means of income was not looked upon so widely as it began to be seen now
  11. 11. Firm level ConsiderationsCost reduction – outsource standardized process e.g. Reconciliation of bank statementsEfficiency 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 sidesProcess transformation – altering business processes,creation of new revenue streams, strategic collaboratione.g. harvesting hidden sources of value in a Supply Chain
  12. 12. Firm level ConsiderationsMichael 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
  13. 13. Vendor Client Relationship“Sticky” : sensitive and confidential client processesRegular reinforcements of mutual interestsMonty Singh, Senior VP, Lean Six Sigma and transitions says “ Comfort level with the partner is a bigger driver ”
  14. 14. Potential LandminesClient Acquisition Negotiation of Commencement of work and ramping up scale Master Service Agreement(MSA) Statements of Works(SOW) Determine the scope and nature required services Sales pitch in response to a client or vendor’s own
  15. 15. 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
  16. 16. Potential LandminesAttributes considered by potential clients whileconsidering a collaborator- Process excellence- Global delivery- Analytical approach- IT expertise- Domain expertise- Stable workforce- Scale
  17. 17. 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
  18. 18. 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) – prioritizeindustries and sectors as per divisions and segments Genpact Virtual Captive – special force dedicated forindividual clients, specially trained personnel
  19. 19. Thank You

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