2. Introduction
Business process outsourcing (BPO) provider.
The company replicated work produced by North American and
European companies.
North American and European Companies outsourced non-core work
to India.
In India it could be done much more affordably.
Privacy and confidentiality were the initial concerns.
These concerns were solved when company grew and gained legitimacy
by winning contracts from major companies.
2005-2014 IT professionals salaries increased by 12 -14 %
Comparatively, Indian IT professional salaries were half of US IT
Professionals which posed threat to the entire Indian BPO industry.
Company repositions itself based on value in addition to cost savings.
Change in the firm’s strategy and culture.
Need for a special CEO to implement this plan.
3. •Mr. Suresh Patel-Chartered Accountant from ICAI
•Began his career in 1987 with international assignment to Bangkok- focus on
the manufacturing industry.
•Next he focused on IT industry.
•Promoted to managing role in Manufacturing and Telecom in 1990.
•Promoted to the position of Asia-Pacific Director of Marketing for the
Customer Satisfaction Centre in 2003.
•Gained experience working across South East Asia and India.
•Selected as CEO of East solutions- Global visionary leader.
Background of the new CEO
4. • Decades preceding 2006 were filled with pessimism and worry over a slow
GDP growth 3 – 3.5 %
• By 2006, India was described as a global growth leader.
• when other national economies were contracting India growth was 6.7 % in
fiscal year 2007-08.
• 5.7 % in 2008/09 with forecast for 2009/10 and 2010/11 in 8% range .
•Reason was India's growing domestic market.
•India had a very young desirable demographic
•.
•By 2020, the average age in India was 29.
IT & BPO in India
5. •By 2035, almost 70% of the population of India would be of working age.
•India the fifth largest consumer market in the world.
•Tangible value of younger citizens- citizens with fresh ideas, an acceptance
and intuitive understanding of technology and a greater willingness to take
risks.
• By 2010, the IT and BPO industry accounted for 4% of India’s GDP, four
times as much as it had 10 years earlier.
•The importance and sophistication of Indian BPO and IT operations was
expected to increase as the use of technology and global business processing
became more entrenched in MNCs. Job opportunities increased.
IT & BPO in India
6. •Companies and the employees got the opportunity of global exposure as
well as training and development.
•the sector also initiated the idea of employee ownership and profit sharing.
•Encouraged diversity in the workplace and corporate social responsibility
• Creation of many leadership opportunities.
IT & BPO in India
7. •Application services, infrastructure services and BPO services.
•Clients- financial services; manufacturing; communications; media and
entertainment; health care and life sciences; transportation and logistics; retail
and consumer packaged goods; energy and utilities; and governments around the
world.
•East Solutions aspired to provide administrative support at a fraction of the cost
of a North American office.
•Cost savings model worked well and revenue grew.
•Growth driven by demand for services.
•2000 and 2010-East Solutions expanded into 120 different countries and pursued
eight different areas of services in more than 100 industries, with 20,000 total
employees, including 326 IT Managers in Bangalore.
East Solution Services
8. Before the introduction of new approach
•The IT managers were usually the only point of contact with clients once a
contract was assigned.
•Manager was responsible for delivering the conditions stipulated in the client
contract.
•There was no scope for creative or customized service.
After the introduction of new approach
•Implementation of new strategy-hiring of new CEO and changing the business
model.
•They had 5 years time before reaching the time where the main advantage of
sending the work to India was lost.
• reposition by altering its relationship with clients and changing the
organization accordingly.
Woking of east solution
9. CHANGING THE ORGANIZATIONAL STRATEGY
•Patel called his leadership team together and explained the plan to reposition.
•The company would reinvent itself to become a value-added partner to its clients.
•This new approach involved not only a strategic adjustment in terms of
relationship with clients, but also a potentially difficult cultural change within the
organization.
•the company’s IT professionals would need to become more sensitive to the
needs of the client and provide both customized and proactive support.
•Need to become much more focused in terms of geographic regions it would
serve and the types of services it would provide.
•Halved the number of industries that east solution would service to four-
provided opportunity to provide value in addition to cost savings.
•Change helped to provide more detailed and higher-value service to limited set of
clients.
10. EMPOWERING FRONT-LINE IT MANAGERS
Mr. Patel introduced a new way of working.
The new strategy required more important role of the front line
managers.
The front line managers were involved in decision making by
flattening the organisation.
However with a flatter organisation a hiccup in the client would send a
tremor throughout the entire organisation.
With the new flatter organisation there was no time to wait for the
approval from the superior and was not in keeping with the new value
approach.
The IT managers were accustomed doing what they were told and
ensured that they follow the process.
New ideas and innovations were discouraged, and were treated as
deviations.
The company needed to train the employees in different areas and the
overall company’s strategy.
11. •This will lead to shift in priorities ,in house training and most
importantly shift in culture.
•The main challenge was making the frontline managers think about
collaboration and innovation.
•But this would not work without the support and participation of the
managers.
•The salary of the IT managers were fixed and the perks and other
allowances were rare.
•Although there was no discontent among the managers.
• They were supposed to be aware of the lower labour turnover
EMPOWERING FRONT-LINE IT MANAGERS
12. •He increased the operating budget relaxing the budgeting constraints.
•Mr. Patel made it clear that mistakes are invitable,once risks are questioned it
implies that risk can only be taken if it has positive outcome.
•Thus operating budget was increased by 20%
•The bare minimum process helped in reducing unethical expenses to a extent.
•While the additional funds were used to try out new ideas and innovations.
•The account from which these funds were taken was named as CREATIVE
ACCOUNT by Mr. Patel.
•The plan gave a positive response.
New Plan – The Creative Account
13. •The only problem was the funds for operating budget was taken from CEO’s
account and it was almost depleted.
•An alternative step was needed for this program to continue & to learn new
skills and relationships that would contribute to the organization.
•Mr. Patel introduced a project in which 100% straight annual salary.
•It involved 30% of total compensation to a profit sharing scheme. The
remaining 70% as fixed salary.
•In order to stay competitive they didn't fall bellow 85 percentile.
•Patel held workshops and information sessions to ensure the plan was fully
understood both in terms of how it worked and how it fit in with the new overall
strategy and role of IT managers
New Plan – The Creative Account
14. •He also ensured this plan would reward managers for their hard work.
•Patel expected the managers would be excited and feel a greater sense of pride in the
company as they shared in the company’s success.
•Feedback survey reflected discontentment of managers with the new enthusiasm
plan.
•profit-sharing payout had indeed put employees in the 89th percentile (a four per cent
increase).
•Patel decided to abandon the new compensation plan that included profit sharing and
return to the 100 per cent annual salary at the 85th percentile.
•the managers were happy and relieved to go back to the old compensation plan.
New Plan – The Creative Account
