3. Company Background
Parent company – General Electric
Priorly – General Electric Capital International Services
GECIS set up in 1997 as fully owned subsidiary of GE
July 2004 – GE divested 60% stake to 2 PE players
September 2005 – renamed ‘GENPACT’
First CEO – Pramod Bhasin
Headquartered at Gurgaon, NCR
Currently the largest BPO with over 100,000 employees
4. Liberalization in 1991
Large technically skilled workforce
3,000,000 English literate university graduates/year
Labor arbitrage
GDP growth of 7% - one of the best
Closing time in US = Opening time in India
provided business cyclicity
Why India?
Per hour cost
Software developer $60 $6
Data entry agent $20 $2
5. Why India?
$2bn by 2000
70:70:70 rule
1997 1998 1999 2000
70% non-core work
outsourced
70% completed
at off shore
development
center
70% sent to
India
6. Why India?
GE outsourced $10mn projects to TCS, Infosys in 1994
Costs doubled in 3 years, so set up GECIS
Started with 20 employees, 14 telephone lines
First project “WHITE MAIL”
Handled GE insurance queries
GE US backend was Indian front end
By 2004, handled all businesses backend
Finance, Insurance, Enterprise apps, SCM, IT infra
Revenues – US$429mn, Employees – 15000+
700+ processes handled globally
7. The BPO Industry
Farming out the responsibility to another party which
would otherwise have been performed internally
Outsourcing – Full transfer of responsibility to third party
Off shoring – Transfer only the functioning, but retaining control
BPO sector mainly of manufacturing, services
Global size in 2000 - $119bn
Outsourcing contributors
North America 59%
Europe 27%
Asia – Pacific 24%
8. The BPO Industry
Evolution of BPO industry in 4 stages
Phase I
- Recruits sent abroad to execute end to end projects at clients site
- Billing in US$, Indian companies made huge amount of money
- Indian engineers very happy
Phase II
- Activities disaggregated
off shore( programming and coding)
on shore( stabilization, optimization)
- Off shore costs cheaper as salaries in Indian Rupees
9. The BPO Industry
Evolution of BPO industry in 4 stages
Phase 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 companies
Phase 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. 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 growth
Development of service sector – Services as means of
income was not looked upon so widely
as it began to be seen now
11. Firm level Considerations
Cost reduction – outsource standardized process
e.g. Reconciliation of bank statements
Efficiency 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 sides
Process transformation – altering business processes,
creation of new revenue streams, strategic collaboration
e.g. harvesting hidden sources of value in a Supply Chain
12. Firm level Considerations
Michael 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. Vendor Client Relationship
“Sticky” : sensitive and confidential client processes
Regular reinforcements of mutual interests
Monty Singh, Senior VP, Lean Six Sigma and transitions says
“ Comfort level with the partner is a bigger driver ”
14. Potential Landmines
Client Acquisition
Sales pitch in response to
a client or vendor’s own
Determine the scope and nature
required services
Negotiation of
Master Service Agreement(MSA)
Statements of Works(SOW)
Commencement of work
and ramping up scale
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. Potential Landmines
Attributes considered by potential clients while
considering a collaborator
- Process excellence
- Global delivery
- Analytical approach
- IT expertise
- Domain expertise
- Stable workforce
- Scale
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. 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) – prioritize
industries and sectors as per divisions and segments
Genpact Virtual Captive – special force dedicated for
individual clients, specially trained personnel
