Interview with President & CEO, Genpact
Genpact, the country’s largest business process outsourcing (BPO) company, delivered strong financials in the recently ended quarter. Growth was driven by strong performance of its information technology business, on the back of its acquisition of Headstrong in April 2011. N V ‘Tiger’ Tyagarajan, president and CEO, tells Bibhu Ranjan Mishra growth will get a further boost with clients relying more on outsourcing partners to concert their fixed costs to variable ones, due to the ‘uncertain and volatile environment’. Edited excerpts:
While on the one hand, there are companies such as Genpact delivering good numbers, most of them are apprehensive about the demand environment and are talking about budget cuts. How is the overall mood of the industry?
The economic environment continues to be uncertain and volatile, and clients are continuing to see these as concern areas. This is important for us because it determines the value we add for the clients. The plans we have put in place are under the assumption that the world will be a little bit more volatile. Therefore, our expectations are also based on this. But the reality is that outsourcing helps the clients to grow their revenues and profitability.
Do you think this uncertainty will boost the pie of outsourcing to third-party vendors?
It will be fair to say outsourcing or having partners to work for you, as compared to doing it yourself, is continuously increasing for almost every company. The reason is simple. When you are living in an uncertain and volatile world, the number one goal that every company has is to convert their fixed costs into variable. This is a big theme for them as the partner does the same thing at a much lesser cost, apart from managing those in ups and downs.
Are service providers also converting fixed costs into variable? Last year, you added over 10,000 people to your headcount.
They might have to do it in the future. We are growing at over 15 per cent every year. When you are growing at this rate and when you have an attrition rate of 25 per cent, you don’t worry about variablising costs — at least the employees’ costs. However, on technology side, we are variablising the costs during the last three years. We have virtualised a lot of our technology infrastructure; we have moved to the cloud and are using cloud-based infrastructure for many of our IT-led business.
You are one of the few BPO companies successfully mining existing clients well. What effort has gone into that?
Over 80 per cent of our businesses are coming from existing customers, and it’s a big payoff for us in the long run, as this indicates the quality of services we are able to offer. Our client satisfaction level is at an all-time high. We are seeing many existing clients becoming a reference for other clients, and that rate is also at an all-time high.
What is your strategy to grow the Headstrong portfolio, with context to your IT business?
With the acquisition of Headstrong, we now have established a capital market vertical. We have added our re-engineering and analytics capabilities to the Headstrong portfolio, which has enhanced the scope to cross-sell to many their existing clients. We are having dialogues with many of the clients for long-term transformational business process management engagements, a growth driver for us in the future. The other interesting thing is that with Headstrong, we have acquired a team that actually understands how to run the IT business.
Do you expect your IT services business to grow faster than the BPO business?
Our IT business has already become 25 per cent of our total revenues, and growing much faster than it used to be in the past. We expect this growth to continue.
You recently acquired a small analytics company. How is this practice and space shaping up?
We have the largest analytics business in the world, which we deliver from multiple locations. That business is growing at 50 per cent year-on-year for the last three years. The recent acquisition of EmPower Research has added new capabilities to that business. While we already had capabilities in sectors like consumer products, retails and pharmaceuticals, the acquisition of EmPower gave us the social media analytics capability. We are using their capability in all our offerings and verticals.
Interview with CFO, TCS