The world is a very uncertain and volatile place: N V Tyagarajan

Interview with CEO, Genpact

N V ('Tiger') Tyagarajan, CEO of business process outsourcing firm Genpact on how the world of process is changing and what larger companies need to do to stay relevant, in an interview with Rajiv Rao. Excerpts:

How will Genpact compete with IT service companies jostling for the same pie?
People think it's all about jumping onto platforms, that it's all about technology, but actually it's all about people, process, behavior - and technology is an afterthought. We at Genpact are very biased about thinking that this is the way the world works. Look at our work in streamlining the mortgage origination process which is a very fragmented world. We spent six or seven years doing that before we bought a small company that had a tech platform.

Any exceptions?

Yes, in capital markets, where if you don't understand the technology you might as well not have a conversation whereas in insurance or life science or pharma - you need to understand risk. This is why Genpact did not enter the capital markets business for a long time, but did so when given the chance to acquire Headstrong, which gave us that capital markets platform as well as domain depth.

Where is the world headed when it comes to streamlining businesses?
The cloud is becoming a standard for standardisation and a catalyst for process improvement. At Genpact, we used to have 1,500 servers but now we don't - even when we have double that business. We simply buy racks, memory and processing capacity on the cloud and pay, based on usage.

Moving to the cloud is easier said than done. You first need to create a standard process and people have to buy into it.

We have companies with whom we have worked for many, many years where even though we manage processes in 150 countries and in 45 diff ways, we are finally now doing it in only six places. If that company now says I want to get on to the cloud, it has to further shrink that in two or three different ways.

What are the challenges facing companies today that make streamlining process necessary?
The world is very uncertain and volatile and today companies usually think the following:

One, I need to run my business differently in the future. I need to be not only lower in my costs but also in managing variable costs.

Two, in low-growth, developed economies, which account for most companies in terms of share of revenue, they have to find a way to get that extra market share to drive profitability in order to spend on things like marketing

Three, if companies want to attack emerging markets they have to invest for the long term. An insurance company looks at a 10-year horizon, an FMCG five to seven years for brand building and distribution. Where is that investment money going to come from?

Who will be the winners and losers?
Brand new companies have no legacy, so it is absolutely important for them to think about the cloud. For a brand new division of an enterprise, companies getting into new markets and emerging market companies who want to compete with the world this is a no brainer.

The most difficult choice confronts 80 per cent of companies from the developed world, where there is lots of legacy and non-standardisation. We think that if legacy companies won't change fast enough, emerging market companies will take them out.