Personal Contribution to Industry: Abid Ali Z. Neemuchwala
Barbara Hodge met up with Abid at Shared Services & Outsourcing Week in Orlando, Florida, where he was presented with the Award, and asked him about his expectations for the year ahead.
Abid Ali Z. Neemuchwala– 2012 Personal
Contribution to Industry Award:
"The People’s Choice"
Read about all the winners of the 2012 Excellence Awards —North America
Barbara Hodge: Abid, you’ve just won the 2012 Personal Contribution to Industry Award – a high honor, as this Award is entirely down to the industry, ie, you’re voted in by your peers. I wanted to take the opportunity to talk to you about TCS. What are some of the new directions you are setting yourself? How are you providing the kind of service that impacts not only the bottom line, through cost containment, but also supports top line growth – increasingly something clients are demanding of their providers?
Abid Ali Z. Neemuchwala: First of all, thank you very much. It was a real surprise to me to have been recognized in this way, and it is a great vote of confidence on the part of our customers.
I think you ask a very important question. We are striving to deliver not just process efficiency, impacting the bottom line, but also process effectiveness, which essentially enables customers to deliver business results that are far superior.
Using analytics to cross sell more to the consumers of your customers, and thereby impact their bottom line as well as their top line is something that we have been doing very well for a while now. Take retailers: by analyzing their plannograms and how they’re set up in stores, we can help them to sell more per customer and thus directly impact their top line. For telecomm companies, improving their ARPU [Average Revenue Per User] directly impacts their top line. By developing deep domain expertise in each one of the verticals that we service, we have been able to do this very effectively for our customers.
Domain expertise is a growth area for BPO. SSON and Everest Research are collaborating on a survey right now, to try to understand how this "verticalization" will play out for providers. Which industries do you believe hold the greatest potential for TCS?
I’m glad, first of all, that at this conference we’re discussing verticalization because we’ve considered it an important area of development for years. I’m really pleased that the whole industry is moving that way, not only delivering vertical core domain processes, but also verticalization of SG&A processes like F&A or supply chains.
Understanding the domain becomes extremely important in order to make an impact on the customers. There is a lot of change going on across industries: reinvention in banking and financial services; high drug development costs and time to market in pharma, especially considering all the patent expiry; utilities are facing deregulation and competitive markets; Government itself and citizen services are big growth areas; telecom is undergoing a huge transformation from landline providers to mobile services; and insurance firms are experiencing low interest rates. In 2011 we signed the largest deal in the insurance industry that year: $2.2 billion with Friends Life. That is really about core processing for their policies on a very innovative business model, whereby we process on our platform and give them a price per policy. So, I see opportunity in every vertical.
"Big data" and its analysis are emerging as an added value offering. But it takes industry expertise to translate analytics into insight. How are you linking data analytics with expertise to help your customers grow?
That’s a great question. I believe our strength lies in being able to offer the technology part of the analytics, which is big data, and combine it with the insights. Today there is an overflow of information with all of our customers and being able to identify the important parts is key. For example, I mentioned the telecom industry: we look at metrics for consumer churn and help our clients avoid that churn. That requires deep insights and analytics on consumer behavior.
Similarly, for the CPG firms … when they launch a new product, there is a lot of analytics around the market that needs to be done. Today’s social media – Web 2.0 – is huge, and there’s a lot of data and information available. To be able to do analytics on that, for the customer, provides them with a huge advantage. We are working in all of these areas, so our analytics practice is growing more than 50% year-on-year.
There’s been a lot of talk about customers’ increasing sensitivity to offshoring over the past years. Many customers want providers to service them from either nearshore or onshore. What’s your response?
I think the choice of location is about the economics and the business value of it. We are investing heavily in onshore centers, both in the US, in the UK and we’re also globalizing more. We have a center in Cincinnati, one in Midland, Michigan; and a couple of others in Dallas and Phoenix, etc. I have 3,000 people working out of Latin America. I have a couple of thousand people in Europe. When we take an end-to-end process, there are some parts that need to be done from onsite centers. We are also aggressively growing China and the Philippines. This overall globalization helps us deliver end-to-end processes and, as customers are globalizing, we are able to service them seamlessly across geographies. [SDK1]
One of the areas where we have innovated is in what we call the One Global Service Standard as part of our global network delivery model. This means every customer is owned and serviced by the same relationship team and delivery responsibility is global. So, the customer has the same experience of TCS, irrespective of where we service them from and where they buy our services. I think that has differentiated us in the market as we’ve invested in onshore centers and other global centers.
Abid, you mentioned Latin America and I think there has not been one presentation over the last couple of days that hasn’t named Latin America as an area of tremendous opportunity. What is your strategy there – particularly in terms to Latin America for Latin America, as well as for clients further afield?
We’re investing in both parts of the strategy. Latin America for Latin American customers has been a great success, although the model is slightly different there because there we have in-country setups to service local customers. For example, Brazilian customers are being serviced from Brazil; Argentina is serviced from Argentina; Mexico from Mexico; Columbia from Columbia; etc. Our proposition is, again, bringing the deep domain expertise that we have into these local centers. Of course, Latin America to the outside world, especially the United States and some parts of Europe – Spain, Portugal and some of the Iberian geographies – is a natural fit.
Your backbone at TCS has been technology. How are you leveraging this heritage to improve the business process services for your clients?
Yes, TCS is a technology company at heart and when we do BPO, the question that we ask – which a lot of pure BPOs are unable to ask – is: "Why do I even need a single FTE to do 100 FTE processes?" So we start from ground zero, and then we look at what could be automated or what could be converted into self-service – and that delivers real process transformation to the customer. So, it’s a great value proposition and we are able to build it into our business model because what we lose in FTEs and BPO, we gain in technology. That is where we have differentiated ourselves; and it actually contradicts the business model of a "pure" BPO, because many of those have a business model based on FTEs used to service customers.
We’ve also been able to re-engineer processes, transform processes and automate them, so that they become so small that we’ve been able to hand them back to the client and say, "It’s no longer large enough to be run offshore; you can take it back and service it locally." And that is the kind of value that customers love. Of course the quid pro quo is that these customers then give us more processes to run, so that helps us grow our business.
What differences do you see between European customers and US customers? There’s more resistance to outsourcing in Europe than the US, so what impact does that have on your offerings? More productivity tools in Europe, for example? And more technology transformation in the US?
I think there are two major differences. One is the language. So, when you talk about Europe, I would separate out the UK, which looks and acts more like the US. In Continental Europe there are three or four key issues that impact delivery: One relates to the labor laws and regulations, so we need to have a local delivery footprint, with local employees, to create a brand that provides service to the customers. The second thing is that European customers look more at an overall transformation rather than just labor cost arbitrage, which is where the US companies started. But today, even US and UK customers are looking for newer delivery models like a platform-based BPO and utility-based pricing, or outcome-based pricing.
Of course, the European economic situation right now is fundamentally changing how European firms react; they are looking at productivity, and so are looking at automation, especially the kind of IT-BPO synergy that we provide.
So, in terms of growth, Abid, where are you seeing the opportunities?
We see opportunities for growth in analytics. If I look at the service lines, we’re seeing a lot of growth opportunities in the US, but also in Europe, and in emerging markets, as customers are setting up operations to position themselves for growth in Asia, Latin America, and even Africa. So a lot of growth is coming from those areas. And India itself is developing as a big market for us. Much of this growth is in transformational play. For example, the citizen services that we offer for the Passport Seva program in India is ground-breaking. The same applies to the "NEST" program we run in the UK, for private pensions. So we’ve seen growth in specific services, as well as in industry verticals, and of course geographies.
Over the past couple of days here at the conference, which presentations or which discussions have you found most interesting? What kind of ideas are you taking away with you?
I think the conference has been great. This year, I see the participation level has moved to a more strategic engagement. And some of the discussions about the future of the outsourcing, and especially the BPO industry, have been very interesting. You already mentioned Latin America; the other conversation that is happening around industry verticalization is personally pretty pleasing to me, because we’ve been talking about – and executing on that strategy for a while.
And, finally, the conversations we’ve had around IT-BPO synergy and business value delivery rather than just cost arbitrage have been rewarding. There has not been a single presentation which has spoken about cost arbitrage as a lever to do outsourcing, and that’s a very good place for us, as an industry.
The way of the future?