Leveraging growth opportunities in Asian markets through BPO

Ashit Mehra leads Information Technology for Sales, Research & Development and Supply Chain at P&G’s rapidly growing Asia Region. He also runs the newly established outsourced shared service for Customer Service. In his 19 years at P&G, he has established and led several large SAP based Information Technology programs like Acquisitions, Order to Cash Standardizations and Business restructures in Asia and the Globe. He has led successful programs to significantly improve reliability of mission critical business applications in Asia and North America and now sponsors the Service Operations competency (IT & BPO) for Asia. He has also led the creation of large offshore service delivery capabilities for Supply Chain IT. His multi-market and multi-region experience allows him to work effectively across cultures and time zones.

Barbara Hodge: Ashit, thanks so much for talking with us today. To start off, could you provide an overview of P&G’s shared services centre in Singapore — SCSC?

Ashit Mehra: Happy to do so. SCSC stands for Singapore Customer Service Centre and it was set up several years ago, as an internal shared services. What we did in July 2009 was we set up what we call CSO – Customer Service Operations Shared Services – and that’s when we started to move towards running some external shared services. What this external shared services does is to serve around 12 countries and seven distinct languages. We do more than two million orders every year, in this office, covering markets like Australia, New Zealand, Hong Kong, Taiwan, the Philippines, Singapore, Malaysia, Vietnam, Thailand, Indonesia, Japan and Korea; and, apart from English, we have language needs for Mandarin, Japanese, Korean, Thai, Bahasa and Vietnamese.

BH: How have you separated your front office, ie, your customer operations, from your back office, ie, service operations? And why did you decide to make this separation?

AM: The main reason we divided our activities up like this was really to be able to focus in each of the categories. So, we set up the back office so that we can leverage skills and focus on operational excellence – or transactional excellence. Really, it’s about executing all our orders with excellence, if you will. That allowed us to focus our front office on creating superior customer experience – becoming the number one suppliers to our customers – as well as looking for opportunities to not lose any field. The issue with the previous model was that, because it was all combined, there was no capability or capacity in the system for people to focus on developing a superior customer relationship, or to look for incremental sales opportunities. So the split allows both the front office and the back office to focus on fewer things in the process, to leverage scale, and to drive our results in a much better way.

BH: When you initially split the business, Ashit, was the decision immediately made to outsource the operations side? Or did you initially run it in-house, as a two-tier model?

AM: We actually did run it in-house as a two-tier model for a few years before we outsourced the operations side, so we were pretty comfortable that that two-tier model worked and we were also clear about the processes and how the hand-offs would happen and what the interdependency between the processes were. So that made it easier as we actually moved into the outsource model.

BH: Did you assume that you would outsource the operational side though, or was it a possibility that you would keep it in-house?

AM: There was a possibility that we would keep on running it. But in the back of our mind, we obviously knew that at some point we’d want to leverage world-class processes – at least where the capabilities existed externally – but the decision hadn’t been made. There were good reasons for restructuring this internally as well.

BH: What were the key drivers that decided you in favour of outsourcing the operations side to Infosys?

AM: Well, we were running in a split model and as we took the decision to outsource, we were convinced that, in order to truly unleash the power of P&G resources working with our customers, we needed to free them up while at the same time creating a focus on their role. So it was important to redefine the way they worked and their main priorities, and in order to do that we needed to move away a significant part of the transactional process to an external service provider. We also knew that we were looking for a better capability from the industry, than we were able to provide internally, and so, rather than try to develop an internal best-in-class process, we wanted to leverage external best-in-class processes that already existed. That, basically, was a strong driver for our decision to outsource.

BH: What made you chose Infosys as the provider of choice?

AM: Firstly, Infosys was already our strategic supplier, and we have a strong relationship with them, so that helped. As we worked with Infosys, we were also convinced that their capability in the order to cash shared services space was very good; it was very strong, and they could bring the best-in-class process capability to how these processes were carried out. We were also intrigued with their operations in Hangzhou, where we could get the right mix of craft and language capability as well as overall capability of resources. So, that’s what led to our decision to outsource with Infosys in Hangzhou.

BH: What kind of challenges does an outsourcing partnership entail? How is the service delivery from Hangzhou working?

AM: Actually, we are dealing with a very critical part of the operation, as you’d imagine. It’s order-to-cash! – and at P&G we take our relationships with our customers extremely seriously. We know that it just takes one error – even if small from an internal standpoint – but if it’s a significant error, it could significantly destroy our relationship with a customer and also lead to potential losses for P&G. So this is one of those more critical parts of our operation. Clearly, things can go wrong if you’re not careful and you don’t approach this in the right way.

We actually followed three principles as we got into the design and the implementation phases. Principle one was that it was really important that there was a strong "one-team" culture across various entities that were involved, both internal to P&G but also external. Apart from Infosys, there were also some other suppliers and it was very important for there to be a one-team approach – a "we’ve-all-vested-in-this-together" approach – to make this succeed. We’ve seen some examples of outsourcing which have not been that successful and one of the reasons is that there’s not a strong will to succeed across all the parties. So that was clearly a huge priority for us.

The other thing that was important, was to have the right design. So the question as to what we would do internally and what we would outsource provided important input to creating the detailed work processes that are needed to support this kind of an arrangement. Also important was making sure that processes were documented and that they were stable. It’s not a great idea to outsource something that is broken, because the outsourcing process might make it even worse, so it’s important to have the processes stable and documented, and also to have the right capability and design in terms of what you want to do in-house and what you want to outsource.

Finally, the team was given strong direction that quality was indeed their only priority. In other words, while we had a very structured methodology and success criteria, if the team did not meet its success criteria at any stage, there was no pressure to actually go ahead. So if it took a few more weeks in order to not compromise on quality, that was okay. I think, because of these three principles, we were able to manage the challenges of outsourcing very well and the results were exceptional.

BH: The governance model is obviously crucial in a relationship such as this one. How have you established parameters for good governance between your team and the Infosys team?

AM: This wasn’t a particular challenge, because we already had a great strategic relationship with Infosys, so what we had to do was just adapt that relationship to make sure that it covered this part of the business as well. We both have a strategic, quarterly top-to-top engagement, where we review progress against our KPIs and our goals, and look for additional opportunities. And there’s also a DMS structure, which stands for Daily Management System, which is really a daily process that allows the people working in Infosys and the people working on the P&G side to collaborate very closely on the priorities for the day and the challenges for the day – as well as share any key learnings from the previous day. This works almost seamlessly, so if you looked at any of the DMSs, you’d be convinced that this is one strong team working together, even though they are working from two different locations – or sometimes more locations. So the governance model was not a big challenge; it evolved naturally because of the relationship that P&G and Infosys already had.

BH: Which KPIs and metrics do you measure service received by? What are some of the critical KPIs and success metrics for these outsourced services? Are there sales and fulfilment centric measures as well as the normal finance measures that you’d expect in an order-to-cash outsourcing relationship?

AM: Yes, there are the usual financial measures that you’d expect, which measure efficiency, cost, the number of personnel, and so on. But for me, those were not necessarily the most important ones. The most important ones were KPIs that related to the overall order processing, specifically the accuracy and the time limits of order processing and cash collection. Again, building on the principle that quality is the only priority, this process was already being conducted at a high quality level, so it was important, as we transitioned, that we did not drop the ball. Focusing on the processing and the accuracy of cash collections was by far the most important measure. I think, overall, we’re doing very well on all our KPIs – on the quality ones and on the other financial efficiency-driven KPIs as well.

BH: How are processes being improved, or transformed? I know, innovation is always a hot topic and a lot of companies are looking to their outsource providers for innovation.

AM: Our first priority, as we transitioned, was to make sure that there was no negative impact on quality. We saw Infosys coming in very quickly with a lot of innovations, specifically in the area of automation. So Infosys was able to further improve the reliability of processes that happen on a day-to-day basis.

What was interesting was that, whereas from a P&G standpoint we would have driven quality improvements through rigour and training, what Infosys was able to do was produce the same quality by building in automation, so the likelihood of human error decreased significantly. We saw that happen pretty much in the first 12 months.

What we also saw was the culture of innovation and transformation that Infosys brought to the partnership. Infosys provided good leadership on things like Lean, which has inspired us to drive transformation, which leads to more break-through results. We’re still early in the transformation cycle, but we’ve already seen some great results. As an example, reorganising by process, rather than organising by market, provides further efficiencies and that’s something that we are embarking on right now. I believe our results will improve even further with some of the transformations that we are jointly working on with Infosys.

BH: This partnership between P&G and Infosys won the SSON Asian Excellence Award, last year, in the category of "best new outsource delivery services." P&G, of course, has won SSON Awards in other regions, as well. Your organization is regarded as leading in shared services. What did it mean for P&G’s Singapore centre, and for the outsourcing partnership, to be recognized globally as being best in class?

AM: Firstly, everybody was very happy and very inspired. Deb Henretta, who is the Group President of the Asia business, sent out a note to all P&G’s Global Business Services employees and all the employees in the SCSC centre, telling them how pleased and how proud she was about the Award, so that meant a lot. Internally, people were very inspired, very pleased with the Award. It was certainly a testimonial or a validation of the fact that the strategies and the concepts we had chosen were right. And also, it validated the partnership with Infosys. Internally, this motivates us to expand the model further, because we now have validation of the fact that what we’re doing is best-in-class – not only internally, but also externally. So this Award has meant a lot to us.

BH: Well, I’m delighted to hear that, Ashit, and I wish you and the SCSC team, as well as the partnership with Infosys, all the best in the future.