Sourcing Superstars: Pramod Bhasin, Genpact

(Genpact is one of India's largest BPO providers; formerly a General Electric captive organization, what was then known as GECIS was sold off - with GE retaining a 40 per cent stake - in 2004 and renamed a year later. Now employing over 34,000 staff, Genpact has a global footprint with operations in China, the Philippines, Mexico, the US, Romania, Hungary, Spain and the Netherlands as well as India. President and CEO Pramod Bhasin - formerly the India head of GE Capital - is one of the most influential figures in the BPO industry and a driving force behind both Genpact's rapid expansion and the development of the BPO sector in India. We caught up with him to get his views on the state of the industry and Genpact's plans for the future - and heard some extremely forthright opinions of India's educational system and infrastructure into the bargain...)    

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SSON: What would you say have been the biggest changes you’ve seen to the BPO industry? 

Pramod Bhasin: I think it’s evolved a lot faster than many of us expected. In terms of what clients’ expectations are today versus six years ago, they’re very different – and they’re driven by value, not at all by price. They’re also driven by the demand for expertise, capability, industry and domain expertise. So it’s changed quite radically from "buying people" to really buying value and expertise.

SSON: And do you think Genpact itself has been a driver of those changes?

PB: Yes. We were driven there, one, by GE and by our own DNA - that’s why we’ve invested so hugely in Six Sigma, Lean and Reengineering because we recognise that if you’re going to work with a customer for ten years, in the second year they’re already past the labor arbitrage bit and saying "OK now show me how you can improve my processes". And I think we’ve played a large role in helping shape customer demand as well as expectations.

SSON: Can you give a bit more detail in terms of customer expectations? 

PB: We have been able to take customers from the cost savings they expected earlier to showing them how we can improve their processes every year and show them that a very large proportion of the processes we do are an improvement on what they were when they were operating on our customers’ premises. We are able to do this not because we are rocket scientists but because this is what we do. And I think now customers are most interested in how this process affects their eventual business need, be it cash-flow or higher margins or lower cost. By aligning ourselves in that direction, I think we play a far greater role in the value we bring to a customer.

SSON: What do you think have been the biggest challenges to BPO and what do you see as being the biggest challenges going forward?

PB: I think the biggest challenge remains in getting real domain expertise. When companies approach us they clearly say "this is my business: show me the people in your team who understand how my business works and can help improve productivity for my business, especially in today’s current economic environment." So that will remain the biggest challenge. There are other operating challenges – which, by the way, all of us have gone through. People talk about how talent isn’t as easily employable as it should be, and I think most of us have figured out how to get around that, by building our own training capability.

I think the biggest challenge is increased competition in this area. All the big guys are here. The IT industry had a free ride for years before the likes of IBM and Accenture arrived. Today they’re all here - running at different cost bases in order to compete - and I think that frankly is one of the biggest challenges to us.

SSON: It sounds like you’re referring specifically to the Indian BPO industry , am I right?

PB: No, I’m talking about the overall industry. I think Accenture, for instance, faces similar challenges in finance and accounting, supply chain & other areas. You’ve got new challenges coming up as well as strong existing players. But the overall environment has become a lot more competitive and a lot more demanding because customers have seen that they can expect more. A lot more conceptual thought has gone into saying "what is the real value I can deliver to my customers beyond labour arbitrage?"

SSON: Let’s talk about India specifically then. Do you see any challenges to India’s dominance at the moment?

PB: For a while, no, because of sheer size of population. There aren’t too many other countries – Philippines in voice for the US market is probably as good, if not better than India. In different language capabilities, other countries will compete because India can’t. But I think the challenge as you said, is that our education system doesn’t work. It’s completely hampered by government regulation and bureaucracy. And our infrastructure sucks.

SSON: Going back to education, are you talking all the way through or are you talking at university level?

PB: I’m talking all the way through, but specifically at college level. This notion of millions of college graduates being employable is incorrect because the fact is we can only hire six per cent of the people who apply to us. The rest are not employable. Their curricula are not relevant. What they’re taught is meaningless. And in many colleges, I suspect, they’re not taught at all. So our teachers, our infrastructure for training and most of our colleges are in bad shape – but this does not include our top-notch colleges which are world-class. So being a graduate is not good enough unless one has attended a recognized institution.

SSON: You’re saying there are some deep-seated problems there, that aren't soluble overnight - is there anything the government can do?

PB: Yes, there is a huge amount that can be done but it requires guts, commitment and resolve – something that is in short supply,  and you can quote me on that. Much of this is common sense, not rocket science! Free up colleges to build their own curricula which are relevant to industry! Allow teachers to be paid more! Build public-private partnerships. Leverage college infrastructure for doing certification and training for a whole range of industries, not just ours. Get the bureaucracy out of the system. Today, if you want to change the curriculum in one of the colleges, you can’t do it. The University Grants Commission in the central government has to say yes or no. The curriculum is completely inadequate. And if you want to pay teachers more, to teach longer hours, you can’t do that. Because someone in the government is sitting there determining how much teachers can be paid. So you’ve got all kinds of absolutely asinine roadblocks in the system that interfere with this country’s growth, impeding the pace it is trying to achieve.

If we are to continue on a high growth trajectory we need some strong actions  – like privatising higher education! And allowing experts to get into education full-time. Ensuring that there is comparable pay with other sectors so that people are encouraged to choose this as a profession. Sanction grants so colleges can invest in better facilities, infrastructure and quality of instructors and becomes recognized and accredited centers of learning. There is no reason why colleges shouldn’t make money. Let education become a thriving industry.

If the government opens this up, I promise you, we’d have a thousand new colleges functioning within a year. And they would teach more relevant stuff, because companies would go to them directly to recruit talent. Since we don’t get readily available skilled talent in India, on our own initiative, we’ve partnered with various state governments to work with colleges and develop relevant curricula and train their faculty.

SSON: Obviously you feel quite passionate about this. Is there a sense in which institutions like NASSCOM for example or other as-yet-lower-profile institutions might be able to do something about these issues where individuals like yourself, despite how powerful, or how passionate you might feel, might not be able to swim that much against the tide?

PB: We’ve tried it with NASSCOM, where I’m Vice Chairman, and we’re trying to improve things. The government has just announced a skills commission, a knowledge commission and they’ve engaged heavyweights to research and come out with reports, McKinsey’s doing some work on it which is known to everyone. We at NASSCOM will stand up – we’ve worked with the government to identify gaps, we’ve worked with public institutions, we’ll do all of that but candidly none of this is rocket science. This is pretty basic stuff that someone has to have the guts to make some policy decisions around. That’s all. You know, sometimes I worry because the government keeps announcing one more commission. We don’t need any more commissions! Everybody knows what the issues are. You can see I feel very passionately about this…

SSON: Yes, and it's an impressive passion - everyone could do with a lot more of that... But let’s get back to Genpact. How far do you think your origins as a captive unit have determined the way you do business?

PB: Enormously! Our focus on operations and operational excellence is driven from having at one time been a captive of GE because that’s what GE’s known for. Our organisational development and leadership development practices are modelled after GE. I think as a captive we had an enormous benefit of being able to learn from a company as sophisticated as GE. Third parties don’t have that luxury. So if I wanted help on how to do supply chain work, I could call somebody and they would teach us.

I think it has helped us get enormous credibility with other customers because people say "ok, you’ve done this for real, you haven’t done this as a consultant, you haven’t been an advisor, you’ve done this for real for one of the world’s most demanding companies". And therefore our entire bias is around operations and execution because we believe that is the hallmark that you need, to play in this industry. And that’s how I think we’ve been able to compete against long-established majors such as IBM, Accenture, etc.

SSON: OK, let’s go on – you are now truly global, your growth rates are impressive and you are very widely spread across your areas of influence. Now without expecting you to give away anything confidential where would be the logical next geographic move?

PB: Latin America, definitely, I think we will also assess new markets including the Middle East and Russia. We will increase our presence probably onshore in the US, possibly Japan, and therefore have a footprint which is truly global - where we deliver a type of service either next to the customer’s premises or from 5,000 miles away. And I think that works very well for us. We will continue of course to expand geographically in our current markets. So we’ll open more centres in China, India and in the Philippines. But in the newer areas, both for market and operations - Latin America, Russia, Japan and the Middle East, will be areas we’d love to target.

SSON: And could you not service the Middle East for example from India?

PB: Absolutely. And we will.

SSON: OK. We're now in what looks like quite a lengthy economic downturn - at least in less dynamic economies than India's. How are you safeguarding against that?

PB: I think it could be a major opportunity for us. Not that I want anybody to go through a downturn. But I think this is a time when companies I hope will value what you bring even more because they need efficiencies and cost reductions, and that’s what we do best. So I think there may be some temporary slowdown but I suspect in the long term it will actually play out pretty well for us. I think we will also continue to expand wherever we go, so India-to-India is big business for us and China-to-China isn’t a big business for us, today. We hope it will be a big business for us someday soon.

I think getting into new markets will allow us to increase our global presence, but will also make sure that our portfolio is well-balanced. And I believe if during a downturn, we are real partners with our customers, and we have credibility with them, it can actually help accelerate our business beyond what is already being done..

SSON: OK. More personally, what has been the most important lesson you’ve picked up during your career?

PB: A thousand perhaps! I think for one, you learn to persevere against all odds with a never-say-die attitude, particularly when you operate in a country like India. Two, you’ve got to hire great people. One of our hallmarks is to hire outstanding people to get the job done – something I learnt from GE. You have to hire a lot of people who are better than you at many different things. And I think that’s been a huge lesson for me. Three, having a fair share of optimism and faith in people. You have to believe that when you hire great people and empower them, they will deliver great results. Lastly, keep things simple. Don’t complicate life. The more you complicate matters, the harder it is to execute. Give your best always but don’t take yourself too seriously.

SSON: Finally, what are your ambitions for Genpact in the future? Where do you want to be?

PB: I think we want to be the world’s best at process expertise. And I think it’s a unique position we can occupy which is unoccupied right now. I think at our core processes we can be absolutely the best in the world.