STRATEGIC MANAGEMENT ASSIGNMENT

NAME: Aftab Khansuri

SMS ID: 106926/RB10167

CENTRE: MUMBAI- KANDIVALI

TOPIC: STRATEGY MANAGEMENT PROCESS OF A LEADING BPO

FIRM GENPACT
Background of Genpact:-

As background on Genpact, many folks in procurement probably won’t be too familiar with their past,
which dates back to the original spin-out from GE in what Genpact describes as a virtual captive model
(i.e., the original Genpact assets were captive GE resources). GE still represents a substantial portion of
their $1.12 billion overall BPO business, which is growing at a 22% CAGR; GE also makes up a number of the
some 50 customer engagements in the source-to-pay area as well. As I see it, the GE legacy is both a help
and hindrance when it comes to procurement growth. GE procurement was always ahead of its time, but its
best employees often became frustrated and left because of management unwillingness to change
(FreeMarkets is the best example of this). In other words, the history of GE procurement could be best
described as both overly conservative and overly process driven, the latter owning to the venerable firm’s
Six Sigma roots.

Genpact formerly known as GE Capital International Services (GECIS) was established by GE in late 1997 as
its captive India based BPO. GE sold 60% stake in Genpact to General Atlantic and Oak Hill Capital Partners
in 2005 and hived off Genpact into an independent business. GE is still a major client to Genpact getting its
services in customer service, finance, information technology and analytics.

Currently, Genpact is a global leader in business process and technology management, offering a broad
portfolio of enterprise G&A and industry specific services, coupled with strong IT, analytics and
reengineering capabilities.

Strategy planning in Genpact :-

The strategic planning process is the formulation of the company’s major objectives and execution plans.
This process is of particular interest in GE. Strategy formulation is the process of choosing the best methods
for a company where customer needs; competitive position and internal capability are the three factors
that play the main role in strategic planning. Every manager needs to have at least a simple notion of
strategic planning to formulate his strategic plans. Strategic Planning is a wide and complex subject.
Strategic Management background is an essential basis of any organization.

Companies plan their various and multilevel activities. A company's strategic planning is a row of elements
that describe how the company uses its resources concerning its inner and outer environments to reach its
objectives. Resources contain financial, human, facilities and technology. Resources are limited that is why
they are prioritized at GE to support the company's goals. The positioning and usage of resources includes
all elements of the company and develops into strategic decisions of the company.

GE strategic planning objective is to increase its economies and at the same time to apply its advantages
concerning company’s clients. There are three basic steps of gaining strategic planning within GE:
- The formulating of a major business strategy.
This is the basis of efforts to build a serious competitive advantage.

- The adaptation of the major business strategy to all the markets where the
Company’s products are presented.

- The globalization of the major business strategy. It means the company has to
Integrate the strategy in all the places of business operation.

In order to implement all these factors of strategic planning into practice , Genpact used the very basic
approach and made the SWOT analysis, which is a set of major factors - Company’s Strengths, Weaknesses,
Opportunities and Threats - for formulating strategic alternatives. The GE SWOT analysis shows its
strengths, weaknesses, opportunities and threats in order to use this information in the Strategic Planning.
When the SWOT analysis is done, it is used as the foundation of objective setting, strategy setting and
usage. The SWOT analysis is concentrated upon the most important factors and it is useful in a difficult
strategic situation. The strengths are analyzed to reach opportunities and to avoid threats. The search of
weaknesses is of importance as it allows the manager to minimize them.

At the beginning of the 1980s General Electric, the big USA electronics company determined a goal of
increasing its market share. This aim was achieved by acquiring Radio Corporation of America and advanced
satellites divisions and disposing of its consumer electronics divisions. This was General Electric’s effective
strategic planning that helped to increase the annual income. These are the GE strengths, weaknesses,
opportunities, and threats that still form the basis of strategic planning. The developed GE culture is its
strength as well as human resources. The competition is great that is why the competitive advantage is the
strength too. Technology is an essential part of any business and its usage presents great opportunities to
GE Company.

GE developed a vision, mission, and general objectives of the company to develop a strategic plan. Vision is
the possibility of the manager to organize people together with a common idea. The mission is a broad
notion of the company's vision. GE’s mission consists of several factors namely history, present
preferences, the market environment, resources and competencies. The mission gives the company a
reason for existence.

A good strategic planning process means sharing the "vision" of the company with the employees and
creation of a strong corporal culture. When GE goals are defined, strategies are developed to help in
achieving its purposes. The GE culture is shaped under the strategic plan. The GE’s information system was
created to successfully use the strengths of human and other resources within the GE.
GE Strategic planning is the process of developing and analyzing the company's mission, near and long term
goals, strategies and resources. The strategic planning process passes at the business and product level. It
starts with the analysis of the GE's present strategic planning and goes on with the making up future
perspectives. Strategic planning defines the methods of meeting the company’s future challenges and
opportunities.
The strategic planning is necessary as it helps to create good decisions and affect the future of GE as a
Company. It becomes obvious that effective strategic planning is a constant environmental analysis for
applying the changes in the environment and turning them into the opportunities. It allows GE Company to
manage/face or avoid undesirable environment effects which may occur at time.

Using the GE Strategic planning the near and long term goals are developed. GE strategy is a set of actions
developed to gain long-term goals. Goals focus on vital changes. Two, three, or five years passes till the
strategy is achieved. In general, GE has long-term goals for such factors as return on investment, earnings
per share, or size. Purposes elaborate on the mission statement and constitute a specific set of policy,
programmatic, or management objectives for the programs and operations covered in the strategic plan.

Tactical plans have shorter time frames and narrower scopes than strategic plans. Tactical planning
provides the specific ideas for implementing the strategic plan. Operational plans support tactical plans and
are the tools for executing daily, weekly, and monthly activities. They include policies, procedures,
methods, and rules. GE has essentially grown in size and benefits since 1980’s. GE centralized financial
management and strategic planning control, and practiced strategic planning management.

Strategic options opted and aspirations set by Genpact:-

Genpact, as it grows, will provide the ideal template for a gen-next BPO. Anyone looking at the company
closely (and many are) will find answers to questions such as: Does it make sense to be a captive BPO? Is
verticalisation the way forward? Should a company adopt a horizontal, platform-oriented approach?
"Anything done by Genpact will be crucial for the entire industry.
In the early 1990s, when conglomerate General Electric entered the country, it did so with great
expectations of the Indian market. By 2000, the company reckoned, its Indian operations would be worth $2
billion, Rs 9,200 crore; $2 billion by 2000 also has a certain cadence to it. By the mid-1990s, it was clear to
the company that this target wouldn't be met and that India would take time to evolve into a significant
market for its products and services. (This is something that actually started happening in 2004-05;
reference article on GE's Indian Summer, Business Today, June 5, 2005). Around the same time, the
company realized that GE's insurance business in the US was having trouble coping with growth; insurance is
a dialogue- and data-heavy business where customers and prospects interact with the company extensively;
GEFA (GE Financial Assurance) couldn't find enough people who could do these things, do them well, and do
them cheap, in the US. And so, the company decided to, as successions of GE managers have put it, "make
their back-end the front-end of the Indian operations." Which is how this business came to the Indian
market.
The first project thus outsourced to India was labelled White Mail and it was executed by a team of 20
people sitting in a 400 sq. ft room with 14 telephone lines. "Everyday, we would get bags full of white
envelopes (hence the name) with requests for change of address, of telephone numbers and the like from
the US," recalls Bhasin as per the article, then CEO of GE Capital. "We would feed the information online,
streamline the data, and send it back." That's how GECIS, GE Capital International Services, was born in
1997.

With six sigma, a quality philosophy (it entails 3.4 defects in a million outcomes) then the prevailing mantra
at GE, GECIS came up as a six sigma beta site (to cut through the jargon, this simply means that processes
could be safely outsourced to GECIS with no loss, and a possible gain, in content, quality, and efficiency). In
1998, GECIS had 800 employees and registered revenues of $4 million; the numbers had increased to 5,000
and $85 million in 2000 and 17,500 and $426 million in 2004. By that time, the teams working in GESICS,
were handling sophisticated functions such as insurance, finance and accounting, treasury management,
and document and content management for most GE operations in the western world. And by that time,
GECIS' success had spawned a rash of me-toos, created an industry, and engendered the next outsourcing
revolution.

GECIS had grown at a CAGR (Compounded Annual Growth Rate) of 10,000 per cent over seven years but
GECIS wanted more. The GECIS team thought that if they could do this for GE, the toughest client in the
world, they would be able to do it for others too. Around the same time GE realized that India, to it, had
finally made the shift from being a resource-centre to being an attractive market. GE understood that a
BPO business wasn't its core competence, and the company did express some anxiety over losing control of
one of its fastest growing businesses. GE also believes in driving a hard bargain with its vendors-as several
of India's IT services firms will affirm-and the fact that there isn't much to be gained in bargaining with
oneself may have also prompted the company's decision to sell a majority 60 per cent stake in GECIS to two
private equity firms, General Atlantic Partners and Oak Hill Capital Partners. As per General Atlantic, GECIS
had a seasoned management team at the helm and a mature product offering. General Atlantic saw a huge
opportunity for its business model. In December 2004, GECIS formally became a third-party vendor and in
September 2005, the company was christened Genpact.
Looking at the figures , the amount of coverage Indian BPOs receive in western media and in India may
indicate otherwise, but the Indian BPO industry boasts a less than 2 to 3 per cent share of the approx $400
billion (Rs 1,800,000 crore) global market for such services. If Genpact wanted to play with the big boys, it
would have to go out and get itself a great senior management team, which was one of the major decisional
parts of their strategy.
In the first year of its separation from GE, in 2005, Genpact grew by 22 per cent, much lower than the 30-
40 per cent most of its competitors (and even Indian it services' Tier-I companies such as Infosys, Wipro and
TCS) hope to have achieved in 2005-06. That growth rate should be seen in the context of Genpact's higher
base compared to its competitors. And a comparison between IT services and IT enabled services isn't
entirely fair; IT enabled services is between 20 and 25 years younger as an industry.

Before it can drive the change Genpact had to first reduce its business dependence on GE, which the
company hopes to achieve by winning new customers and acquiring companies that could bring in non-GE
revenues. In late-March, Genpact and NDTV announced a joint venture that would provide media process
outsourcing services such as editing, captioning, indexing, and digitizing analogue content. With the global
media and entertainment industry worth an estimated $150 billion (Rs 675,000 crore), the joint venture is
looking a huge opportunity in the eye. Genpact considered this as an exciting new field to explore and
potentially a business as large as the software business is in India today.

The process of building Genpact's non-GE business began a year before its separation from GE. Today,
Genpact boasts 80 customers other than GE; 40 of these came through the acquisition of New Jersey-based
Creditek, 15 from the acquisition of a GE unit in Mexico and 25 were new wins. One such was a deal with
the US-based financial services provider Wachovia, which also saw the company pick up a 7 per cent stake
in Genpact (from GE whose stake is now down to almost 33 per cent).

Another challenge is to manage attrition. Genpact has done alright on that front: it ranked #3 in the 2005
edition of Business Today's Best Companies to Work for in India study (it was the highest-ranked BPO).
Genpact achieved this rank by providing their employees the best training and growth opportunities.
The company's immediate focus changed to move up the value chain, maintain service standards, and
increase footprint. Those are logical objectives and With the size of deals becoming bigger, clients prefer
companies with a larger footprint.

Strategy deployment at Genpact’s S2P(sources to pay) Services:-

Driving best-in-class performance and improving key business outcomes in sourcing and procurement are
two key objectives for most procurement organizations. Genpact significantly increased Source to Pay
business performance by delivering 2-5 times higher impact on key business outcomes – Reduction in total
cost of ownership (TCO), working capital optimization and availability of material and services.
Organizations may not be able to leverage the true potential of their sourcing and procurement
initiatives due to:
• A silo approach to procurement across geographies, functions and processes
• Limited visibility into best-in-class performance measures and benchmarks
• Focus only on process efficiencies versus process effectiveness
• Unclear linkages between process drivers and business outcomes
• Use of technology without process rigor

As a result, there is a significant difference in performance between average and best-in-class Source to
Pay (S2P) organizations.

Organizations can now achieve 2-5x higher impact on Source to Pay performance
Genpact drives best-in-class Source to Pay performance by applying its proprietary methodology, Smart
Enterprise Processes (SEP), which manages business processes end-to-end and focuses on optimizing process
effectiveness and efficiency. It covers Source to Pay processes from a holistic, enterprise wide view with a
focus on key business outcomes:
• Reduction in total cost of ownership (TCO)
• Optimizing working capital
• Higher availability of material and services
Genpact’s key learnings, best practices and deep knowledge on S2P are deployed using SEP methodology. It
is enabled by rigorous process execution, targeted analytics, focused IT solutions, and reengineering.

Business Benefits: Best-in-Class Performance

 Genpact’s S2P SEPSM methodology improves efficiencies and effectiveness that increase process
performance between 2-5 times in terms of addressable spend visibility, working capital requirements and
cost savings.
Genpact enables organizations to benchmark their S2P performance and transform it to best-in-class based
on:
• An enterprise wide view across functions and geographies and granular mapping of S2P processes
• 30+ S2P performance measures and 100+ performance drivers
• A compendium of 200+ leading practices and a toolkit of 9 diagnostics tools
• Continuous business improvements by eliminating non- value added activities
• Optimization of existing IT and ERP investments

The Genpact S2P Advantage

• 30+ clients, 3000+ people, global reach with support in over 11 languages
• Over $15 Bn managed spend
• Manage 2.5 MM+ purchasing transactions and 8 MM+ invoices annually
• Process compliance levels of 4.37 Sigma - highest in the industry
• Strategic and technology partnerships with leading procurement service providers.
• Top Procurement Outsourcing provider for 3 consecutive years (2007-2009) and #1 end-to-end
Procurement Outsourcing provider – Black Book of Outsourcing (2009)
• World class academy for training and developing sourcing and procurement professionals
• Global delivery team - 25% of the delivery team located onshore or near shore

Highlights of the Strategy Implemented at Genpact :-

1. Importance of Strategic Planning across levels and across planning Horizontals

2. Importance of Strategic Thinking and Innovation

3. Significance of deployment of Strategy and optimum use of resources.

4. Continuous focus on achievement of strategy through reviews and feedbacks.

Way Forward
1. Understand Develop Strategy , Deploy Strategy and Review Rhythm Process details

2. Leverage the Process to develop Unit Strategy

3. Leverage the Process to deploy the strategy

4. Leverage the Strategy Plans and Business Steering Committees to make reviews more effective and
focused.

Early 2009, As a part of their strategy, Genpact started to explore and acquired some of the small scale
Bpo companies, thereby minimizing the competitions and making up a bigger entity in this competitive
BPO industry.

This Strategy that Genpact uses is perfect for their growth and generating revenue and profits.
However, to maintain and survive in this competitive BPO market, Genpact will have to come up with
more effective development of strategies at different levels to come in the near future, as Genpact
plans to grow further and form the biggest BPO service provider and spread the Name across the Globe.