I often get asked how big a role luck played in our success at Genpact. Well, if a never-say-die attitude, incredible timing, a great parentage, ahead-of-its-time processes and continuous learning comprise luck, my team and I had loads of it. There is a good reason why I have placed the composition of ‘luck’ in that order. For, when we set the wheels of the business process outsourcing industry in India in motion, there were more sceptics than believers. The big defining moment came when I was running GE Capital. We were always vulnerable to a change in regulation. So, one fine day, when the RBI said that banks cannot lend to NBFCs, our funding dried up in one stroke.
Given the talent base we had, I was determined to build a business that was not dependent on local regulation or the domestic market. That is where the idea came in. When I tested this theory with several people, they said you can’t do this in India — you have neither the systems nor the infrastructure. But I was convinced the economic proposition of what we were talking about was so good and, coming from GE, we had huge belief in our capability to build a system. We were already running processes within GE Capital, so I knew we had extraordinarily talented people who could deliver to a high standard.
I wish I could say my conviction was borne out of analysis but it wasn’t — it was a lot of gut. I went to my top management that had the likes of Jack Welch and Gary Wendt and said, “Let me try this, for it is the only way to find out.” And they asked me about my business plan and my answer was, “I can’t have a business plan for a business that has never been done before. What I do need is a couple of million dollars to experiment.” During that time any major corporation could have capitalised on the opportunity. American Express did have a pilot and that is where we got Raman Roy from, but it was not taken to scale. It was only GE that had the guts to try an untested business proposition and say. “If it works, we will go at it full steam.”
But to build an environment that would deliver global standards was a challenge. We were embarking on something that had never been done in the country. There was no template, there were no people. It was not like you could reach out and say, you have done this before, so please come and show us how to do it. We recognised very early that this is not the capability India had and if we wanted to offer these skills, we had better be able to build these skills ourselves. As a result of that, we realised that building a hiring capability would involve finding all sorts of surrogates for the activities that we set out to do. Secondly, we set up a very good training programme right from day one.
We understood that we had to be flawless in the early days. In the early days of 1997-98, not being able to get bandwidth was a huge problem and we were always juggling with how much bandwidth we could get. Therefore, we double-checked, triple-checked, and had a double back-up and triple back-up for everything, so that nobody could ever turn back and say that your creaking infrastructure cannot possibly deliver to the standards we require. That was a huge threat to us at all times and we could not have given anybody even a minor opportunity to be critical of us. And it took a lot of creative problem solving and finding alternative solutions every step of the way. For every process, we would identify who we needed, what was available, what the closest similar profession was, and how we could supplement that with very good training.
We bought manufacturing people in and they built a production planning and supply process that laid out what we needed and where we could get it. We needed people who understood customer service, so we went to the hospitality industry. At one time, pretty much the entire hospitality industry in India was very unhappy with us because of the pace at which we were hiring from them. We had to hire drivers to carry our people back and forth, so that made a lot of car and taxi companies very unhappy. A lot of schools were very unhappy as we were hiring school teachers at high salaries to train people.
At one time, we had 300-400 people in our training department and were hiring 1,000 people a month. Unlike what is common wisdom about BPOs, they are hugely complex animals. You are undertaking 3,000 different processes at any time, so the level of complexity is enormous and you have to be ready to take that on because that is what clients demand.
When we spun away from GE, we made a lot of mistakes and lost many deals. However, clients eventually accepted that we were not sales guys trying to sell a deal but hardcore operators, that our operating capabilities were better than anybody else and that we had consistently delivered for a company that was famous for its processes.
The one big mistake we made was not taking on third-party clients early enough. We really could have owned this market had we been able to go after independent clients earlier, but at that time our hands were full. Had we said yes to all those who asked, “Would you do this for us?” after walking through our corridors when we were GECIS, we would have been doing $10 billion in topline today. Some of these clients now run captives of 18,000 to 20,000 people. While we were drinking from a fire hose as it were then, we did have people who knew how to build businesses and, consequently, I think we could have tackled it.
When we finally moved in that direction, it was driven by external as well as internal factors. We were not only missing out on the exploding growth in the industry, business from GE had started to slow down, too. A lot of our people were leaving and joining start-ups and if we had not branched out, we would not have been able to hold people back. If you are growing at 5% or 8% a year when everybody around is growing at 25%, at some point you risk losing your best people. So I went to GE and said, “As long as we will look at your part of the operations really well (which was their primary concern), allow us to spin-off and we can generate a lot of value.” When the stake sale to General Atlantic Partners and Oak Hill happened, the feeling was more of independence than of exhilaration. The feeling that we could now go out and build the business the way it should be built was very invigorating.
Building a management team is something we did with very good success — because of GE we were able to attract excellent people. An even bigger accomplishment is having retained people. Our senior team has been around on average for 12-15 years. It is challenge and empowerment that has held senior talent back. People love the challenge and opportunity to do new things. We were the first in China, Romania, among the first in Mexico, and now we are opening in Brazil and then Colombia. By giving our leadership team enough latitude, we drove out what I call the fear of fear. We got rid of the fear of failure that holds many companies back. We did that by giving people a lot of ownership, allowing them to make mistakes and learn from them.
Since the spin-off, GE has moved from 100% of revenue to about 30%. In the first five years after we became independent, our global client growth was 80% and we were growing faster than some of our competitors’ entire annual revenue. This was largely possible because of the processes that were put in place right when we started. What we inherited from GE was invaluable.
Lean Six Sigma, a quality improvement tool, is ingrained in Genpact’s DNA. While Lean Six Sigma was fairly well known in manufacturing, GE’s contribution lay in applying it to services. One vital decision that we made was to train everybody at Genpact in Lean Six Sigma. Because we implemented it when we started, it has led to a unique culture, for you can’t start doing that when you are 55,000 people strong.
As we moved to China and then Romania, we used our India learning as a template. By now, we had learnt all the pieces of how to transition processes and set up infrastructure quickly. In India, we may have needed six or nine months but when we hit Romania, we needed three months from start to finish to set up the parameters of whom to hire, processes, operating framework, etc. But each place did have its challenges. For example, in Dalian, we had Indians who spoke English trying to train Chinese who spoke Cantonese and Mandarin with Japanese doing processes for Japanese clients in Japanese.
We also localised fast and, through a process of trial, retrial, experimentation and mistakes, we completed the loop that we had built up. But success created its own problems, for once we went to a new country, others followed. This caused huge cost and attrition pressure. There were some benefits of being a pioneer but we also got poached heavily. In Eastern Europe, the challenge was that none of the countries was big enough to support massive numbers of people.
Genpact today is a legacy player with deep domain knowledge and very strong leadership talent. You can’t replicate that nor can you imitate the deep DNA of Lean Six Sigma operations. That is, and will remain, our strength. Today, when we win a lot of business, we win it because we are unique in providing this capability. While the growing notion of core versus non-core competence is going to propel outsourcing even further, it is becoming hard to figure out where the competition is going to come from. It could be driven by cloud computing, social media, or new applications that are being developed around the world.
Timing and luck is integral to life. I think if I had this idea and I was working for some company other than GE, I would have gone nowhere. We took a lot of ahead-of-time decisions and luckily — there’s the word again — for us, most of it went right and that is how we grew to a billion-dollar company. Everybody told me GECIS couldn’t be done.
While conventional wisdom can be true and correct, you must question the status quo all the time. That is what I keep reminding my team when they tell me, “We know nothing about this area, how can we succeed?” I tell them — if we had followed that line of thought in GECIS, then what became Genpact would not have existed at all. This is more or less our battle cry: “Have no fear of fear, don’t worry because it has not been done before, don’t worry because you are up against huge competitors, don’t worry if 20 people are saying you don’t know anything about this”.
Oh yes, there was one instance of happenstance that I must share with you and that played out just before we were planning to list Genpact on the NYSE. In case you are not aware, our ticker symbol is ‘G’ and we got it only because the earlier company trading under that ticker, Gillette, got bought out and merged into Procter & Gamble. Now, that is sheer luck. As for the rest of what we achieved, that is history.
This article was originally published in March, 2012. For a more detailed version, you can read Pramod Bhasin's Secret Diary