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Genpact Adds Analytics and Automation and Invests in Domain Expertise to Position on “Generating Impact”

In 2012 Genpact was starting to get behind the curve. Many of its competitors had caught up with the need for process framework methodologies and it was struggling to combine its IT assets with its business process services business. In addition, despite its focus on process excellence, Genpact sometimes lacked depth of domain expertise with the result that its execution was variable across accounts.

However, Genpact has undergone a major change in strategy and positioning since October 2012, which is now starting to bear fruit. Following investment by Bain Capital, McKinsey’s subsequent involvement with Genpact encouraged a strategy based on acquisition of key domain IP/technology supported by domain-specific consulting and go-to-market capability. Genpact has now fine-tuned this strategy; its repositioning seems largely complete, with the company also some way down the path in terms of strategy execution.

Genpact, which used to position on the worthy but somewhat static concept of process excellence, is now positioning against “Genpact Intelligent Operations” with the more forward-looking and business-oriented tag line “Generating Impact”. While, in the current digital-centric BPS environment, it continues to leverage its heritage and positioning against the very valid point that BPS suppliers need to understand process and domain in order to successfully leverage technology, Genpact has expanded its positioning by adding a business focus, and incorporating greater emphasis on analytics and automation. In particular, the company is aiming to differentiate based on combining “process expertise to deliver effectiveness, analytics to provide visibility & direction, and advanced technologies to execute more efficiently”.

Genpact was an early leader in developing process frameworks that identify how process levers impact business outcomes and assist organizations in process innovation and moving towards process excellence, through its SEP (Smart Enterprise Processes) framework, an approach now adopted by the majority of major BPS vendors. While SEP and process excellence remains an important part of Genpact’s DNA, the framework was starting to lag behind that of rivals and clearly needed a major update in line with Genpact’s new strategy and positioning.

Accordingly, the new model, SEP 2.0, has moved beyond process excellence supported by business outcomes and process schema to:

  • Value creation:
    • Advanced operating model designs, including cross-functional hybrid models in support of client GBS environments and retained organization designs
    • Integrated blueprints incorporating process models, analytics, and technology
    • Transformation office, incorporating roadmaps and change management
  • Performance optimization:
    • Transformation Index including integrated maturity models & benchmarks
    • Industry best practices
    • Operating rigor, including real-time reporting, metrics, and culture
  • Operational excellence:
    • Smart opex, based on design practices and delivery playbooks
    • Compliance & controls, based on embedded and preventive controls
    • Continuance Innovation Office, based on Lean 6 Sigma, and governance.

Genpact’s process design principles have concurrently been amended to:

  • “Build-to-adapt” not “build-to-last”, recognizing that processes and the underlying IT need to adapt quickly to business circumstances
  • Data-to-action, with analytics embedded into each process/service
  • Design-to-operate, so that processes “feel right” to the people who operate them
  • Using systems of engagement, on top of systems of records, recognizing that changing their systems of records is an impossible, or slow and costly, process for most companies.

Genpact will clearly continue this approach but with a greater intensity in terms of applying “digital” to relatively end-to-end processes, while complementing these “end-to-end services”, and differentiating, by picking specific pain areas and building services that address more focused processes with “surgical interventions”.

This dual approach is embodied in “Genpact Digital”, which, predictably, is focusing on process-centric new technology, as opposed to platform-centric legacy technology, which can be applied to industry-specific and back-office processes (rather than front-office processes). In support of Genpact’s traditional business, Genpact Digital is focusing on digital integration services, looking at how advanced technologies can be embedded in support of wider end-to-end processes. The advanced technologies that Genpact is increasingly looking to embed within processes include machine learning & process automation, natural language processing, cognitive computing & AI, and algorithmic decisioning & service orchestration. Like many BPS vendors today, Genpact is placing a considerable emphasis on robotics process automation (RPA).

In addition, Genpact is looking to apply IoT for industrial asset optimization. Areas of key impact that it will target include increased planning & budgeting effectiveness & efficiency, reductions in emergency purchases, and reduced MRO and services costs.

Genpact Digital’s second area of focus in support of targeting narrower process pain points is in developing systems of engagement (SoE) that can be embedded with analytics to provide packaged, typically BPaaS, services.

Examples of the latter SoE that have been integrated with analytics and operations to address particular processes/pain points are:

  • OpenWealth, supporting a wealth management BPaaS service for U.S. and U.K. markets. The service supports investor acquisition, portfolio construction and administration and interfaces with the client trust accounting & custodial systems of record and is based on a carve-out of a wealth management platform from a global financial services company
  • LoanPath, providing a centralized desktop for multi-product administration ensuring data consistency across systems of records in a commercial lending environment
  • Quantum, for mortgage origination, enabling end-to-end and component mortgage origination and providing market and channel-specific configurations
  • Multi-channel Customer Acquisition & Servicing (MCAS), in support of the delivery of multi-channel customer management to retail banking customers
  • P&C underwriting & triage, analyzing past binding patterns to prioritize the sequence in which cases are presented to underwriters with the aim of maximizing revenues. The service is estimated by Genpact to lead to a 6%-8% cost take-out alongside a revenue uplift of ~10%.

In addition to investments in new service offerings, its new strategy requires Genpact to make significant investments in domain expertise and in IP specific to each of its target domains – which in turn leads to a need for greater focus. Accordingly, the company has considerably sharpened its vertical focus, reducing its previous 23 verticals to 9: retail banking, commercial banking, capital markets, insurance, healthcare, life sciences, CPG, manufacturing, and high-tech. Genpact is deliberately not targeting industries with a predominantly front-office process focus such as retail, telecoms, and utilities.

The company’s vertical approach not only has new service offerings but also enhanced go-to-market capability of both sales and solutioning consultants. In particular, Genpact has increased its S&M expenditure to 6.6% of revenue (previously 4.7%) and changed its recruiting approach to incorporate greater levels of domain experience into its salesforce. This is reflected in the average 15 years of experience within the current Genpact salesforce.

Genpact is looking to use its upgraded go-to-market capability to target transformative discussions and larger deals, and is aiming to create demand (rather than simply reacting to demand), to generate a greater proportion of sole-sourced deals. Clearly the company’s new portfolio of BPaaS services that are targeted at focused pain points have potentially a major role to play here. While Genpact’s 2014 revenues increased by a modest 6.9%, its client revenue profile improved with 89 clients with $5m+ revenues per annum, up from 78 in 2013. Even more encouragingly, Genpact’s 2014 bookings increased 50% to $2.16bn – this increase in bookings reflected in 12.5% CC revenue growth in Q1 2015.

BFSI (including capital markets) accounts for a third of Genpact’s revised target sectors and is a key area for new initiatives. Recent ones include:

  • Development of a Know Your Customer (KYC) utility offering with Markit. The KYC utility involves a number of “design partner banks” to provide industry practice, compliance standards, and policy inputs; Markit for platform capability; Genpact for operations. The utility uses a cloud-based platform and looks to separate out document & data collection (performed by the utility) from risk management & decisioning (performed by the client), taking out ~50% of the KYC process
  • Partnering with Oliver Wyman for risk management services. Together with Oliver Wyman, Genpact is supporting a major capital markets firm in Dodd Frank Act stress testing. Oliver Wyman created the DFAST submission document with Genpact then gathering, reviewing, compiling and documenting business forecasts, loss projection models & stress testing models.

Accordingly, Genpact is once again at the forefront in establishing the model for addressing, and deriving business value from, BPS. The main threat to Genpact within this strategy is its emphasis on industry-specific and back-office processes to the exclusion of front-office services. As industries disaggregate further, and even formerly industrial companies move from B2B to B2C models, industry-specific processes are frequently merging with front-office customer service and management. This blurring of front-office and middle-office processes may prove a threat to Genpact unless the company begins to extend its capability through acquisition to handle end-to-end consumer contact through fulfilment in a number of its target sectors. 

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