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LETTER TO CUSTOMERS AND FRIENDS Dear Customers and Friends, I wanted to wish you and your families a very happy New Year and our best wishes for 2007. Our strong partnership with customers resulted in an outstanding 2006 and we begin 2007 on a high note signing a five-year partnership with Kimberly-Clark to deliver finance and accounting services . Customers recognize Genpact as a partner sharply focused on operational excellence and continuous improvement to deliver higher value and business impact. This is a testament to our Lean Six Sigma-driven service delivery, referenceable customers and partnership approach in the marketplace. To meet the growing needs of our customers, Genpact recruited and trained nearly 12,000 people last year taking our employee strength over 26,000. This year we will invest more than $8 million in training, including our second year of executive education through Duke University, to ensure our people are at their pinnacle in terms of knowledge and performance. The growth we’re seeing is based in part on an increasing acceptance of globalization, which is changing lives through better economic and employment conditions. In fact a recent study, which is featured in this newsletter, shows a high support for globalization. A poll by Canadian research firm Angus Reid Strategies shows high support for globalization in Italy (75%), France & Canada (66%) and UK (62%). Change is disruptive and must be managed well. The US is affected the most by globalization—a trend viewed negatively by the popular media—resulting in a low support of 40%. Global sourcing players must champion long-term benefits of globalization to increase support. Global sourcing has moved the insurance industry to a new level of efficiency and productivity. The insurance story is exciting and we feature it in this newsletter. The instances of positive business impact are numerous. This edition features two insurance companies using Genpact’s Six Sigma expertise to—
CIOs are getting less for more. A Gartner study we examined reveals that more than 80% of IT spend goes for maintenance leaving little cash on the table for business growth initiatives. Global sourcing can resolve the situation as it—
Again, I wish you all the best for the New
Year and as always welcome your candid feedback. |
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INSIGHT The Finance & Accounting Outsourcing (FAO) market is set to overtake Human Resources Outsourcing (HRO) space after a few years of lagging behind. Everest Research Institute predicts that the number of multi- process FAO deals signed in 2006 will be higher than HRO contracts. FAO, the largest part of Genpact's portfolio, has seen tremendous growth. FAO's lead over HRO is attributable to several factors including-
A key reason for the rapid rise in FAO deals is the ability of service providers to show business impact. Delivering business impact in an internally focused HR function is difficult. Several recent FAO deals have shown business impact by-
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Global Sourcing Gets More for Less from IT Spends Several corporations allocate substantial funds to maintaining existing IT systems leaving little for technology innovation that accelerates business growth. However, the strategic use of global sourcing can enable IT organizations to focus on business growth initiatives. Too many IT organizations and too much IT spending is not contributing directly to business growth,” according to research firm Gartner. Gartner feels that eight out of ten dollars that companies spend on IT is “dead money.” Gartner calls it 'dead money' as the spending only keeps "the lights on" but does not "directly contribute to business growth or enhance competitive advantage." "The investments allocated to do new things, to change the business, are usually low, no more than 20 percent, and the investment in innovations which could transform the business is even less," according to Gartner. Corporations have leveraged global sourcing to put IT budgets to optimal use. This is possible as global sourcing—
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Globalization Support High Worldwide, Low in US Global commerce received extensive support in over 20 countries in a recent poll conducted by Angus Reid Strategies for the Canadian magazine Maclean’s. Sixty seven percent of global respondents said the best way to improve economic and employment conditions is to remove import restrictions and increase trade. India and Saudi Arabia boasted the highest support for global trade at 87 percent, followed by South Africa at 79 percent, and Egypt at 78 percent. The lowest numbers came in the United States, where only 40 percent of respondents voiced support for global trade. Since the US is the dominant player in global services outsourcing, both service providers and buy-side organizations must stay alert to the sentiments on globalization and the consequent legislations. Interestingly most US-based corporations support globalization. Microsoft CEO Steve Ballmer said recently in India, "We will have to increasingly bank on India for scaling up our operations to rise on the next wave of innovation. So, outsourcing is here to stay. I have always stated that the so-called outsourcing is good for the US economy."
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The Positive Spiral of Cost & Process Productivity Several corporations have cut costs through global services sourcing, but some go much further. They better cash management, productivity and controllership using Six Sigma that not only continuously improves outsourced F&A processes but drives them to best-in-class. FAO magazine recently published an article by Genpact Senior Vice Presidents Arvinder Monty Singh and Shantanu Ghosh on using Six Sigma to improve outsourced F&A processes. Read More |
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CASE STUDIES A leading UK-based global health & care provider wanting greater scalability decided to move 10 processes from an existing service provider to Genpact. The processes involving 176 associates had to be transitioned to India in a very short time of two months. The use of Six Sigma Lean right upfront at the request for proposal stage and simultaneous implementation of the solution identification and transition stages enabled rapid process migration. This transition was front loaded to ensure customer satisfaction, seamless operations post transition and reduced time in knowledge transfer. The steps taken in this direction were—
Genpact also created a business process management system which tracks --
Business Impact |
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| 2. Process Reengineering Increases First Touch Resolution The sales agents and customers of a large US-based insurance company were dissatisfied due the delays in commission payments and wait times for issuing news life insurance policies. The insurance company risked losing business as agents were looking to divert business to other companies. Using Six Sigma Genpact found the root causes for the problems to be the following—
Genpact reengineered processes and redesigned
work flow which reduced process steps and improved hand-offs The
teams used level–loading principle from Lean to institute
shift changes which facilitated synchronization of associate work
schedules with database updation timings, to cut delays in entering
commission details. Genpact also implemented a black belt project
to improve customer facing processes.
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| GENPACT
NEWS Genpact signed a five-year agreement with Kimberly-Clark
to provide F&A services in the areas of: accounts payable and travel
expenses, pricing administration, accounting-to-reporting and supply-chain
accounting. Read
more |
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GE Leader Speaks at Oracle OpenWorld GE General Manager for GE-Genpact Programs Afzal Modak spoke on “Transforming Finance Operations” at the Oracle OpenWorld in October and highlighted the success factors of GE’s outsourcing journey. He also focused on the lessons learnt in transforming F&A operations through global sourcing and the GE-Genpact partnership. Formed as part of GE, Genpact is now majority owned by GE and two private equity firms—General Atlantic and Oak Hill Capital Partners. Modak felt that some of the critical factors to successfully transform F&A through global sourcing were—
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Hess & Genpact Jointly Speak on Six Sigma Hess Corporation Vice President for Process Excellence, John Douglas and Genpact Senior Vice President for Lean Six Sigma and Transitions, Arvinder Monty Singh jointly spoke on the use of Lean Six Sigma to drive process excellence at the Conference Board-hosted “The 2006 Shared Services Conference” in Chicago in October. The event attended by senior executives of Fortune 500 companies such as British Petroleum, ABB, Walgreens, Boeing, General Motors, Cadbury’s, Delphi among others focused on transforming shared services centers, always viewed as costly overheads, into strategic value contributors. In the presentation “Using Six Sigma to Minimize Risk, Maximize Business Impact and Drive Process Excellence” Douglas and Singh focused on the benefits of Six Sigma, the key lessons learnt and case studies. Some of the learnings highlighted were—
The case studies presented showcased the business impact to customers which included—
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Wachovia-Genpact Virtual Captive Featured Leading sourcing magazine Global Services recently featured the Wachovia-Genpact virtual captive model. The magazine states that the model “seeks to benefit from the complimentary strengths of the two companies.” “The setup is neither a captive nor a pure
third-party relationship. Placing immense significance on its overseas
staff, Wachovia has adopted an inclusive model for hiring and retaining
staff,” the magazine says. Read
more |
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