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Business Process Outsourcing to India - Genpact Inc.

Problem statement

General Electric Capital International Service (GECIS) was a part of general electric

(GE) and operated as an offshore unit. In 2004, Pramod Bhasin, CEO of GENCIS, decided to

operate independently and move forward as a business process outsourcing (BPO) firm. The

problem which the company faced with that decision was starting its operation as a non-GE firm;

it will be difficult to attract clients towards the company. The company is having a very strong

presence in the market as a part of GE business, however, working independently as a BPO firm

would take much time to convince clients towards a BPO system of work. Building the trust

factor with the potential clients is another big issue for the company, as completely outsourcing

the business needs much trust on Genpact Inc. and its capabilities.

Overview of the company

GE came into being in 1892 in the United States as a result of the merger of two

electrical device companies. In 1989, when the CEO Jack Welch visited India he saw lots of

opportunities there for the business to grow. In India the legal system is very good, the people

over there are full of technical skills and market has a very strong potential to grow (cited on

second page of case). That was a point when the company chose India to expand its operations.

Bhasin was president of GE capital India, which is located in New Delhi. He has been with GE

since 1984 and operated as a Radio Corporation of America. When he returned to India he saw a

great opportunity of an offshore unit of GE, which helped GEICS to come into being. The

company achieved a great success after seven years of its establishment in India and expanded its

services by adding accounting, finance, customer fulfillment, insurance, enterprise applications


and IT infrastructures. GECIS had become the largest BPO Company in the country by the end

of seven years of its operations in India (As cited in fourth page of the case). In 2004, GECIS

decided to operate as an independent firm with a name Genpact Inc. and gave its services as

BPO. They have a unique culture at Genpact; they build their business by meeting the demands

of the leaders of GE. The main focus of Genpact is to provide best outsourcing services with a

strong emphasis on customers’ preferences and creative human resources practices within the

organization.

Analysis

PESTEL

Political factor

Political factor describes the policies made by government in order to allow the goods

and services to enter into the country; political factor also consists of outsourcing. It also

describes the government’s support towards the business that is operating in the country. At a

stable rate the Indian government is average. Its political system is analyzed by different factors

that involve government policies, politicians’ interest and the rules implied on business structure

of that country. In India, political influences in privatization are reduced due to which they are

producing better results. Indian government allows free business and flexible international trade

that motivate companies to do business in India. Hence, the less political instability in India

makes it a better place for the companies to do business and make the country more developed.

Economic factor:
The economic factor in India is considerably stable, which makes the country more

attractive in a professional way. India allows a liberalization of foreign capital and does various

agreements on foreign technological advancement that help the country to improve its economic

conditions (as cited on eleventh page of the case). India decreased prices on various goods that

allowed companies to make profit by selling more goods as the taxes implied; and the prices set

by the government are moderate. Pricing strategy set by the government in India helps the

company achieve its target of attracting more customers and made it easy for the foreign

companies to set their business in India and enjoy a good economic environment of the country.

Social factor:

India put great interest in social responsibility; it took the initiative in setting the pension

cost for its employees working in the companies. The Indian government is now changing the

trend by recruiting older employees in the organization that help companies to achieve better

results by taking advantage of the experience which older employees have (As cited on the

eleventh page of case). Increasing the social activity of the country’s overall progress is helpful

in decreasing the unemployment rate in the country, and it brings a change in income

distribution, level of skills, education level and employment rate within the country.

Technological factors:

India is updating itself with the technological changes that are useful in the development

of the country. Instead of using the old traditional system, it is now focusing on the more

developed and updated technology that is used around the world. This technological

advancement helps the companies to produce better output by minimizing their time and saving
its cost that could be utilized due to an old trendy technological system of work. Technological

advancement helps the country to move towards innovation and make creative products that

benefit overall India by increasing its product demand around the world (As cited on the eleventh

page of case). Moreover, India is more towards IT advancement that brings lots of success to the

country as it is now very easy for the companies to operate in India. IT advancement allows

companies to maximize its profit by using a capital intensive system and lower the labor work

load. This system of work increases the efficiency of the output produced by the companies as

now there are less chances of human error in the result of projects.

Environmental factor:

India is offering a friendly environment for the companies to operate in India. The

Government of India allows a free business that makes it possible for the companies to maximize

its profit and achieve its desired goal. The environmental policies of India allow companies to set

high profit for the company and achieve it with the support of government.

Legal factors:

BPO vendors have privacy issues as they want their information to be secured and

confidential. Privacy is a serious concern with the government of every country. Each country

has its different privacy policies that make the activities followed by private sectors on the

collections of information from the clients. Companies have to secure clients' information and

disclose its personal information according to the policies made by the government of that

country (As cited on the eleventh page of the case). In India, privacy issue was very low as the

policies defined by the government are a win-win situation for the client as well as for a
company that is operating in India. As cited on the eleventh page of the case, the company has

issued a personal identification number (PIN) to the taxpayer and the internal revenue code of

US government made it difficult to use the personal data of individual taxpayers.

Offshoring and Outsourcing

Outsourcing and offshoring are two different terms that are responsible for performing

two different tasks. Both work to help the company to reduce its production cost and maximize

its profit by using other companies to perform a particular task on its behalf (As stated on the

fifth page of the case). Offshoring is defined as a function of moving business to another country

of the world however, it is supervised. It helps companies to minimize the cost related to

business by having its operations in the country where labor cost and other business operating

cost is less than the national country (As stated on the fifth pageof the case). Offshoring business

allows companies to have a control on its business activity while operating on an international

basis. Over here, the company monitors both input and output of its project operated outside and

transacts process related to its business only. On the other hand, outsourcing is a process where

companies transfer particular activity related to its business to some other country with the

authority of its supervision. The company only focuses on the output generated from the

outsourced company rather than the process of generating output. Outsourcing is a company

where an enterprise performs a similar task for multiple companies.

Drawbacks of Outsourcing

When the companies outsource their business there are certain risk factors that are needed

to be considered for the company or the factors that can cause huge loss if the company won’t
consider it while making a selection of its vendor (As stated on the tenth page of the case). The

drawbacks of outsourcing business are as follows:

Location Risk

When a company is going to outsource, it is very important for it to scan all the necessary

terms and condition of the particular location of its outsourced firm. It is a challenging situation

for the company to deal with the changes that are due to the change in location of a particular

operation. Fluctuation in the currency exchange rate may cause the parent company to suffer as it

has to pay according to the current currency rate of the host country. Moreover, there is some

cultural barrier that makes it difficult to deal with the people of that country (As stated on the

tenth page of the case). Their system of work and values of professional life is different that

results in the problem for the parent company carry out its desired task according to the way it

went. Companies need to consider all the risk factors related to a particular location, for example,

the culture followed in that country, social and political norms, and work life values for the

people over there. Identifying these differences help the parent company to carry out its business

more effectively and turn this risk into an opportunity of outsourcing.

Operational risk

It refers to the differences in time, cost and quality of work. This type of risk mainly

occurs from the vendor side. When the outsourced company fails to understand the quality of

work desired by the client then then the host company fails to produce the best output. Parent

company need to give its requirements in detail and remain in touch with the host company to

find out the progress of its project and ensure the quality of work produced (As stated on the
tenth page of the case). Timing issue also needs to be considered when the company is going to

outsource its business, as the timings of the host country are important while setting out the task.

Working hours of employees play a great role while setting out a target in other country of the

world as different countries have different working hours due to which sometimes the client has

to suffer.

Capability risk

Identifying the capabilities of the vendor is a key to be successful as this issue arises

when the client needs efficiency in work in a less amount of time. A company needs advance

level of capabilities in order to carry obtain a successful result, in a more efficient manner to

make a strong client relationship (As stated on the tenth page of the case ). Parent company while

outsourcing should trigger out the skills and abilities of the vendors to reduce this risk factor.

Information about the capabilities of the host company helps clients outsource more business and

relax about the result produced.

Strategic risk

Complete dependency on the vendor is very risky for the company as it is relying on the

vendor for carrying out the business. To remove this risk factor, there should be a legal

agreement between the parent company and the vendor that helps the company to ensure the

business should be carried out by vendor as it is decided between them (As stated on the tenth

page of the case). Legal agreements play an important role in reducing a strategic risk factor as it

helps the company to penalize the vendor if they are not carried out their business according to

the requirements of the clients.


Client expectations

In BPO, client expectation is important for the company. When the company is going to

outsource its business, it is very important for the vendor to fulfil the client expectation. The

basic need of the client is to lower the cost of outsourcing its business as well as get the best

quality of output. When dealing with a new vendor, it is very risky for the company to depend on

them for its business to be resulting in a way as they want (As stated on the tenth page of the

case).

Reasons for the rapid rise of BPO

In the past decades, companies started realizing that for effective output production it

need to minimize its cost of outsourcing its business, i.e., the company needs to minimize its

production cost to increase its profit margin by transferring its business over to vendors. After

realizing this factor, companies started moving towards outsourcing a particular portion of their

business by moving its production department to another company. Thus, by doing so vendor’s

office became the back office of the company where the entire task has been performed and the

company will get its desired output. Outsourcing process benefits the company in a way that the

company gets more time for task designing or setting the goals to be achieved rather than taking

time on the operations for achieving the goals. On the other hand, outsourcing helps the vendor

by using its skills of working as a back office for different companies around the world. BPO

starts becoming successful with the passage of time as it is a win-win situation for both the

vendors and the company; both enjoy strong relations as one is designing the task and other

works as an operating department in accomplishing those tasks.


Competitive Advantages of India

Outsourcing and offshoring is a business where quality of the work is acceptable by the

international country and its production of goods and services give the country a competitive

advantage over others. India has a competitive advantage of offshoring and outsourcing business

as the operations carried out in India are appreciated by the client companies around the world

due to the quality of work it maintained though out its operations. Challenges included in BPO

and offshoring are cultural barriers, timing issue, social and political problems that need to be

addressed by using effective management skills. India ranked among the top countries that

client’s feel reliable for a transferred of their business due to the satisfactory political and

economic factors of the country.

Captive versus outside customer

Captive give advantages to the company to maximize its cost by identifying the low cost

center. Indicate untapped new area for the development and delivery of goods and services

around the world. Companies move towards captive vendors to transfer their business, but enjoy

all the supervision of their business by having knowledge about the project day to day activity.

This could help the company to minimize its cost, yet having all the control of its project (as

cited on page third of the case). On the other hand, when the clients move towards outsourcing

their business, then the overall responsibility of the operation to be carried out effectively

depends on the host country. Here the task performed by the host is very critical as it has to bring

out the accurate result according to clients' expectations. Factors that help the vendors and clients

to make their relation strong are the opportunity which the host country gets by allowing

international trade and create paths of international wealth for the country and reduce the
unemployment rate by increasing job opportunity through the client's business. Clients'

businesses help the country to upgrade the economic condition by offering more jobs to its

people and with the quality of work increase the international trade in the country, whereas, it

provided benefits to the clients by getting their businesses from the operations performed by

other country on a cost saving method.

Recommendations

India has a potential market for the companies to outsource and offshore its business.

Genpact Inc. is facing an issue to convince the clients towards a BPO system of work with a

company who is new in this field of work. It is difficult for the company to attract clients with a

new name of the company, however, if the company shows its affiliation with GE for many years

and show some of its work done by the company as GECIS then it would be easy for the

customers to know the company and start outsourcing their business by identifying the success

rate company has achieved in its past. However, now the company is going to operate

independently, but at the start showing its affiliation would work for clients to understand its

brand name which helps them getting the idea of its success. Without showing itself as a member

of GE, it would be impossible for Genpact to attract more customers as for BPO trust building is

a very important factor for the clients gives its business to the vendor.
References

Gupta,A. (2013). Environmental and PEST analysis: An approach to external business

environment.

Palugod,N. & Palugod, P. (2011).Global Trends in Offshoring and Outsourcing International

Journal of Business and Social Science.

Alder, H.(2013).Outsourcing: Problems with Outsourcing.

Mittal,V. Frennea, C. (2010). "Customer Satisfaction: A Strategic Review and Guidelines for

Managers."

Plunkett,W. Attner, R. & Allen, G. (2007). Management: Meeting and Exceeding Customer

Expectations, Business & economics.

Adam , J.(2003). Managing Business Risk: A Practical Guide to Protecting Your Business

Quandt, M. (2012).The Need and Importance of Outsourcing for Small and Medium Sized

Companies.

You might notice there is no real citation, but I used these references and I

wroth what I understand in my way.