Designation: President and CEO, Genpact
Career: Founded Genpact in 1997. Prior to this, worked as an officer for GE
Education: Chartered accountancy, London; Bachelor of Commerce from SRCC, Delhi University
Interests: Loves to read and is an ardent cricket fan
We’ve heard that you wanted to step down two quarters ago, but you delayed that announcement because the company’s performance wasn’t all that good and then in March, Rajat Gupta had to resign as the Chairman of the company.
There’s zero truth about the comments about Rajat and the quarterly performance. I’ve been thinking of this for a while, when the time was right we have executed it, – based on a succession plan that we’ve had for a long time. It happened at a time of my choosing. I clearly wouldn’t have wanted it at a time, sometime last year. Certainly that wasn’t the best year we had. You want to leave it on a high. We had a great quarter and a great 4th quarter last year. We have done a good acquisition and it is the perfect time for me to move on. I will spend 30 percent of my time on acquisition and integration and this is the best time for that. There was no intention of doing this couple of quarters ago. These speculations have been going on for some time. The tragedy is that they are wrong so often, it is a joke. The issues happened in June-July when the transition got delayed and we had to lower our guidance. After that everything was bang on.
Why is the timing right now?
We’ve had a great quarter, but this is not a quarterly business. We can’t run it on that basis. There is a good trend in the market and we are well positioned. We’ve completed the Headstrong acquisition which was a strategic move we needed to make. It is a great acquisition and while we will integrate the front ends, it is not a broken company that requires massive amount of integration. The general sentiments are much better and that is the best time to go. Is it the perfect time to go? I don’t think so. I did want to do something else and try out other things in my life. We’ve a long-term succession plan that is reviewed every year for the last five years. So it was a seamless, easy transition to Tiger.
According to recent news reports, Rajat Gupta was giving independent advice to Genpact while he was at McKinsey. Is that correct?
That’s not true at all. It doesn’t say that about us, if you read it carefully.
I’ve read them carefully; it names Genpact….
No, McKinsey didn’t say that. All that it says is that McKinsey’s looked at the compensation that he received from us. Rajat was a board member and an advisory director for a time. We had other relationships with McKinsey, which are normal corporate relationships. I’m not going to talk about Rajat anymore. The report is incorrect in the way it has been framed.
What is the environment that the new CEO is going to step in? What are some of the key areas he needs to look at as he comes into this role?
While the sentiments are good overall, the US economy is coming back. Europe is not in great shape. The world is more complex about the types of services that we now deliver, be it analytics or smart enterprise processes. The old cliché view of the BPO industry is long obsolete. We have operations in China and Brazil. The size and scale are substantially different. We are $1.5 billion in revenues, which is twice our nearest competitor. Grappling with that and fulfilling the promise of the industry is what he has to do. It is not a problem, but a very good challenge.
There is formidable competition from IT companies, which have BPO operations as well. How do you handle that competition and match up to it going forward?
They see that the business process management market is larger than the technology market itself. They have their own struggle, and not many of them are doing very well in this business. It’s a different business. It’s a bit like saying if a bank has a customer they can start providing them a courier service as well. It does increase competition for us, but it isn’t a foregone conclusion that they will win. There is no question that we also have to embrace technology. We have done that. There is not a single piece of work that we do today that is not based on an ERP platform or a work flow platform. In some industries, having that technology capability is compulsory, like capital markets, which is why we acquired Headstrong. In other areas like supply chain, or finance and accounting, there are platforms available which you don’t have to own. It is all about real expertise. In the past, we all focussed on labour arbitrage, today it is about what areas are you best in.
You are one of the founders of Genpact and founders find it tough to leave companies they started. How will you make sure that Tiger has the operational freedom to operate as the CEO while you are still in the company?
It is an important point, but we have always been different. We are much more global than most companies. Thirty percent of our population doesn’t sit in India. We are comfortable with empowering our people. We have a group of people from strong MNC background, it is not like they are buddies of ours. The basic pedigree of the company is highly professional. So it won’t be as much of a challenge as it might be if I were a true founding promoter. We have a strong independent board that demands and expects a high degree of professionalism. Tiger knows every inch of the company. He knows the customers better than I do, in many parts of the company like the US, because he used to live there. He knows everyone far better than I do.
Lastly, this is precisely why I didn’t stay on the board. My personal view on this is that you shouldn’t hang around on the board. I have a 20-30 percent role in the company as the Vice Chairman, but not on the board. This was a very deliberate decision I took. I didn’t want to be the Chairman of the Board, or a director. I don’t want to be breathing down Tiger’s neck, giving him advice that he doesn’t need. It is going to be driven by him. We have identified three key areas – organisation development (expanding our global footprint), acquisitions (integrating Headstrong) global expansion (growing in Latin America, Japan and China) which I will look after. And I will do it as long as Tiger wants me to; it’s going to be his call.
Having a board full of ex-CEOs hanging around, or after retiring, is not a very effective way of running the company.
Did the board offer you the Chairman’s role or as a Director in the company?