NV Tyagarajan: New Leader, New Expectations

Even today, when you talk to the top leadership of Genpact, including Pramod Bhasin, they never forget to mention their GE heritagetheir GE DNA. If you go by that, there is one thing you should logically expect from NV Tiger Tyagarajan, the CEO designate of the company. He will try to change the direction of the company completely. It is a time-honored GE tradition. The new CEO changes everything. And Tiger, like Bhasin, is a GE man.

And if you go really by the GE tradition, the change may not necessarily happen only in areas where everyone is expecting it to happen.

Like growth for example. In 2009, it grew 7.5%; in 2010, that was a shade better at 12.5%. Bhasin is unequivocal about the fact that he is not happy with that kind of growth. Yes, growth is lower than what we will like. We will accelerate growth. We will have to, he says. Genpact started registering revenue in 1998. Since then, this is for the second time that 2 consecutive years have seen growths lower than 15%. When it was happening for the first timein 2004 and 2005it took the bold decision to go third party. In all other years, the annual growth has been in the excess of 20-25%, touching 34% in 2007.

The challenge before Tiger is not just to pull back growth immediately. That is comparatively easier; and if what some insiders say is to be believed, that may not be his top priority, though as a listed company he cannot ignore it completely. Apparently, he is focused on creating the next generation growth platforma new model that could ensure sustainable growth for at least next 4-5 years. This is exactly what Jeff Immelt did in GE once he took over. And closer home, in a much smaller scale, TK Kurien did when he took over the mantle of Wipro BPO from Raman Roy. For those who do not know, Kurien too is s GE man. And he too was stepping into the larger than life shoes of Roy, like Tiger. Both Bhasin and Roy are BPO legends. But since then, the industry has changed. It needs tough managers, may be mavericks alright; but rest assurednot legends.

Some of it is folklore. It is about Pramod did this; he did that, says Bhasin, modestly, but matter-of-factly. And he is right. But folklores do not happen that much in a mature industry. There are phases in an organizations evolution. As we enter a new phase, he may actually be better than me in meeting those challenges and leveraging the new opportunities, says Bhasin.

Only time will tell whether he is or he is not; but what Bhasin probably means is that in different phases of the evolution of a companyand lest you forget, an industrythere are different types of leadership that are needed. Neither Bhasin nor Kurien managed real transformation when they were direct targets of analysts. Genpact was not listed; Wipro BPO was just a division. Tiger will have to bring about any change that he wants to in full limelight. Any drop in growth or profitability by a few basis points would be thoroughly analyzed, scrutinized and questioned by the analysts in the street.

The Strategist

Tiger brings in 2 great strengths. First, like Bhasin, he is a thorough quality and process man, great in execution. That means the quality and depth of execution that Genpact has will continue to remain its major differentiator.

Secondand in this, he probably has more exposure than Bhasinhe has played a front-end role as EVP marketing and sales, based in the US before he became COO and moved to Gurgaon. From 2005 to early 2009, he was primarily responsible for commercializing the company. Genpacts revenue from global clientsas it calls it non-GE customersgrew almost 100% y-o-y in that period. Tiger deserves the maximum credit for that, says Bhasin. Even today, that remains the most closed metric after the topline and bottomline in the company.

So, do not get surprised if some of the fundamental changes that he brings about in the company could be in the areas that are customer-facing. For one, the company is planning to move a lot of its business leaders, responsible for P&L to the UScloser to the customers.

IT services has been sort of a Waterloo for Genpact. While the low growth in 2009 was industry-wide, in 2010, part of Genpacts slower growth is because of its lower growth in IT services. And it has been that way for the last few years. While IT services as a separate area is just 1 metric, the role that technology plays in BPO would become significant and may well be the differentiation. Cloud has given a whole new meaning to IT and services companies are in a good position to leverage that. Unfortunately, few, including IT services firms have done much, as there is a bigger risk. There is no double opinion that technology needs to be leveraged much better than how it is done today, says a senior executive from a leading consultancy. He is far better with technology, says Bhasin, about Tiger. So, that is another area to watch out for. Both in terms of integrated IT-BPO play as well as better leverage of technology, Genpact could take radical steps.

Bhasin says that government is one area that his company has not invested in the way it should have. But will the new CEO tread in an area that requires a lot of time, energy, and mindshare is anybodys guess. Apparently, Genpact is already working with GE for setting up some engineering design centers. If that is true, and that succeeds, this is 1 big white space that the company could get into.

Also, while Genpacts geographic diversity is better than many offshore-centric companies, both in terms of markets and delivery, it has not been able to penetrate much of the emerging markets, including India, which it identified as a growth market a couple of years back.

What will be Tigers market strategy is something that we will have to wait for. But moving the center of gravity of the organization closer to the customer and a better technology play could well be on the cards.

The Leader

Whether he takes a radical departure or continues in the path followed by Bhasin, few question Tigers ability to be able to move the business. He has successfully handled both the front-end, back-end, and even finance. Where he will really be tested is in institution building.

Genpact employs 45,000 people out of which more than a dozen are SVPs and C-level executives. Many of them are CAs, MBAs, and engineers. And many of them have been with the company for more than 5 years. With so many services and so many verticals, it is a fairly complex organization. Yet, it has always remained an employer of choice. It has always remained among the top 3 BPO employers in India in our annual survey. Not too many large companies are that consistentexcept probably TCS and HCL Infosystems in IT.

That is something he cannot afford to dilute no matter what the next few quarters of growth are. Some early indications are not great on that point, though it may not be alarming. As many as 5 SVPs and senior level people have left since he took over as COO. That includes Vivek Gaur, who resigned as CFO after 5 years in the company; Manish Soman, SVP and business leader, software services, who left in 2009. And then, between April 2010 to January 2011, many SVPs and VPs left, some of which were business leaders. Among the SVPs who left were Tajinder Vohra, SVP, software and IT services; Riju Vashisht, SVP, HR, and Navanit Samaiyar, SVP and BU head, heavy manufacturing vertical. At least 2 of these 5 are said to have left because of differences with Tiger. It is also said that some of the other old timers may be slated to leave soon.

Says another executive, who left as VP, Unlike Bhasin, he does not give space to people. Bhasin was equally ruthless when it came to accountability but never interfered in your working. While he admires Tiger as a manager, he questions his handling of people, especially senior people.

Whether that is true or not, the fact that so many people left in such a short time is not good news for a new leader who is just taking over.

Defends Bhasin, Well, they all left for different reasons. Some because there was no opportunity I could give them. Some for performance issues, some for personal reasons and so on.

In fact Bhasin says that Tiger connects with people far better than I do. In 2005, when this writer was doing a story on the transformation of the company to Gecis Global, a former senior employee had remarked, You know what. That is the greatest news that I have heard so far, commenting about Tiger coming back to the company, after a stint with GE. He subsequently joined the company.

But no matter what, he will always be compared to his illustrious predecessor, even though it may be part folklore. The only way that he can steer the company is by choosing a distinctly different path and succeeding.