Nearshore Americas

Genpact Looks to Verticals in Latin America

Genpact, a global business processes and outsourcing (BPO) company with over two billion dollars in annual revenue, has taken its vertical market focus to Latin America. The company first started to shift to an industry-specific strategy about five years ago, and began the transition in Latin America in January of this year.

“The advantage of working within verticals is how it improves customer service,” says Cesar Lozano, Genpact’s Texas-based head for Operations and Infrastructure, Manufacturing, Services and High Tech for Latin America. “In Latin America, by moving to a vertical focus we can also then align with how Genpact works globally.”

Genpact’s enterprise-wide industry focus is very broad: the company, which has its headquarters in New York City, provides solutions in 16 distinct verticals. Within Latin America, however, the shift to align with industries is beginning with a few key areas.

“In Latin America we are running our operations with a strategic focus on manufacturing, infrastructure, and high-tech,” says Lozano. “These are being delivered mainly out of Ciudad Juarez in Mexico and Guatemala City in Guatemala.”

Specifically, it is Genpact’s center in Guatemala that is integral to the company’s Latin American delivery capabilities. In 2008, Genpact started operations in Guatemala with 100 people. The delivery center has now grown to more than 800 employees.

“About 60 percent of our customers from the Guatemala location are in the United States,” says Lozano. “Then another 30 percent might be in Europe, and 10 percent from within Latin America.”

For Genpact, which stands for ‘Generating Impact’, regional growth in Latin America is part of a longer-term strategy. For now, the delivery centers are focussed on nearshore opportunities for US-based customers, with the Guatemala center likely to continue to play a central role.

“There is good labor arbitrage and cost savings in Guatemala, but the main advantage is the highly-skilled pool,” says Lozano. “Guatemala is a great place for companies to look for talent, and to give employees a future.”

Skills and Employees

Part of that future from Genpact’s perspective is building industry-specific skills within the employee base. Over time, this then deepens the customer relationship and extends capabilities for future engagements within demanding verticals.

“Collections in manufacturing is not the same as in healthcare,” says Lozano. “It’s a completely different business model, with healthcare having more emphasis on customer service.”

Genpact’s shift to a vertical focus is part of outsourcing’s larger trend toward delivering higher value expertise that can drive process change in transactional and operational environments. For a big player like Genpact, a center like the one in Guatemala can leverage the company’s global resources for industry best practices.

“The Genpact blueprint is something we follow globally, but we are not yet putting a lot of emphasis on regional clients in Latin America,” says Lozano. “For example, though Mexico is on our list we are not really targeting opportunities there now. We are more focussed on our global customers and those long-term relationships.”

Lozano says that Genpact is anticipating double digit growth out of Latin America over the next 12 months. To succeed, the Guatemala delivery center will have to stay on track to develop and keep talent with industry knowledge.

Challenge of Aligning Verticals

“We have been positioning ourselves as an employer of choice, working with our people on career plans and areas of interest,” says Lozano. “Developing the needs of our employees in a country that has a free trade agreement with the United States, as well as favorable tax laws and labor regulations, means that we can be well calibrated to address our customer requirements. That said, the main challenge for us is the alignment by vertical, as there are different industry leaders in the region.”

Going head-to-head with other providers that deliver industry-specific solutions will be a competitive trend for years to come, as buyers’ expectations for higher-value services increase.  This means providers like Genpact will have to know how to deliver on richer transactional analytics, including social media, and within changing regulatory environments. And they have to sell that message, too.

“We have a marketplace approach that integrates sales and builds on our deep industry expertise,” says Lozano. “The sales integration is also helped along by the larger organization’s tools and products.”

Lozano himself has a strong background in high technology, and intends to grow Genpact’s customer base in that area.

“Right now we don’t have a huge portfolio of customers in high technology, but it is growing at a global level – and we want to take advantage of that,” he says. “Within verticals the big industries for us are financial services, including accounting services and insurance, then consumer goods and retail, and then life sciences, followed by infrastructure and manufacturing services.”

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These customers are looking for tighter cost management and better management risk – often within tightly regulated environments. Genpact’s approach is to go after Fortune Global 500 customers that are motivated and willing to invest in smarter processes and advanced analytics. It is also building capabilities via acquisitions, such as the recent purchase of Pharmalink Consulting, which is now operating as Genpact Pharmalink Global Regulatory Affairs within Genpact’s life sciences vertical.

“This is part of a well-structured acquisition program, designed to address our customers’ different service level requirements within given industries,” says Lozano. “High technology customers, for example, are demanding innovation and data productivity tools.”

Genpact’s approach includes a company-wide commitment to the Lean Six Sigma ‘process science’, an inheritance from its earlier incarnation as a business unit within General Electric. The result is over 4,500 processes that assist enterprises wanting to intelligently adapt and innovate in the face of market challenges. The approach appears to be paying off: for the first quarter of 2014, Genpact reported revenue of $528.2 million, up 4.8 percent from the same period last year.

Tim Wilson

Tim has been a contributing analyst to Nearshore Americas since 2012. He is a former Research Analyst with IDC in Toronto and has over 20 years’ experience as a technology and business journalist, including extensive reporting from Latin America. A graduate of McGill University in Montreal, he has received numerous accolades for his writing, including a CBC Literary and a National Magazine award. He divides his time between Canada and Mexico. When not chasing down stories, he is busy writing the Detective Sánchez series of crime novels.

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