Speaker 1: A gripe, if you will, that's come back from some of the companies that have used the services of outsourcers in the past, I think admittedly you hear it a little less now, is specifically around the problem-solving capabilities of outsourcers. And that's outsourcers, as far as F&A is concerned, are great at responding to maybe tier one concerns. But when a problem moves to tier two, it needs to come back to the client for resolution. You were talking there about the ability to manage complex processes. What are you seeing as far as a change, maybe within your talent base, as far as moving from the capabilities that were able to deal with just tier one resolution, but not having the ability to maybe deal with tier two resolution? How is that changing from a talent perspective in Genpak today?

Speaker 2: So I think it's changing on two different dimensions. Firstly, the reason why in many situations the scope of what is outsourced gets limited to tier one resolution versus tier two resolution is because tier two resolution necessarily has a lot of contextual expertise requirement and needs long-term history of the company to handle those kind of exceptions. Now if you think about it, the reason why if the proportion of tier two exceptions or tier two resolutions is high, the reason why that happens is lack of standardization and lack of simplicity in the process, which creates a bunch of exceptions and therefore requires that long-term building of contextual knowledge. And there is no shortcut in that kind of a situation to building of that long-term contextual knowledge. So what two things happen. One is at the initial stage the scoping gets limited to therefore doing tier one resolution and leaving that tier two back. And then only over a period of time as the outsourcer gets more contextual knowledge can that person take over. The other solution is that you standardize and simplify those processes and you go through therefore some of the change management challenges and pains at the initial stage. But it obviously delivers two things. One it reduces the number of tier two exceptions. And even those which are exceptions are better sort of formatted so to say and therefore can be handled by a person who is new to the company or new to the context. Not new to the process because the process that person will have experience to. But in the context of the company. But since you have standardized it, industrialized it, it becomes less company dependent and more process dependent and therefore easier to resolve. And two therefore allow for a greater part and actually eliminate a lot of that noise from the overall system as opposed to then deciding who is going to do it. Now in more contextual processes actually it becomes much better over time. So people who run for example financial planning and analysis or budgeting and reporting for our customers are typically groups of people who will be with the same customer for four, five, seven years. And therefore over a period they actually understand the nuance of the customer's business and they almost work as virtual extensions of the customer's team as opposed to really being an outsourced entity who's producing some reports out of a black box.

Speaker 1: I think that's a really key point that you've mentioned there. A couple of areas around contextual knowledge and I'd like to come on to that in just a moment. But also that you have a team that stays with a client for four, five, six, seven years and basically becomes an extension of that team. What is the retention rate like at Genpact? And I'm asking this because I'm curious to know how well Genpact keeps its really talented people so that you can have that relationship, that long-term relationship with your client.

Speaker 2: Right. So the overall retention rate let's say for finance and accounting in Genpact, the attrition rate is in the early 20s. So you're retaining roughly around between 75 to 80% of your people every year. Now that retention however has a huge skew for complex processes that retention rate is 90%, around 90%. For obviously more transactional processes that retention rate is 70%. And that is almost by design. Would we be happy with a higher retention rate? The answer in general is yes. But would we be happy with zero attrition? The answer is no because the business model doesn't work in that. Our whole objective in the transactional processes is to keep decoupling work into modular centers of excellences which run as industrialized shops. And therefore you can actually deal with a higher level of retention there. Clearly it is an industry challenge and I don't want to belittle the challenge but I think we are in a much better position comparatively and relatively than most of our peer group in this particular area.

Speaker 1: You say that you're in a better position than your competitors as far as the attrition is concerned. You as an employee, why do you think that is? Do you think there's a very strong culture within the organization that helps retain very, very good people?

Speaker 2: So there are really three things. One is we really provide huge amount of training and career opportunities for our associates and for our people. Also because we are so large in especially in finance and accounting and we are growing above the industry standards, there are huge amount of opportunities for the people to keep honing their skill sets and keep going up the value chain. So you start as an accounts payable but you then go into reconciliations and then you do books closing and stuff like that. And to help them on that way, we spend significant amount of money, time and investment in training. At any point in time, for example in GenPAC, almost 25 to 30% of people are engaged in serious training outside of their on the job training or those one or two day courses but in actually developing core skill sets, in getting certification, in doing what we call education at work and therefore have very different career path. So that's one. The second piece is we do run a series of HR processes which is not just run by the HR managers but is really the frontline responsibility and we have some of the best in class practices of retention management, of employee engagement, of cultural affiliation in the industry and that obviously helps hugely. Third, the way we work with our customers which is like their virtual partners and therefore continuously focus on driving value as opposed to just executing on tasks creates a huge amount of floor level excitement for the employees. They're always focusing on how do you do things better which is why we focus on making everybody lean trained, everybody Six Sigma aware and then take them through a path of getting certifications on that. So when you start coming to office saying my job is not just to transact but also to work with my customer in a virtual team model to make it better, it creates a very different mindset than just coming to office to say I've just got to process this hundred documents and then I have to come back next day again and process another hundred

Speaker 1: documents. Okay, we talked a little bit about contextual knowledge, you referred to it in your earlier question. One argument used against outsourcers I find is the disconnect in the approach between what I would call the thinkers and the doers, i.e. the gap between the management team and the operational teams and the people on the floor as you would say and also potentially the consequence of these PPO organizations becoming very, very large and therefore having too many layers within the hierarchy. And part of the challenge that this presents is that the doers don't have contextual knowledge. So I'd be curious to know to what degree is this actually a problem in Genpact and what is being done about it?

Speaker 2: So I think the problem is significantly lower in Genpact, again on a relative scale and I'll tell you a couple of reasons why. Firstly, our approach to client engagement from the very beginning even at a deal stage or at an RFP stage or even without RFP when you are in potential discussion stage. We don't have separate teams which just does that and then you almost do a handover to another team which then just executes. The team which faces the client from day one includes people who will execute. Now obviously you need a bunch of subject matter experts, you need transition experts, you need technology experts to be engaged in that upfront because you're designing stuff and all of them will not stay and execute. But that team also has core people from the execution staff. Our transition model is very focused on ensuring that it's a single handoff. So the knowledge transfer happens to the people who will execute, not to a bunch of super trainers who will then go and train one batch and then go and do another batch in another customer. So we create a transition model which is far more one-to-one knowledge transfer as opposed to a double loop knowledge transfer. The third is a little bit of the operating culture which I alluded to a little while earlier. On everyday basis, we expect the associate who's doing the lowest level transaction processing to understand the upstream and downstream and work with customers to think about how to improve the process. So we are not creating a situation where people who are doing transactions are not supposed to be thinkers. We expected them to be thinkers. Now obviously there has to be an operating model because they can't just be thinking for the whole day where you do this through engagements, through brainstorming sessions, through group dynamics and stuff like that. And that is where the Lean and Six Sigma DNA comes into play. A bunch of those issues keep on happening. And then of course you transact for 90-95% of the time. So we are not making that as a distinction. And lastly, our floor hierarchy is reasonably flat. There is just really two or three levels of hierarchy when it comes to an operating organization for any of the customers.