Genpact’s CEO on Building an Industry in India from Scratch

by Pramod Bhasin

Pramod Bhasin is the chief executive officer of Genpact.

The Idea

For several months in the late 1990s, I was inundated with phone calls from competitors and other companies that wanted to visit the offices of GE Capital in India. Taking competitors on tours of the facilities isn’t among the responsibilities of most top executives—indeed, it isn’t done at all. But I agreed because I viewed the requests from such companies as Standard Chartered Bank, Bank of America, and Accenture as a sign that we were on the cusp of something incredible.

And we were. Today my company, Genpact, handles business process management and employs 43,000 people around the world. It also indirectly contributes, we believe, to the employment of another million people, who work in businesses that support us and our employees. We are in 13 countries and we operate 39 facilities serving 400 other companies. Genpact spun off from its parent company, GE Capital, in 2005 and is now a $1.26 billion publicly traded company.

But 13 years ago it was little more than a small division of GE Capital. Then the head of GE Capital in India, I was trying to find ways to grow the business. At that time the division was the first 100% foreign-owned financial services company that had been allowed into India. In our effort to create a local market, we were providing back-office services such as processing car loans and credit card transactions. India had just begun to open its borders—we were, in effect, an experiment by the government. But I could see how vulnerable the business was to changes in government policy and philosophy. We were hamstrung by regulations and red tape. When Indian banks faced a liquidity crisis, the government asked them not to lend to us, because it assumed that our borrowing from them was contributing to the liquidity problem. I recognized that a single regulatory stroke could change the dynamics of our organization completely. And it was hard to build a sustainable business that was so dependent on regulations under the government’s control.

At the same time, I could see on a daily basis that an eager, ambitious talent pool existed both within the company and across India. Why not take advantage of it to build our business? We could expand our back-office support services to GE Capital all over the world.

I remember asking a handful of people I trusted if this idea was feasible. All of them said, unequivocally, no. What I was talking about would require building a large-scale facility unlike anything that existed in the region; hiring huge numbers of people and training them to Six Sigma standards on products they knew nothing about; persuading regional and national governments and telecommunications companies to set up and ensure service and infrastructure at a level unheard of in India; and creating an entire business ecosystem.

The concerns that were expressed ranged from the extreme (a terrorist attack would take us out) to the thoughtful—some of which I’d anticipated, such as that mission-critical processes might fail in our hands, or that if we messed things up, we might destroy the whole company’s supply chain. Some people within GE worried that we’d be stripping out a critical layer of judgment—middle management. We would lose crucial records. They also had simple concerns that were easily dismissed, such as whether we would be able to set up modern offices and hire people who spoke English. But many concerns were valid and would require extremely careful planning on my part.

Completely Uncharted Territory

It was a nearly unimaginable undertaking. Many things could go wrong. So, I thought, we would need a foolproof plan. We’d have to think defensively—to get ahead of any real concerns.

I didn’t do any business plan modeling or studies to prove that an opportunity existed. To me, it was obvious. I knew that if we could get sophisticated technology to support us—a very big if in India at the time—we had the raw talent to offer our services at a small fraction of the cost elsewhere. So in 1997 I approached Gary Wendt, who then headed GE Capital, for money to launch a pilot project. He gave me the princely sum of $2 million to make it work.

In hindsight, getting the initial investment was the easy part. (We eventually spent closer to $5 million on the start-up costs.) We had virtually nothing in place to make such a global operation work. We couldn’t just sit down and do the proper analysis to plan it, because this was completely uncharted territory. We did draw up a business plan, but there was so much finger-in-the-air stuff that I don’t think it had much credibility. We didn’t even know at the start how big the venture could be. We just said, “Let’s light a fire and see what happens.” We did know, however, that given the low costs of highly educated labor in India, we could probably build an operation that would save GE Capital 30% to 50% of what it was then spending on similar services. That was really the essence of our business plan. It was also pretty much all we knew.

Having a few people trained to provide minor back-office support for a nascent Indian market was a far cry from handling a large volume of work and calls from all over the world at any time of day. We needed to conceive the entire operation from scratch. We decided that we had to become very good, very quickly, at four key elements: hiring the right people, training them, building a tool kit to replicate our learning in other parts of the world and to move processes from one location to another, and embedding Six Sigma quality controls in our operation from day one. We would be a beta site with the potential for huge growth at GE Capital—if we got it right.

We had no expertise in recruiting and training the people we’d need for the work. And the products they’d be supporting, such as mortgages and credit cards, were completely foreign to most of our potential employees; training would have to begin at an extremely basic level. Even more challenging, we’d first have to train our trainers. No Indian trainers knew about mortgages and the other sophisticated financial products GE Capital offered the public. They didn’t even have the knowledge of such products that we take for granted in America—how credit cards work, who pays the money and when, how a plastic card leads to someone’s bank account. We had to teach them everything. The gulf between what they knew and what they were going to be employed to do was enormous. One of the best things I did right up front was recruit Raman Roy from American Express. He had already built a small back office for AmEx and knew what would be required. He led our efforts during the early years with great creativity and problem-solving skills.

But what I was most afraid of was that the head office wouldn’t consider our operation to be of sufficient quality. So we set out to avoid failure at all costs. Every scrap of work had double or triple checks before it went out the door.

We had to literally build the infrastructure around us. We started on the floor of our existing office building in Gurgaon, which was about 8,000 square feet. There were many other hurdles—some enormous, some basic. One of the biggest was creating a reliable telecom system in a country that was far from modernized. We set up multiple phone lines to make sure we had backups in case of any possible problems. To ensure service, we installed the first satellite dish on a commercial building in India. We had to figure out how to sufficiently soundproof the cubicles for workers who would constantly be on the phone. We began by asking people to bring curtains and saris from home. In hindsight, it was pretty funny. But we were trying to be creative with our limited resources.

“Trespassers Will Be Recruited!”

Considering the intensity of the buildup, the day we went live with our staff, in late 1998, was fairly mundane. We weren’t doing anything on the phones. We were handling what’s known as white mail—paper that comes to credit card operations about things like changes of address. Before we set up our operation, these very simple tasks would have been handled in much higher-cost locations in the U.S. It didn’t take long for our project to gain momentum. We’d had 8,000 applications for our first 20 jobs; 5,000 of the applicants were clearly eligible. By the following year we had 300 employees. Raman Roy actually put up a sign outside our building that said “Trespassers will be recruited!” We began to handle increasingly complex back-office support, such as mortgage applications, auto loan approvals, disbursals, and accounting transactions.

With people coming on staff so quickly, we needed all kinds of attendant services that we hadn’t originally anticipated. We had to have vans and SUVs to transport employees to and from work at all hours—requiring a level of organization then unknown in India. (To this day we offer transportation to 15,000 workers.) We had to provide food for a 24-hour rotating staff of what would become 4,000 people on any given shift—working in an undeveloped suburb that offered no facilities and constructing business continuity plans from scratch. And we had to demonstrate to customers and recruits (and their families, who had concerns about their children’s involvement in the operation) that this would really work.

That’s what led to our willingness to give tours of what we were building. Every time people walked through our facilities, they were impressed by the size and sophistication of our operation. We learned how to tell our story very well—not only to the GE brass and competitors (we eventually stopped allowing the latter into our facility) but also to the people we would be relying on to create support services like that round-the-clock transportation. We actually created “prospective parents’ days” so that the parents of the young, single women we were frequently hiring could see their daughters’ workplace.

How Do You Spell That?

We knew we had a tiger by the tail, because demand surged—not just from GE businesses but from other companies that had heard about what we were doing. It was the beginning of an entirely new industry in India. In 1998 we had 20 people doing this work. By 2001 we had 12,000. We were trying to hire and train a thousand people a month, and the pressure on us was very high. Our work was increasingly mission-critical for GE, and I feared that at the pace we were growing, quality would decline. It did.

We started providing new services for different GE divisions, but at some point our breakneck expansion was just too much. Often we weren’t at our best on calls handling products and services that were new to our group. Once, the vice chairman of GE had a problem with his computer and was put through to our help desk in India. The customer support person asked him where he was calling from, and when he said Fairfield, Connecticut—well-known as GE’s headquarters—our guy asked him how to spell it. Believe me, I heard about that. It seemed as if we were not on top of our game—and we weren’t. Looking back, I sometimes find these stories hilarious, but then I knew we had to slam on the brakes and get this stuff right.

With that fast-paced growth, attrition also began to soar, reaching 50%. Our hiring engine wasn’t good enough to replace that many employees every year, never mind train them to Six Sigma standards. So we had to pull back. We deliberately stopped growing for a full year, from 2001 to 2002, in order to get a handle on quality again. It was obvious that we had some issues, because our clients were talking about them. That year, when the world’s markets were skittish after 9/11, we stopped all hiring, redoubled our training of managers, and rethought our training processes until we felt we had achieved better quality control.

That was a useful pause in our exponential growth, because it enabled me to develop a vision of where the business should go in the future. It was clear to me that the potential lay in expanding our services beyond just one customer. By 2002 we were back in growth mode. We now have operations all over the world, including Dalian, which is considered the outsourcing hub for China.

Back in the beginning, I knew we were on to something incredibly exciting, but even I am surprised at how enormous and game-changing our growth turned out to be. We helped spawn an entire industry of business process outsourcing in India—though we are still the leader in terms of revenue. As I look around at the physical transformation of the towns in which we operate, I’m proud of what those early-stage ideas turned into. When we first started building in Gurgaon, you couldn’t buy a decent coffee or tea or sandwich. It’s now a thriving community five times the size of Hoboken. And all that has been built on the shoulders of those initial 20 hires we made in 1997. I don’t know how many people get an opportunity to lead that kind of transformation in their lifetimes.

Originally published in June 2011. R1106A