Genpact: Procurement BPO Brains and Brawn (Part 3)

In the first two posts in this series (Part 1 and Part 2), I examined Genpact's procurement BPO offerings and approach, including their benchmarking methodology, Smart Enterprise Processes (SEP). In this long overdue final installment (many apologies for the delay), we'll look at how Genpact stacks up from an overall procurement BPO standpoint in the competitive marketplace. I think that in part, it's possible to trace Genpact's strengths and weaknesses back to the GE culture that led to their creation in the first place. Certainly, the metrics they share -- $15 billion in spend managed, 12,000+ supplier contracts, 2.5MM in purchasing transactions per year and 8MM+ invoices per year -- are impressive when taken out of a competitive context. But they're undifferentiated in a procurement BPO market where scale among most competitors (e.g., IBM, Accenture, Infosys) is also the name of the game.

Nor is Genpact's "expertise in third party tools," as they put it, remarkable compared with their larger competitors who also have similar partnerships. In fact, it's possible to argue that Infosys (and another competitor I'll get to in a second), as an SAP BPO partner, has greater experience in SAP transactional environments (as well as actual hosting credentials). Still, the fact that Genpact has relationships with Ariba, Oracle, SAP and Emptoris (and others they openly discuss, yet are not in their presentation material) certainly does not put them at much of a disadvantage relative to other BPO competitors, except perhaps CGE&Y, which through their IBX acquisition now has significant solution and delivery IP in-house.

Given how undifferentiated (either positively or negatively) Genpact looks in terms of scale and experience relative to other large BPOs, it's important to look elsewhere to understand what exactly separates them from the pack. And this is where the GE legacy begins to come into play, owing to the importance the firm places on Six Sigma and an overall GE purchasing culture that at once is somewhat risk adverse (e.g., killing off the early reverse auctioning program that led to FreeMarkets) but also highly skilled with a strong financial understanding of procurement levers. Moreover, Genpact adds significant functional expertise and certifications and training (e.g., CPM, CPIM, SPSM, APICS, etc.) to this legacy, in addition to a clearly entrenched "GE way," as I've observed in their discussions, presentations and overall demeanor.

While there are some things not to like about GE culture (I can share firsthand numerous anecdotes from current and past GE executives I know), I think the positives outweigh the negatives in the end. For one, pennies count at GE, and the firm was one of the first I'm aware of to actively think about and practice demand management in procurement. This is evident at Genpact as well in thinking about their overall SEP model and approach, which appears to go remarkably deep in evaluating opportunities, especially out year savings potential after initial sourcing and transaction automation waves. It's also evident in some of the people I've met and know Genpact has hired who come from the procurement school of hard knocks and experience and are capable of going deep in discussion at a level most consulting executives I know are not.

Still, I think Genpact has some material convincing and marketing to do to make sure they stand out from their primary offshore and domestic BPO competitors. The differences I've picked up on in getting to know the organization that help them stand out are not necessarily what they lead with in their positionining (which often sound similar to competitors). When it comes to procurement BPO, Genpact needs to make the GE legacy and culture work more in its favor rather than apologizing for its roots as a captive shared services provider.

Regardless, Genpact has earned my respect in their approach, expertise and choice of partners like ICG Commerce, which helps round out a broader offering. In my view, any company considering large-scale BPO efforts -- either focused on procurement or as part of multi-tower engagements -- would be foolish not to consider what Genpact has to offer. Still, I think they have material go-to-market work to do in North America from a reputation standpoint to make sure that prospects understand what separates their approach and legacy out from the rest of the crowd. And that's not something that generic BPO advisory and selection firms without much functional and applied knowledge of procurement are likely to help with.

Jason Busch

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