India arm helps Tesco take on Wal-Mart in US

When Tesco, the £46.6 billion UK retailer, entered the US market in November, it was in a way taking on lion Wal-Mart in its own den. It had a major weapon in its armoury which Wal-Mart did not have "" an India back office to cut costs.

To differentiate itself from Wal-Mart, Tesco, through its Fresh & Easy chain, has gone in for convenient neighbourhood stores which stock fresh foods, which is not a thrust area for Wal-Mart. But cost is one area where the two cannot avoid clashing, and this is where Tesco Hindustan Service Centre steps in.

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Tesco in India has played a major role in Tesco in the US. "There, for the first time, Tesco has deployed an operating model which has been planned, installed and is being supported out of India," according to Meena Ganesh, CEO of Tesco Hindustan.

This model integrates functions such as finance, payroll and personnel, on top of which sits the information technology layer.

By integrating processes which are in themselves being standardised, the operating model seeks to minimize manual work. Once this operating model is debugged, Tesco plans to take it to Turkey and other countries where it is in business.

Tesco in India plays a varying role in the company's global operations, a role which has been changed significantly in the three and a half years it has been in existence. It has been in IT support for operations everywhere from the beginning. (The global network operations centre out of India.)

Thereafter it has got into finance and business processes in the UK, US and Ireland.

Over time Tesco in India has also secured greater ownership of the IT development lifecycle. From being given 'specs' to work on, it is now more into designing and 'specking'.

It has set up a test lab for point of sale applications and also an integration test lab. This ensures that many components in the operating template which get integrated do so without glitches.

"Today, we get involved fairly early in any new initiative in the US, UK and Ireland," added Ganesh. Tesco in India is into process reengineering in areas such as accounts payable and own consumption.

"In six months, we will reengineer the way goods are ordered for our consumption, centralize invoicing, create a robust purchasing process and a catalogue for ordering things such as trolleys for ourselves."

This emerging role has produced two changes in Texco in India. It has started recruiting people including systems analysts, specialists in processes such as six sigma and business experts. It is also upgrading internal skills to take end-to-end ownership of applications and processes and reengineering them.

"We are no longer just a service delivery unit. So we have to get people to think differently. To enable this, we have initiated an internal campaign called 'get curious' to have staff look beyond the obvious and reorient themselves for the new functions that are being passed on," she said.

This organizational transformation has also meant a change for Ganesh who has headed the Indian operations right from scratch. "Board members increasingly seek us out at strategy conferences, keen to understand how we can be a centre of excellence in the true sense of the term in systems and processes."

"They, the top leadership, call us the 'beating heart' of business" and Ganesh has personally moved up the corporate ladder, joining the company's 'retail council' which includes its top 60 people.

Tesco Hindustan now has close to 3,000 people - 1,600 in IT, 500 in finance and 500 odd in other support services such as stores design and dotcom. Any new store that gets launched or an existing store refurbished in the UK has a lot of the midwifery done out of India.