After clinching a Rs 2,420-crore deal to acquire Headstrong, one of the biggest by a business process outsourcing company in the information technology segment, Pramod Bhasin, President & CEO, Genpact, maintains he is not competing with IT services players. In an interview with Piyali Mandal, he talks about the acquisition and the way ahead. Edited excerpts:
Why do you say this acquisition in no way makes you an IT services provider or competitor?
It is a step towards building expertise by verticals. In the capital market area, you need IT skills; in the retail area, one may need skills in analytics; in banking, one may need skills in operations. It (Headstrong) is unique in the vertical it operates and that is our focus. We want to play it vertical by vertical.
This acquisition will, of course, increase our IT business but that was never the primary objective. The primary objective was to build expertise and capabilities in a vertical that we think is very attractive and can be a competitive differentiator.
The number will increase in the IT business. But it is not that we are trying to build up the IT. That can never be the primary reason for doing this.
Why do you want to keep Headstrong as a separate business?
Because I think they bring unique skills and, within Genpact, there are independent verticals. Our analytics is an independent vertical, our IT is an independent vertical, our banking and insurance business is independent. By nature, if you are very strong in a vertical, it will be independent. There is no point in my trying to integrate them. It makes no sense. What we are trying to do is build specialised skills in a range of different verticals and each one of those would run separately. More, Headstrong is a very well-run company. It has great culture and we will not change that.
In fact, the idea is that we will actually add to their capability, by giving them expertise in knowledge processing and analytics, so that they can sell even more end-to-end services to their customers in the capital market.
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If both the companies add to each other’s skill sets, does this alliance catapult you into a different league? Does this put you in competition with a different set of rivals?
In the capital market and the healthcare part, it puts us in a league where I think there are not too many people who can compete. And, it makes us the leader in those spaces, absolutely. These are fast-growth industries, so the expertise that we build up really allows us to take an even larger and longer lead, as we go forward.
Will the acquisition further reduce your revenue from GE?
In percentage terms, of course. GE is today about 38 per cent of our business. Headstrong brings $217 million; add to that a 20 per cent growth rate and add that to our current revenues, and GE will come out to be eight-nine percentage points lower.
What will be the go-to-market strategy of the joint entity?
Right now, we will mainly relay on Headstrong. We will add processes like in KPO (knowledge process outsourcing) and analytics which can be used to sell into their clients. We will equally bring them to the segment that we serve, which they have not acquired. But they will have a standalone base, and would be run as a separate segment of business within Genpact.
Would Arjun Malhotra, chairman of Headstrong, exit the company?
No, he’s a wonderful man. He has founded the company. We will find a home for him as a potential advisor or a special advisor. As someone who can help and guide us. He is a very valuable person.