Genpact IT strategy signals BPO and IT services consolidation

I have just interviewed Charles Hunting, the Asia CEO of Genpact.

Genpact, which is one of the biggest BPO suppliers in the world, recently acquired an IT services company Headstrong.

This immediately gave Genpact IT capabilities on top of its vast BPO business. Genpact was an internal shared services operation at General Electric (GE) before it was spun off in 1997.

Genpact is traditionally very strong in the financial services with HR and finance and accounting BPO making up a lot of its business. GE is still its biggest customer.

Hunting says the Headstrong acquisition is the company’s most significant of a raft of acquisitions in the last 12 months. He said Genpact started doing IT services on top of BPO about 8 years ago but only on a small scale.

The company now plans to step up its IT services. It has capability in designing, building and running ERP systems such as SAP and Oracle. It also provides a range of services including IT service desks, remote support and datacentre services. It offshore services capability is massive with thousands of staff in India and China.

Hunting believes it is a certainty that BPO and IT suppliers will consolidate and he expects acquisition activity.

Anthony Miller at TechMarketView says Genpact lost its way with IT services but he believes BPOs will have to move up the value chain by offering IT services on top of BPO services.

He says the BPO/IT services market is going to look different in the coming years. “The BPOs will have to offer services like business process design, software platforms as well as deliver services if they are to participate.”

He says IT service providers might acquire software companies to help them develop platform based solutions.

Commenting on Capita’s recent acquisition of contact centre business Ventura for £65m Peter Brudenal, lawyer at Lawrence Graham, said the deal is part and parcel of consolidation. He said this could be a trend and large service providers attempt to become “more like Accenture.”

IT service providers and BPO suppliers could increasingly come together as large companies target areas to grow post-recession. “This could be a sign of how service providers are trying to get a bit more creative about what they are doing.”