The new age of outsourcing

THESE DAYS, ARUNA JAYANTHI LIKES throwing around the French phrase ‘la niaque’. Capgemini India’s CEO says it’s slang that roughly means ‘fighting instinct’. It’s a quality she’s been seeking in recruits for India. Jayanthi has been put in charge of an ambitious programme within Capgemini—building senior management positions here. Her life now follows a pattern: 15 days at the India office in Mumbai’s Powai suburb and another five at 11, Rue de Tilsitt, Paris, where the 120,000- strong €10 billion (Rs 69,800 crore) IT consulting firm is headquartered. When she told Capgemini’s global CEO Paul Hermelin that she was even learning French, he quipped, “Are you mad? Just go live in a French village and you’ll be all sorted out.”

Over the past year, Capgemini India has increased the number of senior positions from around 20 to 65; there are plans to add at least 60 more. Senior vice-president Rajesh Chandiramani, who was formerly a senior executive with Tech Mahindra and joined Capgemini a year ago, says this kind of senior management build-up is unique within the Capgemini universe. Indeed, even others such as Accenture or IBM haven’t been known to adopt such an aggressive approach. The positions include account managers, vice presidents, senior vice-presidents, and directors.

In IT consulting parlance, account managers build relationships with the customer, identify opportunities to sell, and manage the interest of an account. They have sales targets but aren’t sales folk. An average account can be between $50 million (Rs 272.9 crore) and $100 million, and larger accounts can even require two or three managers each. In essence, they’re small profit centres for a multi-billion dollar company.

These professionals manage international clients such as Walt Disney, Coca-Cola or General Motors, which are accounted for on Capgemini’s books in different regions (the U.S., Benelux, etc.), but 40% to 45% of the ‘delivery work’ (the actual execution of the task) is done here. That has an impact on India revenue because they get billed here. As Chandiramani says, this also lifts profits because “with senior people you charge more”. Jayanthi says she can’t hire them fast enough. “I could hire another 40 and still need more.” She points out that she added a dozen-plus account managers to the ranks in the past eight months alone.

With 40,000 workers, India has the highest number of Capgemini employees in the world (France, the next highest, has 21,000); while the company doesn’t break down financials, 26% of its revenue comes from Asia, Latin America, and smaller markets in Europe. On Aug. 1, 2002, Capgemini had kicked off its India operations with barely 100 employees. The targets were to grow the employee base and business at least 10 times. While Jayanthi’s assignment demonstrates how far Capgemini India has come since, more fundamentally it upends the existing outsourcing model entirely.

When offshoring of jobs to India began a little over a decade ago and the country positioned itself as the back-office to the world, common wisdom was that only low-, or at best, medium-end jobs would move to India. It was all about labour arbitrage. But now, at Capgemini, that model is under attack.

One way of understanding what the IT consultancy is doing is to think of the classic way in which organisations are structured—like a pyramid. In the conventional outsourcing model, the pyramid would be cut horizontally above the base and those jobs would be moved to India. Now, the pyramid is being cut vertically, from the vertex, and all the jobs on one side are being created in India. In other words, the positions in India are nearly mirror images of the positions, say, in Paris. “It takes the offshore story forward in an entirely different way,” says Jayanthi.

Consider salaries: Jayanthi says that one can’t hire anyone for less than $150,000 anywhere in the world for such positions at the middle level. Here in India, when you hire execs for smaller accounts, expect to pay close to $90,000. Those who manage larger accounts, easily make double the amount. “We just hired a couple of hotshot sales guys in some specialised areas for more than $250,000,” says Jayanthi. She emphasises that beyond the IITs and the Ivy League MBA talent pool, it’s about finding candidates with “fire in the belly: It’s not [just] about being from a good school”.

These are people who can develop a strategy, revamp existing business lines, or launch new ones (as Capgemini plans to do in hi-tech engineering). Many are prima donnas. “But that’s what we want—talent with an independent opinion who will put a stake in the ground and say ‘I know this, leave me alone’,” says Jayanthi.

There are multiple reasons behind Capgemini’s high-level push. Jayanthi explains that as Capgemini’s clients get more of their business from this region, the consultancy’s staffing should also reflect that. According to a report by global executive search firm Spencer Stuart, when a company enters a new market, its centre of gravity moves and it then starts to source the best people regardless of nationality.

Equally, this has to do with longer billing hours and more productivity. Indian execs average 55-hour to 60-hour working weeks. That’s almost twice as much when compared to France where on average it’s a 31-hour working week, according to The Organisation for Economic Co-operation and Development. “Here in India, a customer such as Reliance [Industries] starts its meetings at 2 in the morning”, so one could be working around the clock, says Chandiramani.

This isn’t without its set of management challenges. Foremost among them is that creating senior positions in India makes a lot of people around the world very anxious. Salil Parekh, who set up Capgemini in India and is currently CEO of application services, North America, U.K., Asia Pacific, and global financial services, a business that accounts for 38% of the firm’s revenue, dispels the notion that HQ had to fire people to create these senior roles in India. “The addition of these senior roles is in keeping pace with the overall growth of the company,” he says. In the past year, business has grown by 9% globally.

EVERY MONTH, CAPGEMINI HAS a group executive committee meeting where members discuss core strategy, which is then submitted to the board. Last year, at one such two-and-a-half day pow-wow in Paris, the committee members, including Jayanthi and Parekh, discussed an India transformation plan, which included the hiring initiative, and explained it to the people who actually execute and run client projects. One of the reasons for that was that senior managers in India would also be hunting for business all over the world. Later, in October last year, the entire board had a similar meeting in Bangalore to measure how things would work out if senior positions were created in India.

But the question that begs to be asked is how it plays out for an overseas client being serviced by a foreign consultant. Parekh says it comes down to client preference. The client wants the same consultant profile, with comparable rates and services across countries in similar regions. In addition to the technical capabilities, he argues that consultants based out of India typically are more comfortable in a multicultural environment.

Though the number of senior executives out of India may have been fewer in the past, the alumni has made a mark globally. Parekh says the global head of Capgemini’s client relations for banking in the U.S., Anirban Bose, started his role in India. Other key global leaders include Darshana Ogale, head of global transition services; Seshaiah Amisagadda, group infrastructure head; B.L. Narayan, head of BPO India operations and global engagement executive; Pratosh Jhari, leading sales operations and strategy for North America application services, and Deepankar Khiwani, who leads a business unit in Europe and is also a member of the Swedish Board. Baru Rao, who started as CEO India, is now COO for Capgemini’s European Application Services.

With a ramp-up in the number of senior execs based out of India, and judging by the mark made by the few who came before, Capgemini is evidently going to be seeing many more Indians in its global operations. Jayanthi’s new phrase could well change from la niaque to la force du nombre (strength in numbers).