Genpact Ltd is one of the leading providers of Business Process Outsourcing (BPO) and IT services in the world; targettign majorly manufacturing and financial service industries Genpact Ltd focuses on data management, risk management and analytics services. Although started off as one of GE’s units in 1997, Genpact Ltd became an independent entity in 2005 through divestiture (Zacks Equity Research, 2015). With its headquarters in New York, the firm has over 68,000 employees globally and international operations in more than 25 countries (Zacks Equity Research, 2015). Genpact Lld has over 800 customers, including in excess of 25 percent of Fortune Global 500, which ranks it the largest provider in the analytics industry (Zacks Equity Research, 2015). The company seeks to drive “an effective end-to-end improvement strategy,” a strategic direction that serves as a retort to various external forces in the BPO industry (FDE, 2010). To appreciate this strategic direction, it is important to conduct an external analysis of the company’s environment based on Porter’s Five Forces model.
Genpact Five Forces Analysis
The five forces in Genpact’s external environment include: robust competition or competitive rivalry, strong bargaining power of buyers, weak bargaining power of suppliers, weak threat of substitutes and low threat of new entrants.
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Robust competitive rivalry
Genpact experiences a tough force of competition. Under the Five Forces model, a strong competition limits a company’s growth opportunities. Genpact should take into consideration the following external aspects which contribute to its strong rivalry: a high number of industry player and high diversity in the industry. Genpact has many competitive rivals such as IBM global sevices, Accenture Ltd and WNS (Holdings) Ltd (D&B Hoovers, 2017). The firm also has a diverse group of competitotrs because of of its high product diversity. The firm offers data management, analytics and risk management services. There also exists a sticky cooperation between clients and BPO providers.
Strong bargaining power of buyers
The bargaining power of buyers strongly influences Genpact’s business. This effect is brought about by a large size of buyers. The contribution of each buyer to the company’s revenue is significant hence exerting a robust force on the firm. Customers in the BPO industry can also juggle between the options they have, with ease. There is a strong force from the quality of information; customers have a lot of knowledge. For instance, advertisers might access Genpact’s analytics data, which is substantially informative on the complexity and dynamics of the marketing environment.
Weak bargaining power of suppliers
Genpact experiences a weak power of suppliers; the firm has the privilege of choosing from many suppliers. In essence, there is a large supplier population as well as a soaring availability of supply. The markets which the company operates offer many skilled individuals to hire from; particularly, India which has a high population with most people being skilled. Most of these markets also offer a supportive environment for BPO firms. As a result, the large supplier population coupled with the high supply availability reduces the impact of the bargaining power of each supplier on Genpact’s business.
Weak threat of substitutes
Genpact experiences a weak threat of substitutes. Even though there are competitor firms, there are no obvious substitute threats to Genpact’s business at the moment. Customers in the BPO industry generally experience low costs of switching from one provider to another, something which makes easier for them to switch from one firm to another. However, for Genpact’s business, the clients cannot easily switch because they cannot readily find alternative to the firm’s solutions. Nevertheless, customers are reluctant to outsource their processes; they often prefer to work themselves. Hence the customer is the substitute, though with minimal effect. The aggregate impact of these external aspects is the weak threat of substitution.
Low threat of new entrants
The threat of new entrants is weak in influencing Genpact’s business. This is brought about by the hiht costs of doing business; there are a high number of entry barriers in the BPO industry which makes it hard for new entrants to compete with established firms like Genpact. The costs of installing the required system infrastructure, developing a brand and even hiring the required workforce are prohibitive to any new entrant. Due to increased incidents, governments have moved in haste to counter the vice by introducing strict regulations that govern the use of IT systems; which immensely affect the BPO Industry. This makes it hard for new entrant to fulfill the regulatory requirements due to associated costs of licensing.
Conclusion
In conclusion, the Porter’s Five Force analysis of Genpact’s external environment has revealed that the company is best positioned to push forward its strategic agenda: “driving an effective end-to-end improvement strategy” (FDE, 2010). To augment is competitive advantage, the firm should consider investing in infrastructure outsourcing, investing in their immediate and prospective workforce, and cooperating with global leading firms such as GE so as to widen its client base.
References
D&B Hoovers. (2017). Genpact Limited Competition. D&B Hoovers . Retrieved April 20, 2017 from http://www.hoovers.com/company- information/cs/competition.genpact_limited.9e5f7522db313726.html
Finance Director Europe (FDE). (2010). GENPACT: End-to-End Vision: Driving an Effective End-to-End Process Improvement Strategy. FDE. Retrieved April 20, 2017 from http://www.genpact.com/docs/resource-/the-end-to-end-vision-driving- an-effective-end-to-end-process-improvement-strategy
Zacks Equity Research. (2015). “Genpact, Kennametal, Armada Hoffler Properties, Camden Property Trust and Apartment Investment and Management highlighted as Zacks Bull and Bear of the Day: For Immediate release.” Nasdaq.com . Retrieved April 20, 2017 from http://www.nasdaq.com/article/genpact- kennametal-armada-hoffler-properties-camden-property-trust-and-apartment- investment-and-management-highlighted-as-zacks-bull-and-bear-of-the-day- cm511201
