The evolution of the GIC and Shared Services landscape in India with Mr. Deepak Puligadda

Hi Deepak, it is great to have you as a part of our fireside chat series. Thanks for having this conversation with us regarding the GIC and Shared Services landscape and evolution in India.

Thanks Vaibhav for having me as a part of this conversation. It is a pleasure to be talking to you.

Let’s start by knowing more about your professional career. Can you take us through that, and maybe share some points that you consider as milestones in your career so far?

A large part of my 23 years long career has been in the GIC space, with large companies across geographies and process domains. The central theme however has been the same – how to transform each function and make them more value-adding. For example, in my early days, I always asked this question, why should companies need to spend money to pay money? Can we make this process simple and automated? Many such examples can be attributed to inefficiencies in how our IT systems functioned back then. Can we shrink these inefficiencies? 

Till a few years back, GICs were primarily looked at as low-cost aggregators. Today, we are talking about adding value by making new things possible. We are setting up centralized services at a low-cost platform with highly efficient IT systems, which will enable you to go and sell to your customers what you want to sell. For example, in 2009-10, we wanted to enable Siemens to deliver better customer service to their customers. Imagine the cost of an MRI machine being down in a hospital. Many patients could be provided delayed treatment potentially impacting human lives. So the uptime of these machines was a very critical factor. Those days, a Siemens field engineer could only visit 3 or 4 hospitals for repair or maintenance related tickets. We sat down and said – how can we solve this problem by setting up a shared customer service center to coordinate, plan logistics, create an automated ticketing mechanism leveraging the technology available at that point in time. These improved visits by each engineer to 6. A huge improvement. 

Even today, there are multiple case studies where shared services have played an integral role. Consider GST implementation in a large conglomerate such as L&T from the old system to the new system. The entire Finance, Purchase, Logistics and other organizations had to come together and collaborate with IT and Shared Services to make the change happen. So in a nutshell, we are moving from doing your work at a lower cost to collaborating in solving some of your biggest problems. This is the journey so far. 

Going forward, there is a lot of value addition that is going to come from GIC and Shared Services. For example, many companies have opened their ER&D centers in India – Bosch, Novartis, Sandvik and many more. They are using the best talent in India to make the best Engineering & Design solutions. In the past 5 to 6 years, some of the breakthrough design, engineering and product innovations have come from Indian GICs. India has been at the forefront of these breakthroughs in many industries – Oil & Gas, Pharmaceuticals, Automotive, Manufacturing, Technology etc. We are moving up the pyramid now, not just limited to things like accounts payable or HR processes where the drivers were just lower cost and efficiencies. But I feel we are still in the process of transformation – it’s a journey that will see significant innovation in the times to come.

What does this mean for Indian GICs? You talked about value addition, and about the significant role of smart work done by ER&D GICs in India. Are there some other opportunities that you see for Indian GICs for the near future?

Different industries adopt different solutions customized to their needs. However, something does cut across all industries. Firstly, many companies are going to take out a lot of their costs and clean their balance sheets in the future. There are bound to be a lot of cost pressures in the post COVID world from a financial stability standpoint. This will make GICs far more relevant. In countries like India, the Philippines, companies will start looking at GICs more carefully than before. Secondly, India will definitely be at the forefront of creating a lot of intellectual property in design, engineering, research & development, finance, analytics etc. So the focus will also be on creating IPRs from these Indian GICs. This will lead to more expertise and investment in people, technology and R&D. Thirdly, GIC and Shared Services will now become strategic investments for their parents and no longer remain cost aggregators.

For instance, GE’s Jack Welch Research Center in Bangalore or the SAP Labs center are the centers of excellence for their parent companies. Volvo, Schneider Electric and many other companies are developing similar centers. So these kinds of investments will get accelerated. From a domain standpoint, areas such as AI, IOT, Analytics & Digitalization will see India taking a lead. For example, L&T has come up with a huge initiative called L&T Next in this space. 

Finally, I also see all of the above leading to very critical positions of responsibility moving to India. For example today, typically the Finance Controller of a company sits in the headquarters while the Indian GICs just do the work for them. This will change with time. I am observing that GIC Head positions in India are now transforming into the GBS Head position, where the person has a seat in the strategy-making process.

Are there any particular industries that you think will benefit more than others from this evolution of GICs in India? OR you think this is going to be more of a global phenomenon across all industries?

Let’s look at this answer along with the economic and social implications that the pandemic has caused. The dynamics of a few industries have completely changed. For example, the aviation and hospitality industries have taken a big beating globally, so they will have to reduce costs and clean up their balance sheets anyways. But there are some industries that are going to gain – IT, Digitalization, Consulting, etc are going to come out of this crisis faster. So you could look at three segments of companies – those who will benefit from this crisis, those who will actively bounce back and those who will take a little longer to recover. Each of these will have a different strategy. Companies which can come out of this crisis quickly and have already made some investments in GICs in India will be the ones who will move the fastest. These will be industries such as Pharmaceuticals, Electronics, Automotive, etc. They will say – we have already started out so let’s continue moving forward with high-end work being done by the GICs.

Coming to the talent side of things, what could be the key talent and capability challenges that we need to address to capitalize on the huge GIC opportunity?

India is a hot talent source with a very vibrant talent pool. One of the key elements that we need to do is integrate the fantastic startup ecosystem into our GICs. Whenever I have worked on transformations in GIC and Shared Services, I have tried to integrate a lot of these startups in the system.

This brings a combination of new thinking along with the robustness of traditional platforms that have delivered for many many years. We have got to keep technology at the forefront. We should adopt the fastest and most efficient solution – even if that is coming from a young startup right at the beginning. 

From a capability standpoint we should constantly look out to integrate the startup ecosystem into the mainstream. Secondly, GIC leaders must shift gears and become far more enterprising. They can’t just continue to be bound by things like SLAs and SOPs. They must not just run these GICs as cost arbitrage centers but be keen to experiment and see how they can unlock more value for their organizations. You have to expand your boundaries and allow entrepreneurial and fresh thinking. Thirdly, if we look at what kind of talent will thrive, we can look at the three levels of talent. For folks who are early in their careers, India has a very large and diverse talent pool. For this level, things such as selection criteria, content and training are mostly solved. The middle layer is where ideas get translated into reality. This is where there is a tendency to look at technology as secondary and a tendency to look at the number of people reporting to them as a critical benchmark of seniority. This has to be challenged. The question should rather be why do I have 5000 people working in my center. Why can’t I do the same work with 500 people by leveraging technology and smart processes? This paradigm shift needs to happen at the mid-level. The top layer of GIC leaders must also start having a seat in the HQ of the parent company. This is also an important change that needs to happen at the top. GIC leaders must demonstrate the hunger and capability to run their organization like an entrepreneur. If this happens, we will see thousands of IPRs and patents coming out of Indian GICs in no time. Without this, inefficiencies start to breed and that’s not good for the companies.

To conclude, we have solved the talent problems at the bottom of the pyramid, we now need to do the same for the middle and top levels, which can create some amazing assets for these GICs.

Further to talent & capability, what changes do you think the GICs need to make in their ways of working to thrive in the future?

I think the biggest change needs to be made in the adoption of technology to unlock more value for your clients. Do you remember how the electricity bill agents or the LIC agents used to act as aggregators and take care of manual work for customers? Today many BPOs are in a similar position. If they continue to expect the same work coming to them as the past 10 years, very soon they will find themselves out of work. They need to constantly innovate and find new ways of creating value by leveraging technology. This is a paradigm shift that needs to come in the way GICs function. GIC and Shared Services must constantly think about technology disruptions that will help them move up the value chain.

Agree. Technology and innovation have to be at the forefront of everything we do. This brings me to my final question for today. This one is related to both talent and ways of working. Do you also think that as we see increased impetus on getting the job done in the most efficient manner, there will be a shift towards interim positions from the currently popular full-time roles?

Absolutely. I am a big fan of the gig economy. With today’s connected world with all the technologies out there we should be open enough to tap all resources on hand, and not just be limited by our own teams. If you get a talented person in your team but not utilize him or her well, there is going to be decay. That’s not good. Rather, I would like to have people as and when required into my ecosystem with a great deal of flexibility, expertise, and understanding in the area, let them play a pivotal role in a project and then move on. This is where the interim philosophy works brilliantly and GICs should be open to this. 

In my case, I have relied heavily on interim positions in my team. I have primarily looked at two types of people – doers and experts. The first group of people enables execution to happen at the desired pace while the second group brings in fresh perspectives and expert opinions on the table. This has also given me tremendous flexibility in terms of hiring resources that I feel are suited for key projects, giving rise to beautiful symbiotic relationships. This experiment should definitely be a part of the capability building exercise for GIC and Shared Services.

And to add to this, it also aligns with the preferences and belief systems of the tech talent available today. They want to be at the best place and deliver at their best levels. Decay is not good for this talent and also for the organization that employs this talent.

To add one more point, the western markets are adopting this more easily than in India. We still have the social obsession of full-time jobs but all of that is going to change. The change also needs to start with the companies that employ interim talent. Beyond salary and designations, the companies must start giving the respect that the interim talent deserves. Instead of looking at them as ‘contract labor’ think about them as an expert cardiac surgeon that is called in by a hospital for a second opinion. So we need to classify them in the right bucket. We also need to look at some other elements such as Cyber Security, IPR infringement, Core v/s Non-Core work and GDPR related issues etc. Once these things get sorted out, this system of interim talent is going to thrive immensely.

Deepak, this has been a very enriching discussion regarding the entire GIC evolution in India. I would like to thank you once again for taking the time to have this discussion with us.

Thank you Vaibhav. Fantastic set of questions.

Vaibhav Agarwal is the Vice President for the Consulting & Intelligence practice at Catenon India. He holds a BTech from IIT Guwahati and an MBA from ISB Hyderabad.

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