Wachovia (Charlotte, N.C., $493 billion in assets) has signed a seven-year business-process outsourcing deal with Genpact (Luxembourg, New York, and Gurgaon, India).
While the terms of the deal were not disclosed, the impact will certainly be felt within the bank as Genpact finds ways to make a bottom-line impact. "We have a group of six-sigma black-belts and process black-belts 'in the stream' with Wachovia, working with their teams and identifying the right processes to decouple – which ones to move first, which to move second, what kind of sequencing would make sense – and really getting prepared for alignment of processes," says Tiger Tyagarajan, executive vice president, Genpact.
Genpact was originally established in 1997 as GE Capital International Services, a captive subsidiary of GE Capital, to handle tasks such as credit card application processing, collections and accounting for GE's financial services businesses. At the end of 2004, GE divested 60 percent of the firm to private equity investors so that the former captive company could better pursue new business from outside firms.
The Wachovia deal is Genpact's 17th since branching out from GE, and it is the company's fourth deal in financial services. Financial services comprises about 40 percent of Genpact's book of business, including the work that it still does for GE's financial services divisions.
As a GE creation, Genpact was an early beneficiary of Jack Welch's famous embrace of the "Six Sigma" process methodology. "We had the real advantage of hiring our first individuals into the company and turning them into Six Sigma nerds," quipped Tyagarajan. "Every employee is Six Sigma trained."
Building such a shop from the ground up has its advantages relative to entrenched operations, he adds. "If you have 40,000 employees and you have to convert them into Six Sigma, that takes a long time," says Tyagarajan.
Now, Genpact's 16,000 employees in India, China, Hungary, Romania and Mexico will begin to drive the process through Wachovia's operations. "We will work together over a seven-year period, identify a range of processes, and move them, from Wachovia to a dedicated facility that we will run for them in India," says Tyagarajan.
Although Wachovia is pursuing an aggressive cost-cutting plan, including headcount reduction, the logic of the deal wasn't centered around "moving work," claims Tyagarajan. Instead, the goal of the venture is "to drive process improvement in processes that are actually pretty well run, and to try to take them to the next level – to help them to be more competitive in a very competitive market."