CEO: Shift from manufacturing to services expected

(China Daily)
Updated: 2012-09-14

Building on a trend that has already begun, China should shift away fromreliance on manufacturing and further develop its service economy, saidthe senior executive at Genpact Ltd during the Summer Davos WorldEconomic Forum in Tianjin on Tuesday.

"The slowdown in China's economy is not a surprise with the backdrop ofthe gloomy world economy," said Tiger Tyagarajan, CEO of Genpact, aglobal provider of business process management and technologyservices.

"The situation will continue for a relatively long time, at least through thesecond half of the year," said Tyagarajan. "But when the economy is notgood, it offers good opportunities for business process outsourcingoperations.

"Companies want to know how their business can grow better and what they can do to solve theproblem," he said.

Some 8 to 9 percent of Genpact's revenue came from China in 2011, a figure Tyagarajan expects togrow to 15 percent in five years.

Mainly working with State-owned or large-scale private companies, Genpact had to expand itsbusiness step by step in China through "education" because the Chinese market is still at its "earlystage", said the CEO.

"When we seek new clients, we have to educate companies and local governments, letting themknow the importance of business outsourcing companies," he said.

"That effort to help them realize our value is very typical of an immature market," he said, noting "it willbe a long journey".

"It could take 10 to 20 years," he said.

Chinese companies with business overseas tend to cooperate with outsourcing companies more thanmedium-scale and small operations.

The first professional outsourcing services company in China when it arrived in 2000, Genpact nowhas more than 20 domestic clients and about 50 to 60 international customers with operations inChina.

Its clients include banks and telecom giants as well as manufacturing and data service companies.

With about 5,000 employees in its China branch, Genpact's biggest challenge is the shortage of talent.

Tyagarajan said the company spends a great deal of time, money and effort training people.

"But the problem is not unique to China - it happens in every country," he added. "So we cooperatewith about 40 universities in China to teach students the qualities they need to have a successfulcareer."

He said the World Economic Forum provides a good chance for him to establish new connectionsand renew old ones, networking that is "very important" in his business.

dujuan@chinadaily.com.cn

(China Daily 09/13/2012 page5)