Outsourcing: Naresh Lakhanpal And Hiro Notaney Of Patni Computer Systems (Part 2)

By guest author Tony Scott

Tony: Size is a phenomenon that is not only related to outsourcing companies. When I was at A.T. Kearney, we did a marketing survey on the perception of clients and potential clients around consulting services organizations. One of the key things we found is that because clients have a very hard time distinguishing differences between services organizations, the primary way they judge is scale. That’s the first and only attribute that has any kind of real significance among the people who don’t know the companies that they’re dealing with.

Naresh: But is that because the name is out there and it resonates with them, or is it really because of the quality of work?

Tony: Well, it’s not quality of work, it’s actually just because of the name; the assumption is: “Well, if they’re big, they must be good,” because they have no other way of distinguishing otherwise. It’s not like you have a computer chip and you can say, “Okay, I understand how fast this chip works, and I can compare that against this other chip on the basis of speed versus price.” If it’s a services organization, that’s not nearly so obvious – many of the evaluation points are subjective. That is also why it becomes very difficult to create distinctive positioning around the competencies that a services company has compared to its competitors.

Hiro: It’s interesting; over the summer I had this conversation with somebody in our organization. I was watching the World Cup, and as you know there is stadium advertising. One of the major outsourcing companies was advertising, and every game you watched you saw their little banner. I received e-mails saying, “Are you seeing this?” as if we should be doing this as well. But one of the things that’s important from a brand perspective for us to understand is that we’re not marketing to the entire world. We’re marketing to a handful of companies, and if we’re well positioned with those companies and the people who select outsourcing service providers within them know who we are, that is what is important. So, there is a balance between broad-based brand recognition and brand identity with the companies that are your customers or those that you’d like to be your customers.

Tony: Absolutely.

Hiro: To follow up on your point, we did a survey, and one of the things that we found out was that what our customers value about us is that we say what we’re going to do, we’re very reliable, and we’re very responsive. So, those are all pretty positive from the perspectives of our brand. From my perspective, I’m still concerned about scale, though. But from a business perspective, how much does that affect us? Because the customers know us pretty well.

Tony: But when you don’t know much about services companies in a particular segment and you’re very busy, you think, Well this company is two billion, this company is five hundred million, and the two billion company must be better than the five hundred million company. But they may not be delivering in the same way or be of the same quality. Again, to go back to your point, how much scale do you really need, and aren’t there disadvantages to scale as well?

Naresh: Sure.

Tony: So, going back to that, what do you focus on? What do you say are your core competencies, the areas that you deliver on as well or better than anyone else in the world?

Naresh: I think there are a couple of things we’ve got that make us distinctive in the marketplace. Patni as a whole obviously is focusing on delivering solutions to our customers’ customers. That is critical. So, if understanding the marketplace is one of the big things, it drives us to make that one of the things we are doing to differentiate in the marketplace. It is critical to how we operate. A good example of that would be the TPA business we acquired. We decided to go into the third- party administrative business in the insurance segment, and it was critical that we demonstrate an understanding of the issues in that marketplace. Because none of our competitors were there, acquiring a company with that market understanding that was a huge distinguishing factor right away. Not only does this distinguish our business from our competition, traditional and nontraditional, it allows us to get into new revenue streams.

Our structure also provides us with things most folks wouldn’t think about but for me are important. A good example is that in the beginning of 2010 we went to a regional construction company. That was one of the reasons I was brought in, so the Americas is now running in a distinct manner from EMEA and Asia Pacific. TPA was something this region needs. We said, okay, we have smart people, we enable them, they have the power to do the right thing, we found the right company, and we made the acquisition.

That took us another step forward, and for me personally I had to reflect on the marketplace. I now had folks in Pensacola, Florida, who are from the United States. We’re not just we’re buying bodies, we won’t do that. We’re buying unique skills that differentiate us in the marketplace, so obviously a micro-vertical strategy is going to be important to us.

The second thing is how we treat our people. We’re going through that process right now of understanding how we’re doing this. How do we become a role-based, high-performance organization? I think that’s a distinguishing factor. We’re probably spending more time making sure from an executive perspective that we understand that when this is rolled out, it’s not a shock to people. There are companies that get this role-based thing going in three months, and are not all are happy with it. But people are our most important asset. It’s the passion of mind that is important; we want to be a trusted partner to our customers.

The next thing we need to do, and we’re doing it, is enabling our people to have those conversations. We need to elevate the capabilities of our folks because we find that when we talk to our customers today, they know we’re really good, and they’ll tell us that. The single criticism is always, “But your folks don’t express themselves enough.” I think part of that has a lot to do with the culture.

I think a lot of it is changing now because the regions are all running themselves in a distinct manner. I think the other thing that is happening is our responsiveness to the marketplace is changing from what it was in the past, and this is not to say what worked in the past isn’t valid. In order to scale yourself to being a $1.5 billion–dollar company in the next couple of years, you have to be aggressive in how you respond to the customers. The Americas is an example. We have a head of delivery; his job is to focus on customer satisfaction for external as well as internal customers. So, it’s really about being close to the customer, being attuned to the marketplace, and understanding what we can bring to the market in an appropriate manner and at the right time. We want to be on the right side of the growth curve for a market segment, and at the same time take advantage of the fact that we may not be the biggest, but we’re nimble and can move pretty quickly.

This segment is part 2 in the series : Outsourcing: Naresh Lakhanpal And Hiro Notaney Of Patni Computer Systems
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