iGATE is enjoying significant growth and currently performing strongly in the market with a 200%+ increase in stock price since 2009 and market cap increasing from $300 million to nearly $1 billion. I spoke with David Kruzner, Senior Vice President, about the way iGATE goes to market, its differentiation, and how its customers benefit from its Integrated Technology & Operations (iTOPS) platform.
Q: What is the main facet of iGATE’s go-to-market approach that attracts the attention of so many customers?
Kruzner: Our approach – and a significant differentiation from other players in our space – is to deliver business outcomes. We focus first on outputs rather than inputs to drive customer results. Inputs are the activity to get to a deliverable. In contrast, our approach is to define a measurable outcome for our customer and how we can create value while at the same time share in the risk of getting to the outcome in either the investment or any other aspect of what it takes to deliver the business outcome. Our expertise is to integrate technology and operations – what we define as our iTOPS model — to achieve that outcome for our customer.
By focusing and managing the entire business outcome, we leverage our strengths in both technology and process improvement, effectively transferring risk from our clients to ourselves, specifically in risk areas with which we are very competent.
Q: If your go-to-market approach is an outcome-based model, I assume your pricing is also based on outcomes.
Kruzner: Yes, and this enables our clients to enjoy elasticity in supporting their evolving business needs. When service providers price their services by headcount or FTEs or even “inputs,” buyers can’t cost-effectively or easily scale up or down significantly based on their business conditions. Since we price by outcomes, it doesn’t matter what the volumes are as long as our customers achieve their respective value/outcomes they’re paying for in both good and challenging times.
Q: How do you define business outcomes?
Kruzner: First, it’s something that is truly measurable and something that our customers value. Second, the outcome is very time boxed relative to how we measure it.
In a customer-facing scenario, for instance, we work to business outcomes such as likelihood of first-time processing of a customer inquiry. Then we time-box that. It could be X percent in six months. We make the outcomes both qualitative and quantitative.
Or in the mortgage space, what’s important to our customer is not how many mortgages go through their system (which is the input) but, rather, how we get our customers to a valued outcome such as a funded loan (the output). Today it may cost a company thousands of dollars per mortgage to get to a funded loan. We rapidly come in with innovative processes and technology platforms to enable our customer to achieve a higher conversion of executable mortgages that ultimately get funded. The customer only pays us per funded loan.
In some cases, customers haven’t thought about their business in terms of measurable outcomes. They just know their process is broken, or it costs too much, or it’s not working the way it should. But we’re a relationship-based company and invest a lot in the front-end processes for relationship management. To that point, we forge very close relationships and drive to understand our customers’ strategy, their culture, and how they go to market. This helps us know how to drive to the business outcomes that are truly important to them.
Q: If you’re promising and driving to deliver business outcomes, you need to handle the technology as well as the business process operations the platform supports.. How does your iTOPS platform enable the desired outcomes?
Kruzner: First of all, our iTOPS platform includes both process (operations) and the technology. So it’s a business platform, not only a technology platform; and that’s a market differentiator. A lot of our competitors look at their platform as the technology. This is critical in how they think and operate compared to our approach and services.
Another key benefit of our iTOPS platform is that it delivers not only what’s necessary today but also looks at what our customer will need two, three, or five years out, to get to the next level or next generation. By looking three to five years out, we will leverage our Lean Six Sigma practice to continually refine the overall platform to increase efficiencies while getting to the next level and deliver year-on-year savings and value.
Q: Can you give an example of how customers have benefited from your iTOPS platform?
Kruzner: Prior to outsourcing to iGATE, a leading electronic manufacturing company was running an AP operation at a cost of approximately $20 per invoice with multiple ERPs, and out-of-date workflow and imaging technology. The company also had a team of approximately 100 FTEs including mail/data processing and call center resources processing approximately 750,000 invoices per year. iGATE’s iTOPS solution delivered a complete solution including consolidated data-entry system, new workflow and imaging, and a vendor portal at a cost of less than $2 per invoice.
That’s a huge difference – more than an 80 percent cost reduction. And it wasn’t due to the reduction in people. It was because we built front-end systems to optimize data capture as well as a vendor portal for suppliers to do self-service inquiries, eliminating the need for people to answer routine questions.
We also streamlined the process and, at the same, implemented interfaces to the customer’s back end systems to feed the right data automatically, eliminating manual and duplicate data entry. With less than a four-month transition, iGATE delivered a transformational solution focused on outcomes.
Q: In business transformation initiatives, many outsourcing buyers face significant challenges internally with change management. How do you help them embrace the transformational model and manage the high degree of change?
Kruzner: First and foremost, we help them determine the most important outcomes they want to achieve. We put together a very robust change management plan that is very clear at each step along the way. We define and explain the journey to our customers from a strategic standpoint. We have also helped some customers with their internal communications strategy for articulating the changes to their staff.
We also define the transformational journey so they understand the beginning, the middle, and the end, as well as the ROI time line and kinds of returns they’ll get in year 1, year 2, year 3, etc. We also educate them along the way about the processes and tools involved in the journey.
Another important factor is that we bring not only domain-specific, process-based experience, but also program managers who have experience in running large transformational initiatives.
Q: Delivering on outcomes is difficult for many service providers because of the challenges they face with the customer’s retained organization not following the new processes or procedures and thus creating bottlenecks. How do you manage that risk?
Kruzner: That’s the sweet spot in our iTOPS business platform. When operations and technology are truly integrated, it eliminates bottlenecks. This is very critical in our model of delivering on outcomes. We’re very careful to carve out of the back-office process the customer-facing and value-add functions. We divide those processes so they’re efficient enough not to introduce bottlenecks. Also, we take over the bulk of the back office – 80 percent at least – so there are fewer critical handoffs.
Q: Many companies already have significant investments in technology, which can cause them to be reluctant to adopt an outsourcer’s platform. How do you help them move beyond this mindset?
Kruzner: Putting it in a nutshell, we want to be vested in our customers. Therefore, what’s important to them is important to us. And we want to meet them where they’re at; this is part of the understanding of how to get where they want to go. iTOPS is a journey. We start by leveraging the customer tech platform and reengineering the process; we then stabilize and, over time, evaluate either migrating or upgrading the platform.
I’ll give you an example of one of our clients, a large financial services company. On the technology side, the business had invested $60 million in a technology. But the end-to-end process wasn’t working as they thought it would, given the investment they made. Would it be right to not realize the returns on the $60 million investment? Absolutely not. We met them where they were at. We said, “Fine. We’ll focus on the process side and leverage your technology and hopefully get it to where you need it to be. Down the road, we may replace that technology, but not today and not in the near future.”
Q: Is there anything besides your iTOPS platform and your vertical and horizontal expertise to which you attribute iGATE’s success in the marketplace thus far?
Kruzner: We work with our customer deep and wide. Our focus is on working with a limited set of customers as strategic partners. Currently, we only work with about 35 strategic customers. Our foundational success to date in growing our company is due in part to strong account management processes, strong individuals in the process, strong relationship management capabilities, and strong execution.