Josh: Hello and welcome to the WNS business insights podcast series. My name is Josh Passman and I am your host for this podcast and joining me today is Arijit Sen Gupta, MD for Asia Pacific and Middle East for WNS, a leading global business process outsourcing company. Today we’ll be talking with Arijit to get his thoughts on the topic of change management which is becoming very important to companies worldwide as a part of their overall outsourcing plans and programs. Hello Arijit and thank you for joining us today.
Arijit: Hey Josh, looking forward to the conversation.
Josh: So Arijit, just to kick this off, why don’t we start by talking in your own words, why you feel that change management is so important as a part of an outsourcing program?
Arijit: Well Josh if you look at any outsourcing exercise, it is really a journey and you need at least three to five years of going down that journey to get value from that effort. Based on all the experience that I’ve had, if you were to ask me what is the single most important thing which differentiates success from failure, I’d say effective change management. Let me start with an example and then I’ll talk in some specifics about how I think change management matters. We have a couple of client case studies. The first one is a financial institution in the US, and they started with a plan to outsource about 500 odd positions across multiple functional areas over a twelve month period. In 12 months, they achieved about 30 per cent of their targets; they were not hitting metrics that they sought for about half of the processes that had been outsourced and they had a very angry set of internal stakeholders; they were of course behind budget…The second company outsourced all of their customer support operations, in a sales oriented function over a twelve month period and this was in excess of 1200 positions and they actually achieved their numbers in 10 months. They started exceeding their performance goals ahead of time, and they achieved higher than projected cost savings. What was the difference between these two companies? They both had great management team, very strong commitment to outsourcing and it was a very intense effort from both sides, but the second company did a great job of change management, and the first one didn’t. Now let me explain what I mean by change management. First, they communicated very effectively across all parts of the organization. Two, as change happened across different stakeholders in the organization, they were able to manage that through constantly interacting with the stake holders, getting them aligned and making them progress to the next step. Three, as they evolved to a new operating model from where they used to be earlier, they were able to really make that message of how it was more valuable, more important, and more relevant for the organization come through and they were able to do that successfully while the first organization was not.
To me, in an outsourcing journey which is typically three to five years to really derive value. You can have the best strategy, you can have the best provider, you can have the best team, but if you can’t manage the change over that period of time, you are not going to be successful.
Josh: Taking a look at change management in your experience, are there any thoughts regarding anapproach for companies to get involved in change management. For example, is there a ‘one size fits all’ model that companies can apply or are there other considerations depending upon the type of company, on the type of industry, geography, etc. and if you have the opportunity to give us a couple of examples on how companies are employing change management, that would be very helpful as well.
Arijit: Josh, you make a very valid point and while there are some universal principals of managing change, I would say, it needs to differ, by type of company, type of baseline situation and let me try to explain that with a couple of examples. The first one is a global company with operations in many countries and some history of doing outsourcing, some history of working globally. So this was not all new to them. The second company is a regional bank in the US with no international experience, very conservative no history of outsourcing outside of the US…so, very different approaches. Let me explain how they sort of went about it and if there are any learning’s from that experience. So the first one, the global company, what they did is, they had various call centers and finance shared service centers across the globe, and they outsourced about 1500 positions from 15 to 16 countries and centralized it with us in three of our global centers and we built a set of standard operating practices, gave them cost savings of 40 to 50 per cent, improved service levels, all the good stuff. But they were brilliant in managing the change. And what they did is first of all, they set it up as a large scale program which was always global, so there was messaging from the CEO, the CFO, the Vice Chairman. The second thing they did is really they created an organization to enable the change. They pulled off a lot of their high performers from their businesses and created an outsourcing management organization which was accountable to the business but had enough weight within the organization to deal with change issues as and when they came up in the program and I think that really helped smoothen the process of transition and ongoing operations. The third thing that they did very well, is that being a global company, they understood the whole aspect of integrating with the local culture very well. So they invested hugely in making us understand their culture, in making us feel part of their culture and orienting their people to the culture of the outsourced partner and that I think got us to a point where both companies felt like pretty much officers of the same company and that was a huge plus in managing change issues as and when they came up.
The second company - A very different ball game; they were very local, very conservative, never done this before, so the first thing they did is they said, we won’t do anything dramatic or big. ‘We’ll start small with a pilot, get a few people, call them the coalition of the ‘villic’, make it successful and use that as a baseline to drive global outsourcing programs. They were also very clear that this was a top management directive, but the way they communicated it was very different. Because of the context of the company, instead of saying this was a global dictate, get it done in the next twelve months or so, they said, ‘Hey all our competitors are doing this, we need this to be successful, but we want you as business owners… to be partners, we’ll be cautious, but we are committed to making this happen and that message really helped make this program successful. The third thing they did again related to culture, a little different. They did not have a bunch of people with global experience. They did not have people who had travelled overseas, so what they build up in a twelve month period is a visit program where more than 35 to 40 of their critical business managers were sent to our site overseas to make them feel comfortable about the operations and to really build one on one relations with people of both companies and that really got a lot of momentum going across both the organizations. So as you can see, different approaches for different situations, but overall the same things remain important – get executive commitment from the top, communicate well and make sure that there are a bunch of key stakeholders who have the right incentives to make this happen.
Josh: As far as, I don’t know if you want to use these companies as examples, or if you have other, so to speak in general terms but what are the things that the companies need to keep in mind as they get into establishing a change management program?
Arijit I would say, the big mistakes that people make typically when they embark on an outsourcing journey – one, they don’t make a very comprehensive plan; they don’t communicate enough and they don’t really focus on driving the message of – what’s there in it for me for some of the individual businesses who are intact and they don’t listen enough and so sort looking ahead and saying, here are the five or six things that the companies really need to look at from a change management perspective, I would say, 1) really you communicate consistently, right from the top, get top management to explain why they are embarking on this journey, what will change and how to be prepared for that change. The second aspect is really building a bunch of processes and organizational changes to make the change happen – could be identifying some people who actually will drive the change, could be identifying a monitoring process which makes sure change is on track, could be building a set of metrics. Third thing I would say is that there are a bunch of people who are impacted. It’s not easy because suddenly, your world is turned upside down. So really make a very comprehensive set of plan for each stakeholder group which is impacted and tell them how this will work for them and what they will get out of it and help them through that change process. The other piece I would say in terms of making sure that you really appoint some champions of change across the organization who will empower to make it happen and anybody who sort of follows that path of change that you are driving across they really get rewarded in a very visible manner. So that drives greater acceptance across the organization and I think companies don’t place enough emphasis on making sure non compliance is not punished and I would say that’s an important aspect as well. So overall, communicate, build a plan, create an organization and work through all the stakeholders in managing it. Those are really the key messages I would have.
Josh: That’s been great Arijit. Thank you very much for taking the time to speak with us today.
Arijit: Thanks Josh, this was a pleasure speaking and hopefully this message goes across some of our clients as well.
Josh: Thank you. For more information on the topic of change management, please visit www.wns.com/financeandaccounting.