Print

Comment

Email

Digg

Del.icio.us

Reddit

Twitter

UK-headquartered Serco is the worlds largest services company focused on public services. From space program management to running of prisons, from running train services to managing the rehabilitation of soldiers after war, it services are so diverse that the CEO himself struggles to find a perfect phrase for describing his business.

The man himself is as versatile as you can imagine. An athlete (he once ran 100 mts in 10.8 seconds), a racer (he is into Formula 3), a musician (hes recorded an album of Gospel music), his ethnic background competes with his skill-set when it comes to versatility. A British citizen who hailed from South Africa and is of Indian origin, Chris Rajendran Hyman (45), chief executive, Serco Group plc, is proud of his roots. He has been appointed National Ambassador by the Prince of Wales for Business in the Community.

In a freewheeling discussion with Dataquest editor, Shyamanuja Das, he discusses his company, major global issues before the national governments and how his company is helping them manage that. He also outlines his India strategy and the rational behind acquiring the Indian BPO company, InfoVision Group. Excerpts

How do you define what you do? Is it really outsourcing?
It is very important to take note that our company has very deep public service ethos. By that I mean, we have a lot of work with the public sector. In fact, nearly 90% of our work is in the public sector. About 85% of our people around the world are ex-civil servants. Civil servants get a lot of bad press around the world. Once they move to us, suddenly they become heroes. We do not use McKinsey to come and fix anything. We do it ourselves, with the same people. So we must be doing something different so that the same people start working better.

We do many things around the world, but what is common is that we are experts in change management. If you need to move people from the public to private sector, we are experts in that. In the private sector, if you need to completely change jobs and take complete ownership, we do that. We tell a car manufacturerwell you are experts in making cars, you make cars, we will run your entire infrastructure. That is what we do. The moment you say outsourcing, people sayyes we know outsourcing. Then, we tell them some of the things that we do and they say,that is not outsourcing. Well, we do not have a term for that. We do not know whether to call that output-based contracting or output-based services.

Can you give some examples?
Sure. We run the European space agency. I mean that my people do rocket launch control, control the shuttle for 14 minutes, and not NASA. We control the satellites that give you satellite television. We run the Queens flights. No royal member in the UK flies without us. We do the flight plan, the engineering of the aircarft and all the security checks.

We have 5,500 nuclear scientistsall PhDsrunning the nuclear weapon establishment of Britain. So, we handle the nuclear bomb. We run all the trains in Australia. We are the largest air traffic controller in the world. We run over 500 schools in the UK. They are among the fastest improving in the country with some of the best results. All the prisons that we run have the lowest rate of re-offendingthe prisoners who come out of them are less likely to re-offend. The governments rate of success in this is 14%; ours is 72%. That is seventy-two people of every 100 that come out of our prisons do not re-offend. Our hospitals are rated as the best hospitals in the world. We supply helicopters and fighter planes to the UK government. We get them designed, built and bring them.

You go to America. We work with the nuclear submarines in San Diego. We receive all the returning soldiers from Iraq, Afghanistan. We work with them to rehabilitate them, retrain them and help in finding new roles. That is a very very delicate job.

That will give you how diverse is our services and why I was struggling to find a phrase for that. We do a lot of things but we take over completely what we do. What we do not do is that we do not supply people. We cannot supply ten teachers, three scientists, or four mechanical engineers. You rather go to recruitment companies for that.

Are the progress in these services measurable, except for in a few cases like school results?
A report unveiled by the prime minister of UK in August 2008 called the Julius Review, was the first ever assessment of the impact of the public services industry by the government. Within Serco, we have measured what saving we bring to the government when we take over something that they run. Our figure has been 32%. The Julius Review says it is 30%. So, the private sector can bring up cost savings up to this magnitude as long as it is whole services management. That is why this industry has taken off the way it has.

When I joined the business 14 years ago, it was 238 mn globally, with about 8,000 people, in twenty-one countries. With InfoVision today, we are in India which is our 36th country. Today, we are about 60,000 people strong and our revenue is about 3 bn. Our order book is 15 bn. The pipeline where we are bidding now is about $25 bn, and when I say $25 bn I include only the projects where the actual bidding is happening, with a budget and a project start date.

How many of those thirty-six countries would be developing economies, apart from India?
It is a very good question. Not many. A developing middle class causes outsourcing to start Poor countries do not have that demand. The demand really starts from people like us, who are sitting in this room. We do not want to wait, we want better services.

Are all these thirty-six countries democracies?
Yes, non-dictatorships. If it was not for the UAE, I would have said yes to the democracies part. So, yes, it is the middle class which wants these services, which does not want to pay a lot of taxes, and which drives the need to be more efficient.

Are there any commonality in the challenges they face?
Yes, as I talk to the governments around the world, the presidents and the ministers, they are concerned about four issues. First is rise of crime. That includes terrorism. The second is climate change. Third, is migrationpeople come and go to and from countries. We do not know who they are. We do not know whether we should know who they are. And fourth is congestion. We all want to be in the same place at the same time.

We have products for all of those things. If we talk of congestion, we have congestion charging models. We write the software, we run the systems, we run the toll, we do all of that. In immigration, we have immigration centers. We have border control systems. We do that in the UK. Now, there are eleven member countries whose databases would be connected for the first time in a system called e-border system. 8% of the people who enter countries illegally come through the borders. Now here is the real issues. Most countries that I am talking about are democracies. We do not shoot them at the border. We allow them. We put them into a holding area. And who pays for that? You and I...

Similarly, in each of the four areas that I just mentioned the challenges are huge and fundamental. We help the governments in all those areas.

In the UK alone, where you have such a wide and deep presence, do you feel, going forward, you will have enough people, in say 15 years, to serve the rest of the population?
We do not have enough today. The reason why we are not growing by 50% and are growing only by 10% or 11% is because we run out of people every single year.

In fact, that is one of our interests in coming to India. There was a survey done by the Boston Consulting Group. It said in 2020, there will only be eleven countries that will be net exporters of talent. I am sure you can guess which one will be #1. That is not the surprise. The surprisethe first oneis China is not one of the eleven. And here is the next surprise. From #2 to #11, if you add all the ten together, itll be smaller than India.

The world came to India looking for price arbitrage. Every single company that came here found out there was a value arbitrage. And that is a big thing for the company. It is a double whammy. Firstly, you can reduce the price of your product. Customers are happy. Secondly, you can enhance the quality of your product.

So a very short answer is that I cannot grow the company faster if I do not have the people. And the opportunity lies here.

We have completed 20 years. In 1988, we were 25 mn. We are 3 bn today. And we do not grow by buying out companies. It is very unusual what we did here. We bought just six companies in our history.

So, what made you choose InfoVision?
When we realized we have to go to India, we did not know where to start. One of the things that we were lackingthere are not many things that we cannot dothat our customers are asking for is the BPO capability. There was no point in looking at the UK because of the same issues that I described. So we decided to come to India to look for it. And we did not want to buy a company that was a big name. We wanted to look at the domestic sector. Let me make it very clear. We have entered India, the Indian market. We are not here to make our operations cheaper. We want to be running services in the Indian economy, for all the big companies here. We want to be running train services, defence services, health, education, air traffic controlall that we have an expertise in. But that is going to take some time. We are not in a hurry. Whenever we enter a country, we have a 3-5 year horizon in mind.

The first step was to find a company that has the same aspiration and ambitions as us. And InfoVision had it. And it is not growth, size, ambition for growth that I am talking about. You come across many companies like that. But what I mean is a company where the people are invested in, where people are aligned to the management vision. In this industry, where the turnover is in 70s and 80s, if this company has an average tenure of 8 years for employees, there must be something right. We too have a very low attrition. When we found that we have the same aspirations and culture, our heads come together, and so did our hearts. They say 80% of acquisitions fail and I agree having done that for a very long time. It is not that the business does not make sense, the cultures do not match.

In case of InfoVision, that is what we found matched perfectly.

How did you find out about them?
Well, they were the #3 in the Indian domestic market, according to a leading, independent market study (It is Dataquest Domestic Contact Center Services Market report in February 2008, he is pointed out by his colleagues at Serco India). So that was not difficult. But then, we did not rush. It took us nine months to finalize that.

When we look at a market, we look at two-three years ahead. I think India will be a big market in two to five years time. Right now, we bought a business that is 24 mn sterling. That is very small. So, what we have done is that we have got a team that is aligned to our culture and we will help them with resources. Immediately, we will grow in the BPO sector itselffrom being #3 to #1. And then, we are going to look at what are the big opportunities in the private sector and public sector. We want to look at all the opportunitiesschools, airports, etc.

Shyamanuja Das
shyamanujad@cybermedia.co.in

Page(s)   1