So again, good morning, everybody. Is this on? Can you hear me? Yes. Good.
So good morning and welcome. I'd like to thank everybody for coming down today to speak with us for a little while on a beautiful autumn day here in
New York City. Just looking out into the audience, I think I know most of you from various meetings, from conference appearances, But for those who don't know me, I'm Roger Sachs from Investor Relations here at Genpact. And on behalf of our 90,000 plus global team members, I like to welcome everybody to our 2019 Investor and Analyst Day. I think we have some interesting and useful sessions planned. We're going to talk to you about the markets where we play in, how they changed over time.
We'll update you on our growth strategy and perhaps dig a little deeper into a couple areas where we see some significant opportunities. We'll also update you on our own digital evolution and some of the new work and value we are providing for our clients. And then we'll tie it all together with a review of our financials. Now before we begin, a couple of quick housekeeping items. During today's program, we're going to have 2 Q and A sessions.
The first will occur right before our mid morning break. And then we'll do a second Q and A, maybe a little longer Q and A session at the end of all the formal presentations. So if I can ask everybody to please hold your questions until those specified time, it will get the data moved a little more smoothly. 2nd announcement, if you haven't had the opportunity when you came in to stop at our client solution centers, I would encourage everybody to do so. It will give you a little bit of a flavor, a little taste of some of the solutions that we've developed for our clients.
And these solutions will be very relevant to some of the content that you'll hear today during our presentation.
Do you have a clicker?
Okay. Does this work? Some quicker issues? Tech, tech? Okay.
So with that, forward looking statements, you can all view that and memorize it. And then to kick off our session, do you want to introduce our President and CEO, Tiger Tiagarajan, to get this to move to the next slide.
Good morning, everyone. Welcome again. When we pick the date for something like this, we check whether it's a holiday, whether it's an important some other conference happening that will take away a bunch of the audience. What we haven't checked for, which we should, is whether the UN is meeting in the city. We will check that going forward, but traffic is a mess.
So I know how difficult it is sometimes to navigate cross town all from places like Boston and other places that all of you have come from. So really appreciate being here. Really, we are in the middle of transforming the way our clients run their businesses. We live in times that are volatile. I mean, this is no there's nothing new.
You open the morning newspaper, you listen to that news. Volatility, disruption are words that are used a lot, both for our clients and by definition therefore for us because we got to change as our clients change. These disruptive forces are not just technology, but it's in the context of also political, social, economic changes that keep happening. And one of the things that we are seeing is the speed of everything is becoming faster and faster and faster. Everything is becoming real time, whether it is the speed at which decisions have to be taken, the speed at which an insurance claim has to be processed, the speed at which information flows both within an organization, outside an organization and globally.
And the expectation of that speed, the expectation of real time prediction is just exponentially going up. And in that world, we believe culture, the ability to deal with change, the ability to drive change is actually the ultimate differentiator and winner. In that broad changing our own markets have been changing a lot in the last 5 years. Management teams are really looking to leverage all these new technologies, these disruptive technologies in order to change the way they run their businesses. When they think about it, no longer do they think about I want to do this all myself because they want speed.
You don't get speed when you do things yourself. You also don't get all the learnings that are happening at a very fast iterative space. So therefore, we are finding more and more of our clients and our potential clients thinking about partners to work with to drive that change that leverages all the new technologies. And it's all becoming bolder. There is no question that what that technology disruption is doing is to make our clients bolder.
They're increasing scope. They're increasing complexity. They're reducing time and they're willing to take more risks. Their own decision making time is accelerating for a bigger scope, a more complex scope a faster journey. Their own decision making time in very large organizations has dramatically improved.
And finally, in the end, the world is moving to focusing on outcomes. We are moving to focusing on outcomes and our commercial models also are shifting to really get focused much more on outcomes. And we ourselves have evolved in these 5 years from being a company that has always been known and continues to be known as someone who runs critical operations for our clients and has an enviable client promotion reputation referenceability measured as Net Promoter Score to now being thought about as a global professional services organization that delivers and sustains digital transformation and journeys around those and takes our customers and clients on that journey. Now there is a reason why this is not a left to the right, but is a left to the top right. And a pictorial representation here is that as we have gone more and more towards helping our clients drive digital transformation, it's on the foundation of what we've always been.
We never ever should miss the fact that our foundational depth of delivery of excellence and our operational insights and domain insights is what gives us the right to win in driving that digital transformation for our clients. So it's 1 on top of the other. So what is that journey? That journey of driving outcomes therefore allows us and gets us the right to win more and more. So it's leading clients through that transformation journey.
It's in that journey bringing in digital technologies, analytical tools in order to change the way companies run, focus on outcomes and changing our commercial model to match the outcomes that we promised to deliver and then deliver. And the more we do that, that becomes a flywheel, that becomes our virtuous cycle. And that's what we are seeing in our marketplace. That's what we are seeing in our business. Our market continues to be under penetrated.
I just want to reemphasize this again and again. It continues to be under penetrated and digital is expanding the size of that market. So think about it, we had a certain size, it was under penetrated, it continues to be under penetrated and because of digital, the size of that market has increased, while obviously digital is going to automate a whole bunch of things in that market. And what you'll hear today is some of the new services we've brought in with our clients in our verticals very carefully chosen, our services and opportunities to drive change, leveraging all these new technologies that actually opens up a very large market space. And you're going to see a couple of examples of that in supply chain and financial crime, 2 big examples for us that opens up a whole new space.
And the only way to compare this is 2,005 finance and accounting for Genpact when it came out of GE. Think about that and say supply chain services for Genpact today, because that's exactly the position of the market today on supply chain services. That's exactly the position in the market today in terms of change and the amount of change that's happening in financial crime in the banking space. And we are winning a fair more than our fair share in our areas of choice. I do believe that one of the reasons we are winning more than our fair share is because we have made choices.
Our deep focus and our strategic choices in specific verticals and geographic markets and services that we made 5 plus years back is making a huge difference. That has allowed us to get depth in domain and bring out the deep understanding of process that we've always had. Our maniacal focus on clients that haven't changed, that then allows referenceability. And then our 2 synergistic routes to market, and I'll talk about it, intelligent operations, transformation services, and the interlinkage between the two, all driven by a very diverse global team that brings that all together. So a moment on the choices we made.
These choices we've remained steadfast with, whether it's the verticals that we've chosen, 6 of them, or it's the services broadly divided half and half between end to end enterprise services that cut across all these verticals. Finance and accounting is a great example. Supply chain is a great example, but only for the non financial services verticals. And then very vertical specific services, services that are unique to a vertical, managing insurance claims for auto, for the auto insurance market or managing financial crimes in the fraud and AML area for credit cards. I mean those are very specific vertical driven services.
And those choices that we have made, we remain steadfast. And every year we reevaluate any new services to add. And we've added, as I said, over the last few years, we've really doubled and tripled down on supply chain services, we've doubled and tripled down on financial crime as two examples. Domain depth, you've known us for this. Our clients have known us for this.
20 plus years of building knowledge industry by industry, initially with GE and subsequently with a range of clients that we serve. Proprietary frameworks on processes, smart enterprise process, you've heard that term before, that is rooted in our understanding of how you use lean and 6 Sigma to disaggregate process, all of which are amazingly important in the world of digital. Our considered view, which has got now reinforced over the last 5 years, is that digital comes to life when you really bring it and implement it with a deep understanding of process and a clear understanding of the outcomes you're trying to deliver in the industry you're trying to deliver it with that domain understanding. And then an increasing reputation as we implement this and execute this and deliver this outcome that has a tipping point in terms of that reputation, in terms of winning iconic brands that then become the reason for others to talk to us and engage with us. That maniacal focus on clients that then delivers referenceability is built on 3 foundations.
When we say something, we just do it. That goes back to our foundation on just delivery excellence. Focusing on outcomes as the most important thing and our client outcomes with the clear view that once we deliver that we'll get paid our fair share. And then being an extension of our client teams, remember the way we grew 6 years as an extension of a large corporation, that becomes even more important in today's world as we drive end to end improvement and implement digital and analytics. That gives us the permission to co innovate.
Digital without co innovation is not going to happen. And that co innovation is with our clients where we experiment a lot. It's an extension of that relationship where you start in one area that gives you the permission to go to other areas. Our permission to go down the path of supply chain services comes from the depth and the strength we have in finance and accounting because that connection is very deep in a manufacturing company. And then our clients become our ambassadors as we become more and more a trusted advisor for them.
That little thing that circles in the middle is a synergistic route to market where we take our operations, embed digital analytics and all of those tools and frameworks and methods into that operation, that we now call intelligent operations. And that gives us the permission to go to our clients and say we'll change the way you run by bringing in our all our technology and that we call transformation services. And in the center is the interlock and that interlock is a deep understanding of the industry and a deep understanding of processes. Without that interlock, we don't think you can be successful in actually embedding digital into operations, neither can you be successful in changing the way our clients run their business. 75% of our business today is intelligent operations, 25% is Transformation Services.
And together, that drives growth for us. Often underestimated that actually the single biggest bottleneck we see for our clients embracing change and then driving change and getting to better outcomes is their ability to actually embrace change and get on to the bandwagon of change. And that requires, we believe, a really diverse team that is cognitively diverse, that thinks differently, that in the room has a person who is deep in a particular industry, someone who is deep in trust, someone who understands how people change behaviors, someone who understands digital, someone who understands robotic process automation. And together that team delivers value in producing solutions that are highly innovative. At every level of the organization, starting with my team, that team is very, very different from what it was 7 or 8 years back.
A third of the team are people who've been in the company for 20 years, 15 years, people who really understand all the things that I talked about in terms of domain process and what we bring to the table. A third of the team are people who grew up in the company, who are now in leadership positions in the company and a third of the people who've come from the outside, who bring new thinking. These are people who've joined the team from the outside either directly or through acquisitions that we've done. We've had a great track record of leaders who've joined the company from the outside through acquisitions who are now running big jobs in the company. You will hear from a number of these leaders today as we go through the session.
And it is this team and it is the diversity of thinking, their background and their experiences that together finds a way to drive transformation and change for our clients. And we are executing on our strategy. We've been investing over the last 5 years in client facing teams. We've been investing in digital, analytics, experience and domain capabilities in the industries of our choice that then fuels our growth through the solutions that we develop. We go to market with these end to end solutions.
We deliver outcomes that then become referenceable and that has allowed us to win really large complex deals that has allowed us to drive change of complexity and great outcomes for our clients. And that's leading to accelerating new client wins as well as scaling existing clients. If we look at clients who have $50,000,000 plus revenue relationship with us as of the 30th June, the middle of this year. That's gone up from 3 to 8 in this 5 year period. If you look at the bottom right hand side, 121 clients are now more than $5,000,000 in revenue.
And remember, those are a subset of them are perfectly positioned over time to get to that $50,000,000 number. And that's the beauty of our business. You get in, you deliver value and you expand in that relationship through the reputation that you build. If you take one of the 10 plus year relationships we have in the insurance space, this is a client that started off in 2007. Over that 12 years with on the back of amazing net promoter scores and promotions, we've expanded geographically, we've expanded services, we've expanded business lines, so today doing reinsurance, insurance, specialty analytics, finance and accounting, which by the way came in only halfway through that journey.
The first half of the journey was actually very deep insurance core operations. And at every step of the way, this client expects outcomes and value to be delivered that then gives us a right to win more. This then positions us to be pretty much the premier partner for this insurance company for anything and everything in the spaces that we operate in. Another example in the global life sciences space. We started this journey really, really early, soon after we became an independent company from GE.
Started with a very small finance and accounting group for one country, only procure to pay and general accounting. And through expansion of geography, services, businesses and then helping them integrate acquisitions to now bringing in digital into their finance organization beyond the work that we do, implementing robots for them, implementing AI and machine learning in the way their contracts are managed, that's the evolution of that kind of a relationship. These are the kind of relationships that gets us to the $50,000,000 and beyond mark. So we believe, and I've used this phrase over the last 3 or 4 earnings calls, we believe we have crossed the tipping point of reputation. Remember, we are in a network economy.
Now in a network economy, we all intuitively get network economy in the consumer space. There is a network economy that plays in our space as well. There comes a time when our clients and the leaders we work with become the owners of our reputation and the carriers of our reputation across. There comes a time when much more people know us than they did, and that makes a huge difference. They know their reputation and the delivery that we bring to the table.
And that positions us not just as someone who delivers operations, but as someone who can actually help drive change for them to reimagine the business they have and the way they run-in today's world. So what you'll hear from my leaders today are what is specifically our strategy, how has it played out so far and what's the go forward strategy, A deep dive into 2 of our services, the 2 that are what I would call the newest with probably the largest addressable market out there that we think we are really well positioned to capture. Sanjay will take us through our digital evolution and where we see that going. And then Ed and I will come back to close with financial update as well. Thank you again for coming here.
And with that, Katie.
Great. So Katie Stein, Chief Strategy Officer. I've had the pleasure to be at Genpact for 3 years and so see our journey continued from Bluebird 1.0 to 2.0. I'm happy to share some of the elements of our strategy today. So our objective driving sustainable growth in double digits and there's 4 key elements to our strategy that I want to focus on today.
The first is how we make choices. We believe that a core tenant of our strategy is that sharp ruthless choice around where we focus. That's both in the realm of our service areas and our clients. And it's working. We've been on this journey now for more than 5 years.
We revisited it 3 years ago. And in terms of our inflows, our bookings, our pipeline, you've heard us talk about it being at record highs. And those areas are within our chosen areas where we have deep differentiation and we command leadership position. The second is being positioned as a problem solving partner. What does that really mean?
It means that clients look to us for greater scale and more complex problems than ever. And they do that because they trust the domain and depth and experience that we have combined with the third point, our ability to bring transformation at scale and at speed. There's too much transformation that's taking too many years and not delivering results. And so transformation at scale and at speed, you'll hear a lot about today. And lastly, our people.
This is all done through our people and continuing to upscale and hire in the best talent in the industry. So let's just take a moment on the journey. The last 5 years, if we look back, Blueprint 1.0 around the time of 2014, we decided to double down our box of data that we built upon to in 2015 inventing lean digital. That was taking our practices and our deep domain expertise and infusing that with our digital smart enterprise processes, which is our proprietary framework we bring to deliver end to end transformation. But then in 2017, we decided that we needed to accelerate the pace of change in our pivot in digital.
So we made a few strategic acquisitions. We brought in RAGE framework, natural language processing in the space of AI. We acquired TIM and 7, which brought in CX UX customer experience, and I'll talk about that a little bit more in a moment. And we tripled down our investments in our digital SAP framework in terms of how we actually deliver and accelerate transformation at the digital core level. This year we've been focusing and Sanjay will talk a lot about why is AI failing in the enterprise in many cases.
There are so many AI models available. You all know they've been around for many, many years if not decades. But organizations are having a hard time putting those to practical use in organizations. So what we did was we have taken our data and used that with labeling the data off of our domain in the spaces of S and A, supply chain, procurement and core operations and we've built a library of over 50 pre trained accelerators that allow us to quickly bring rapid transformation using AI in our processes in the organization. And then finally, I look forward and I think about how the industry is changing and we had marquee deals that we've announced within the last 12 months, some of them Bridgewater, where the market is transforming in terms of customer experience being really a front office activity to redefining how we drive operating model for our clients in a time of rapid disruption.
But at the end of the day, what matters, this is a huge market, dollars 500,000,000,000 we think is the addressable market and highly under penetrated today. We recognize there continues to be natural compression. This is driven by productivity commitments. It's driven by automation, microservices platforms coming to market. But the key message, as Tiger said, is digital is actually driving expansion.
And so despite the compression that we see every day, digital is expanding the core market that we participate in. And you'll hear today as we talk about something like supply chain. Supply chain, we size to be about $500,000,000,000 opportunity in and of itself. Now it may take 5 years to a decade to get to that size, but we see that service area alone being as large as the market we drive today. And why?
Because areas of supply chain that traditionally would have been considered core are now being unlocked through analytics, AI and digital in a way that only 3rd parties can bring scale to those activities and deliver superior outcomes. This is why we believe that we will continue to deliver double digit growth in global clients on a sustained basis. So I want to take a moment and focus on what is Transformation Services. Tiger showed that, virtuous circle and he talked about Transformation Services being 25% of global client revenue today. So what really is Transformation Services?
It's where we bring together capabilities, digital, analytics and within those more specifically automation, analytics, AI and experience combined with great advisory models to deliver superior outcomes. So this shifts us from being a traditional 10, 15 years ago BPO outsource provider to someone who's actually extending beyond traditional labor arbitrage to use those capabilities to deliver new outcomes. Mark will talk later, for example, in the space of financial crimes around how we can actually use analytics for prediction of fraud and how we bring that in addition to the cost and productivity that's a given that we drive in our operations. We bring these to market either on a standalone basis, oftentimes as a multi year journey, an annuity type of revenue base, it could be analytics as a service, for example, or we bring them, as Tiger explained, embedded within our operations, again, oftentimes in a multiyear journey of transformation, but enabling us to deliver outcomes more rapidly for our clients than we could have before. So why is it so important to us?
As I mentioned, it increases our ability to bat at intelligent operations. Over half of our intelligent operation deals today are sole source. And that number continues to hold and creep up. Why? Because we're able to enter the client through design work.
We're able to bring them transmission services as tip of the spear in that case in order to secure downstream intelligent operations. 2nd, when delivering on those outcomes in intelligent operations, as I mentioned, it unlocks new problems we can solve. It allows us to change our commercial model. It allows us to speak to new types of commercial models such as gainshare, where in addition to cost and productivity, we can solve problems. And finally, it allows us to attack a scope and scale of problems that are larger than before.
Our clients trust us to deal with that complexity using these capabilities, because they see the outcomes quickly, they see the value delivered and they see how it links to core business problems beyond typically what was just within their shared services. We see this as core to our competitive advantage and we continue to invest heavily in building and acquiring these capabilities. As I mentioned, Transformation Services is translating the results. As we go down this journey, more and more of them become multiyear journey, annuity based revenue. Transformation Services, second of all, is now finding itself in most of our deals, over 3 quarters of our deals, up from a half a few years ago.
Our fastest growing relationships who have transformation services embedded in them, the correlation is they grow at 2x, the average company relationship. So again, we see the momentum of higher growth off of those relationships where we're using transformation to drive outcome. And finally, it allows us to shift our commercial model. 40% of our revenue today is not FTE pricing. So this slide is an abstracted client example.
And the reason we abstracted it was simply to say that this could be any marquee Fortune 500 client. But the important part if you look at it is the X and Y axis almost. The X axis is from 2018 to an idea of 2020 plus where we take a client from less than $10,000,000 of annual revenue to over $100,000,000 of revenue. This is a real client example. This is one where we're on a journey right now and we see this forecast coming forward.
So why ask these is the scale of the relationship. So Tiger talked earlier about a couple of examples of relationships that have developed over a 10 year period. The important point to take from this message is that in a period of a year and a half, using transformational services and capabilities, we are able to take on a greater scale and complexity and therefore drive greater growth in these relationships and outcomes for our clients in a far more protracted period of time. So just to pause on this example, it began in 2018 a relationship we didn't have, a logo we'd always wanted to be in, but not a relationship we had at that time. It began with less than $1,000,000 of design work.
The problem so many of our clients are facing, which is digital disruptors knocking on their door, and they needed to think about how to operate differently. Yes, a core element of it was productivity and cost, but it also is how do we operate differently? How do we change and transform our middle and back office? It led from that design very quickly into one geography where we clicked in and did a deep blueprint of how we would transform them. A core element was that at the core of that was actually transforming through digital and technology and analytics.
And then very quickly turn to us actually taking over and running those operations and day 1 starting to deliver those outcomes. So if you were to talk to that team and say, what did it feel like the 2nd week you came to work, they would say, I had insights in analytics that allowed me to better manage my position in working capital than I'd ever had before. I had daily reporting that let me manage my teams on the collection floor faster than I ever did before. I knew where my leakage was happening. Roll forward 6 months later, we've built out components of the data engagement layer and now the business is again transforming.
What did that do? It immediately unlocked again the willingness to trust us with the complexity of a second geography and a third geography and we're on a path to scale to over $100,000,000 next year. So we talk a lot about ruthless prioritization and focus. And I wanted to take a moment to talk about what goes into that equation for us. I mean, not surprising classic matrix of we pick our sweet spot based on where we see there's a large addressable market.
Again, BK will talk about supply chain. Could be a $500,000,000,000 market. It's a large addressable market and we take it based on our right to win. So again, BK will talk about some of our legacy assets in the space of supply chain that gave us the confidence that we were ready to move into that market and then we supplement through organic and inorganic and partnerships. 2nd, we always look at what's happening in the market around us.
So where are the tailwinds? Where is technology innovation occurring? Where is artificial intelligence going to actually markedly change the growth curve and where is experience in changing how work has to be done to satisfy the employee, the customer and the supplier. And finally, we want to move up the value curve in terms of the types of outcomes that we deliver. So cost, risk, compliance, they're critical.
They're always part of the conversation. It's a table stake. But our ability to impact top line deductions, whether it's in the consumer goods industry by helping manage deductions and recovery, Real top line dollars that we're helping to capture and preserve falling straight to the bottom line or whether it's as Tiger alluded to changing the operating model, business model evolution, the digital bank and how we're helping a card issuer change how they fundamentally operate in the market and serve their end customer to grab more market share. Once we picked our spot, we always go through as anyone else, a clear view as we build, buy and partner and we employ all 3. Let me just start with buy.
As you know, we've employed a successful tuck in acquisition strategy. We focused on both digital capabilities, RAGE, I mentioned earlier in the space of AI, Hannon 7 in customer experience, PNMsoft that added to us some great workflow technologies and also domain acquisitions, Bartowie being a leader at the forefront of Connexus limitations and supply chain and also in some of their own just pure supply chain design and domain expertise or risk canvas, we'll talk about later today in the space of financial crimes and banking. Partners, we have a very active investment focus on partners. These are just a few. Obviously, there are many of the cloud giants and others not listed on this page today.
But in the space of the technology, whether it's automation or process mining, whether it's some of these microservices platforms like BlackLine, we recognize that our job is to be the architect who stitches us together into our smart enterprise processes to bring transformation for our clients. And lastly, we spend about 3% of our revenue on R and D, which is both focused on building IP through our domain, whether it's as we said, F and A, procurement, supply chain or cooperation and also through our digital build. So we feel pretty good about what our clients say to us, but we also feel very validated by the industry. There's a couple of example leadership notations up here, but I think the core message is in the last year 2017 to 2018, we doubled the number of our leadership rankings and over half of those or around half of those were in the space of digital. And I think that speaks again to our strategy is working in terms of where we're recognized in the market as a core player and leader.
And lastly, in terms of those 4 pillars, our people. So we have over nearly 100,000 people globally. And like all of our clients, we are going through a transformation ourselves to think of how do we up skill, reskill, recruit and retain the best talent. So Genome is an internal program built by us off of the best of our experts who we call gurus in a network fashion available to re skill not And it is so that they can reskill not just in their domain area, constant refreshing in where they practice today, but also cross skill into, as we talk about bilingual or working across digital and domain. And then up skill, so I myself have taken AI courses on this.
And one of the most important things is our view on this is to contextualize And the reality
is what this slide says to
me actually is we're less than a year into this And the reality is what this slide says to me actually is we're less than a year into this journey. Our goal is 70% penetration. We're on our way towards that and feel confident. But more importantly, it's the exponential growth in learner hours. So our people are pulling on this.
They're asking for more. And I think that's the type of upfilling we'll be able to achieve. So again, Propellus Ward is a partner of choice with our clients. And lastly, I didn't mention industry vertical at all during the conversation, mostly because what you'll hear from today is D. K.
Who will talk about the CPG and Retail and Life Sciences Industry and how supply chain fits into that. And Mark will talk about banking and capital markets and how financial crimes and risk plays into that. But we believe winning the last mile is all contextualized to our clients and their industry. And so, when we think about all of the problems we solve, we come back to the core of who is our client, what is our industry and what are the problems that we can solve. And that's how we feel we win in the last mile.
And with that, I'll invite Mark up. Thank you.
Good morning, everybody. Doing okay. That's a lot of information in a short period of time. I'm Mark. I'm responsible for Banking and Capital Markets at Genpact globally.
Proud to be here today. We spent some time talking about our focus on financial crimes. We're very proud of how we help our clients with financial crimes. So let's just set the stage as to what how is financial crimes defined. And so there's some things that we do in this space and there's some things that we do not do in this space.
So if you think about fraud, anti money laundering, trade surveillance, anti bribery and corruption, those are areas that we play in. We think we have an advantage in how we play in those spaces. There's some other areas, tax evasion, cyber, insider threat, market manipulation that we do not participate in currently. Talking about the market itself, it's exploding. This is a significant problem for the banks and the capital market companies that we serve.
There's data, there's new transaction types, there's real time payments. So if you think of all that you do and how money is moving in the economy today and the interactivity that the banks have, it's a growing ecosystem that is creating more and more opportunity for fraud and financial crimes. And the banks and our clients are trying to keep up with that. There's a lot of noise. There's confusion.
How do I manage a strategy? How do I deploy emerging technologies, including artificial intelligence, machine learning? What are the choices that I can make to identify fraud and to fight financial crimes. Our clients are struggling with those choices because there are so many choices and there's so much noise in the system on how to address this concern. There's converging threats in that outside of financial services you see technology firms starting to participate in transactions.
You see new currencies being launched. You see a variety of different disruptive activities that also lead to financial crimes and fraud that need to be addressed and understood. Currently, our clients, the majority of them are doing manual investigations. They see an issue and they literally brute force their way through the issue to try to understand exactly how they're going to deal with it, to make sure that they alert the regulatory authorities, to make sure that everyone's aware of it and they can address it properly. So it's an expensive growing brute force type industry for our clients.
We look at this and say where is the market and how do we and what has yet to be transformed? Where are there transformational opportunities in this market? If you look at the spend on financial crimes, it's $38,000,000,000 around the globe. If you look at the spend with the banks that have a significant amount of assets, it's about $27,000,000,000 So
if you look at our target market here, it's about $16,000,000,000
Of that $16,000,000,000 marketplace, we believe only 10% has even attempted to do something transformational in this space. So we believe there's a 90% of $16,000,000,000 is a market that's untapped that we haven't even entered yet, that no one has entered yet, that hasn't brought a transformational solution to what we think is a very significant problem. So why do we win in this space? We started obviously and you've heard Katie and Tiger talk about intelligent operations. We're there today.
We understand what's happening in the operations today. We understand from a domain perspective, the emerging differences that are happening in that space. We've added digital and analytics. You've heard that. So those pieces were already here.
We've now brought in RiskCanvas, which is cloud based technology rendered as a service that creates unique customer profiling for us. So we have one view of the customer for the banks and the capital market companies. We understand what's happening exactly and can identify those trends. We think this is a comprehensive picture that really does help us be in a position for growth over time. So to add to that, there's things that we do from an advisory perspective.
All of our clients have to have a strategy for this. How do I address this? What are we going to do? What technologies are we going to use? What's the operating model that I'm going to deploy?
It has to be unimpeachable for the regulatory agencies that would look at them and they have to be able to communicate it clearly to their customers and to anyone that would participate in them. We have that capability. The domain talent, I have Chief Risk Officers on my team. I have ex regulators on my team. There are people at Genpact that have deep, deep understanding of this area and we've had those for a period of time.
We've now added the technology component, which looks at this problem as a service and can take this operation over and render an outcome back on an as a service basis, which is exactly what our clients are looking for. So thinking in that context, there's a couple of options that we can do for clients. KYC, Know Your Customer as a Service, Transaction Monitoring as a Service. We work with our clients to do both the advisory, we bring the talent and we drive the technology to take that entire operation over, keep it modernized, keep it digital, keep it advanced and be ahead of the marketplace. So we create a great outcome for the clients that we serve both in KYC and transaction monitoring.
Why do we win? We win because we think we have a unique single view of the customer that looks up and down that whole stack 360 degrees, which all of our clients are trying to compile and they struggle to do so because it's a manual process. We have a transparent risk scoring algorithm. This isn't a black box. You can see what we do.
We share what we do so you understand it and make sure that it meets your needs. We use RPA, robotic process automation to drive our data collection process. Is significantly challenging to collect all of the data from these transactions and all the differences that happen there to get it in an organized way without spending too much money frankly. So we use RPA to do that. We have a proprietary engine actually that helps us with that data ingestion that understands how to consume that data, how to organize that data and make it more effective for use.
And that is informed by constant improvement via machine learning and transaction monitoring over time. So it gets smarter the more data it ingests and it gets more effective over time. We render this as a service. All of our clients are looking for that. We think the market is going that direction.
They'd like to have everything delivered as a service. They want outcome based models, which is what we're doing here. They want to reduce their time to market. They don't want a big project that takes years for incremental improvement. They simply would like us to do it better and to do it more effectively and they would like transaction based pricing versus FTE type pricing and that's exactly what we're delivering in the market today.
I'll leave it a couple of examples. The Global Bank, their situation, they had a big operation trying to reduce their fraud write offs and they had us come in and we talked to them about all the capabilities that I just talked to you about and we deployed them in one area of their bank, one area, not the whole bank. In doing so, we cut their cost of that operation by 40% while also reducing their fraud write offs by an incremental additional $11,800,000 So it's a great example because we feel as we continue to scale that and go to the other divisions of the bank, there's an opportunity to do another 11.8, another 11.8, another 11.8. You can quickly see how 100 of 1,000,000 of dollars of value and losses as a result of fraud can be avoided while also reducing the cost of the operation that you are managing. We think it's a fantastic example and that's exactly what we're trying to do with everyone else.
When we move into the strategy example too, we had a large global technology company born in the cloud, very sophisticated, who was dependent upon some payment technology for extended period of years that they no longer would have access to. So they're now driving their own payment technology. And as a result of that, they've inherited all the burdens of that situation, including anti money laundering, risk, fraud, financial crimes and the like.
As a result, they asked us
to come in. We talked about all our capabilities, but they asked us to set up their strategy. How would we do this? How will we communicate this is a large global business? This isn't something that's a startup.
So how do we get an operating model? How do we pick the right technologies? How do we put ourselves in a position to succeed knowing that we've inherited some significant risk as a result of the payments changes that were being made? So very excited to work with them. We've done their strategy and we're in a great position now to work with them on a long term basis as their partner.
Think about what this means to us.
We start with just our existing IO portfolio, which is significant in banking and capital markets. As we look at that and talk to our current customer base, we think as we drive the new software licensing capabilities and add this service to the clients that we're already servicing, we think there's a path to at least $500,000,000 And that's not accounting for clients that we're not serving today, new logos that are still eager to work with us in this regard. So it's a very exciting space.
I'm going to hand this over
to BK, who's going to talk to you about some supply management. It's another great example of what we're doing in our verticals.
Thanks, Mark. Dollars 40,000,000,000 spent on financial crimes to protect it. And then there are actors on the other side who still managed to do something else. It's a much larger industry. Very glad to see many familiar faces.
For people I do not know, I am BK Kalra. I lead our consumer goods retail business and life sciences health care. What I want to do is talk about supply chain and I'm very excited to talk about it because it is at the center stage of where strategy and execution meets. We typically how we run our strategy is we scan the marketplace, we talk to our customers, we merge organic inorganic investments, we go back to our customers, understand their problems, fuel our pipeline, deliver value to our customers, in the process deliver value for ourselves. And that is really where supply chain comes to be.
What I want to do in next 15 minutes is talk about 3 things. 1, frame the market opportunity for us 2, introduce what we specifically do in supply chain and 3, make it come to life with couple of examples. Okay. It is something else here, but nevertheless, I'll continue to go. Fundamentally, if we look at how what is supply chain, so supply chain constitutes that slide is not here, but nevertheless, I'll continue and just listen to me.
So it constitutes 5 sub functions: plan, source, make, deliver, and aftermarket. And we have services across all of these 5 sub functions on plan, source, make, deliver, aftermarket. In planning, it fundamentally constitutes forecasting demand and how does the planning supplier planning happens to meet that demand that is being forecasted. As far as sourcing is concerned, it sources raw materials and make sure that suppliers are in compliance with whatever are the rules of various organizations. So I said plan, source and make is manufacturing goods for making sure testing is happening, quality assurance is happening, packaging is happening.
And after that is delivery, delivery of goods and services to what the demand has been for a particular customer. So think of Unilever producing goods and delivering those adov to Walmart. So that and the entire logistics operation that goes behind it. And the aftermarket service, because it is also manufacturing, aftermarket service includes maintenance, repairs, managing service contracts and it is again a very large function of supply chain. Fundamentally for all of these manufacturing operations and you think of manufacturing companies, be it high-tech, life sciences, consumer goods, retail, any of the or heavy manufacturing, it's a very significant portion of revenue that gets allocated just for running the supply chain operation.
Okay, finally it comes in. But why now? Why has it become a relevant question now? I call it an Amazon effect. Amazon has dramatically raised consumer expectations and delivered to it, including rapid last mile delivery.
The experience is frictionless. You think of cost of processing an order for Amazon, it is 0 point 0 $2 Compare and contrast it with 1st top quartile consumer goods company, it is $16 and our customers are also recognizing that in case they have advanced supply chain, it has a strong positive impact on revenues and it's not just the cost gain. And the time is also quite opportune. ERPs have been there for over a couple of decades and to be fair, they have delivered certain amount of value. However, the last mile execution is still suffering.
And what digital proliferation has done, because it has brought in newer tools, AI is adding prediction to forecasting, Experience, as we just as Katie just enumerated, is taking a new proportion, as an example, the frictionless experience of Amazon. And suddenly there is far more demand for these services. And even from our standpoint, we are finding our relevance has improved dramatically. We've always been proud of owning the end to end and have that end to end DNA, but and we knew how the interconnectedness works of finance with various functions of supply chain, as an example, how it interacts with order management or how it interacts with demand forecasting or how it interacts with logistics or transportation. And suddenly, the same interconnectedness is causing more insights and it's causing more value to come to life.
And to be fair, a number of our customers have been they have found our supply chain services valuable. But I must say that it has been almost it's been damn difficult to lead the horse to water, let alone drink it. But with Burkhame acquisition, we now have a very credible seat at the table with all the supply chain strong supply chain buyers and supply chain leaders across the industry. But let me quickly frame what we precisely do in supply chain services. I spoke about on the top the 5 sub functions that exist in supply chain.
And on the left is the services including transformation services from consulting, digital analytics that in any case we do for balanced services and we are very strong in supply chain too. Intelligent operations has been integral part of the entire solution set since the days of GE. So in planning, again, it's a full service suite that we have. As an example, we run inventory planning for our consumer electronics major to reduce working capital requirements. Source has been a very strong franchise for many, many years.
In Make, bulk of cost is in Factories. However, we have smart Factories framework that is helping our customers optimize manufacturing. Or again, deliver is a complete suite of services. As an example, very recently, we did a touchless order management for 1 of our consumer goods customer, much like an Amazon experience. Or aftermarket, again, be it claims or repairs or we do as an example for service parts management for our airline aviation manufacturer.
So it's a whole set of services that we have across the value chain. But I must say, if I was speaking to you in summer of 2018, this chart was not as robust. And in late 2018, Burkhabi happened for us. In late 2018, we closed the transaction with Burkhavi. And what it did for us, in any case, on the left hand side, we had a very strong franchise in running intelligent operations for few of our customers on supply chain, including digital and analytics.
And with acquisition of Bercawi, we got a short in-depth in terms of making sure we have now management consulting and citizen consulting coming in the same space. And they have technology partnership that we are leveraging to help. And all of this is also lauded by many of industry analysts and we are actually ranked as leaders by most of the industry analyst community. Actually, one of the leading analysts, Nelson Hall, recently did publish a study and that is available for you to consume here or you can take it below. So let me actually frame the market opportunity for us.
As Katie was mentioning earlier, it is and we assimilated this data from number of industry analyst reports. It is in a sense a very large addressable market getting to almost 500,000,000,000 dollars with very low penetration rates and growing at a CAGR of high teens. So think of any manufacturing company, anywhere between 20% to 70% of their revenues are invested in supply chain, 20% to 30% for a high-tech or a life sciences company, 50% to 60% for a consumer goods retail company, 60% to 70% for a heavy manufacturing company. In essence, a very large market space and given all the disruption that is happening, it is opening up in a very significant way for us. And if I frame this for our particular consumer goods company and what we did here, we thought of a consumer goods company, say, which is $10,000,000,000 There are 50 just consumer goods, I'm just picking one segment of the industry.
There are 50 consumer goods companies who have revenue north of $10,000,000,000 globally. So we picked an example therefore of a $10,000,000,000 company. And how you read the chart, given there are too many bars here and there's a waterfall here, on the in the blue, what you see is a $10,000,000,000 and about $4,300,000,000 that goes in various other functional costs, be it R and D, sales, marketing, finance, HR, whatever you can think of and the profits of the company. About 5,700,000,000 dollars is what is for a consumer goods company is for a 10,000,000,000 company is reflected in supply chain. We have broken that into further 5 sub functions that we spoke about from plan, source, make, deliver aftermarket And in the dark red is the addressable opportunity that we believe we have, which comes to about which is summed up in the last bar to about anywhere between $300,000,000 to $400,000,000 If I apply the same logic because we're coming from finance background as well, For a similar company, the finance cost is somewhere around 1% to 1.5% of the revenue.
And the addressable market is anything like 5 to 6 times what we've been addressing finance for last 20 years. So it is a very significant market that we are going after. So I think what I'd like to do is now actually bring it to life for one particular use case. This is the frame that you have seen. So this is the actual real example for one of our clients.
So this story played in this story started in early 2015 and it started in the deliver tower where we were just asked to do order management. And how we performed and the credibility that we were able to generate with our customer was actually matched by their aspiration to disrupt the end to end supply chain. So the next momentous event happened in 2017, where they asked interested us to run the entire or virtually entire plant tower, expanded the delivered tower and relevant parts of source and aftermarket. And we've been at it now for about the entire end to end value chain for about couple of years. In those couple of years, we have obviously connected the DAS end to end.
We have been able to improve the demand forecast accuracy by 4 50 basis points, which is a very big deal here. We've been able to reduce in a significant way a lot of fines and penalties they were paying to retailers. And in a sense, we've been able to drive greater than $100,000,000 run rate savings over last 12 months for this particular client. And there is a rub off effect on the revenue, which is not counted in this. Look, fundamentally, if I reflect on our journey that has I've been as part of Denpike for last 20 years and have been focused a lot on the finance and accounting market and driving influencing and driving transformation there.
If I look at the opportunity and contrast the opportunity with supply chain and look at the aspiration that our customers have and the capability and the domain skills that we are bringing to bear, there is no reason we will not be able to do the magic with this market at 2 and 3 times faster than what we've been doing on SNA. With that, Roger, over to you.
So right now, we'd like to have the first of our Q and A session. Can I please invite Tyler back to the stage, Katie, Mark, VJ?
So depending on the questions. People want coffee. Yes.
The market and how it's evolved,
can you also spend a little time on how
the competitive landscape has evolved? Yes.
So the question was how has the competitive landscape evolved as the markets evolved? I would say the single biggest competitor we've competed with historically, It continues to be the single biggest competitor we compete with today, if anything more than ever before. Why? The complexity, scale, size conversation that we just had and the global delivery footprint that is required with all those capabilities in every location in the world that is relevant for that client means that there are very few people who can bring all of that together. So the number of players in those types of deals reduces pretty dramatically, which is why Katie talked about more than half of our relationships and pipeline and wins now are sole sourced.
And in the other half that is not sole sourced, typically the competitive landscape is the usual one or 2 suspects. So that's one portion of the answer. Obviously, there are specific areas where the competitive landscape changes. In banking, there are a couple of other competitors. The Indian IT companies, a couple of them do come up.
In insurance, there are competitors such as the insurance competitors who've always been there and they are more prevalent than the bigger competitors that I talked about. One of the things that we've realized is that with the way the market is changing, our industry has enough of a moat around relationships that makes our relationships sticky, not just for us, but even for our competitors. That is not that easy for a brand new competitor to stand up and say, in our services world, we're going to build a brand new business from scratch. It is incredibly difficult. It's easier for someone to say, I have a new technology tool that I'm going to build to solve a problem.
But then the question is, how do you wrap services around it and that's where we come.
Ashwin Shirvaik for Citi. So I guess is a lot of good data in here with regards to say for example the percent of total revenue that comes from non FTE nowadays, particularly if it's embedded with transformation services. I guess the question becomes, could you break down that non FTE revenue into is it based on output? Is it based on outcome? If it is based on outcome, in the example, I think BK gave where Amazon's cost is $0.02 and CPG cost is $16 If you cut that cost from $16 to 8, dollars what do you get?
Can you kind of
size that? Yes. So I'll answer the first part of the question Ashwin which is non FTE based pricing can be typically of 3 forms. Transaction based pricing, I think the Mark Financial Times example is a great example where you basically we get paid based on every transaction. As we drive more technology intensity there, more AI and machine learning there, that allows us to drive lower costs for ourselves while the transaction price remains what it is.
And the client gets certainty of that transaction based pricing. And then our joint attempt will be to actually bring transaction number of transactions down. So that's one. The second will be fixed price. So if you have a relationship where you establish a piece of work that you do at a fixed total price.
And then the combination of labor and technology allows us to figure out the right combination in order to drive to that fixed price. And if we find a better way to deliver that, then that's our margin. And obviously, there's a risk that we take when we enter into that kind of relationship. And the third one, and probably I would say the most interesting one is value share. Value share, we think about value share in 2 ways, Value share on cost productivity, which is the example you took, dollars 16 becomes $8 on a cost, what portion of that do we share?
We share some reasonable proportion of that. But the bigger opportunity is not that. The bigger opportunity is the one that both Mark and BK described, which is if you take the supply chain example, if you find a way to reduce the amount of spot buy that a consumables company uses for their transportation and that is let's say a $40,000,000 lesser transportation cost, not the cost of managing transportation, but the actual transportation cost, then what is the value share on that? Those are much bigger numbers. If you reduce working capital by $450,000,000 what's the value share there?
If you reduce fraud by $20,000,000 what's the value share there? The distribution of those 3, the value share component is the most exciting one, is the biggest opportunity available, is the earliest in the game here. The productivity 1, the fixed price 1 as well as the transaction price one has been in the industry. It's just digital is allowing us to grow more.
Hi, thank you. Brian Burton with Cowen. Wanted to ask, it sounds like you have rounded out the offering in financial crimes and supply chain management. Can you just first identify if there are any if that's correct or if there are any other areas you think you can add to those chains? And how should we be thinking about the margin profile of these new service lines?
So Brian, we've been evaluating supply chain and financial crimes for quite some time because as both Mark and BK explained, we've had pretty material significant operations in both supply chain and in financial crimes. In both cases, what we did was we wanted to round out those capabilities as we saw the market change with all these digital tools and technologies coming in and take that to market. And we think that's a real opportunity with the market changing. We keep once a year we do evaluation of all the services that we currently are taking to market, which ones of those we could double down further, which ones of those we should just sustain. And we also evaluate new services that we should introduce.
I wouldn't say right now, Katie, if you want to add to that, anything?
I was just going to add, absolutely, every year we reevaluate. And oftentimes, as I said, where we pick is predicated on some basis of a right to win. So oftentimes, we've been participating in that economy for a while, but we haven't yet decided to full force invest organically or inorganically. The area additionally, to give you an example that would be coming up is for years, we believe that in the space of SP and A, there is a managed services play. We believe that the time is increasingly more coherent with the ability of digital data, analytics, machine learning on forecasting to unlock value that again no one client can derive on their own.
And so that would be an area where we're actively working with clients. As D. K. Talked about in supply chain, we had some significant clients where we had been building credibility in use cases over the years. We are also moving quickly into that space and see that as a tremendous opportunity to move up the value chain in finance and accounting where we obviously already are a market leader.
Yes. Hey, Tiger, it's Dave Koning at Baird. So are there certain products and services that you lead with like for example some of the more F and A type work stuff that clients start with and then they move into supply chain and they move into fraud reduction at banks and stuff. Or are these some of these newer product stuff that you lead with like is there yes?
So I would have answered differently Dave if you would ask me the question 5 years back. I would have said we typically would lead with finance. We typically would try and knock on the doors of the CFO. I think in banking, we've always knocked on the door of the operating officer who typically has ops and tech or the chief risk officer. Historically, that's been our port of call along with the CFO.
The CFO has always been around. I think it's changed. I guess it's changed for us for sure. It's also changed in the marketplace. If you talk about a consumer goods retail kind of company, our actually board of call today would be the supply chain leader, even more than the CFO.
Because if you talk to a CPG company, they would say their single biggest challenge is growth. Cost is yes, cost is a challenge. But cost is a challenge because they want to use that investment dollars to drive growth. So growth is always a great port of call any day as compared to cost. So I would say supply chain is a big, big first opportunity often now we start with in many of the manufacturing type companies.
And in Mark's world, risk is often the first start because again, talk to a bank, cost is always important, but I'm actually dealing with this increasing cost and increasing penalties and risk that a regulator can apply to me and all of those rules and laws are changing and the loyalty of financial crimes is just increasing. So I think our natural ports of call, how we start work has significantly shifted to get far more diversified beyond the CFO. But I think our CFO continues to be one of the dots that we connect back to many of our services. In financial crime, if you think about a bank, the CFO's office, the compliance leader, the cybersecurity and infosec kind of leader and the person who does all the I mean all of those are intermingled with each other. And then you have often banks now being asked by regulators to have a Chief Data Officer and we're all interconnected.
Our strength in finance and accounting gives us a right to have many of those conversations, whether it's banking, it's insurance or it's the manufacturing company.
Thank you. And maybe one follow-up. I feel like if it was 5 years ago and you had won Walmart and you had won more GU work, I feel like that would have probably been dilutive to margins at the time. Now, we can hardly see it in margins. And is it that some of the newer stuff you're selling now is just a higher margin profile, higher value add that you're just immediately getting good margins on New York?
No, it is a it's a very insightful point, Dave. The traditional services and the profile of revenue itself was a ramp. That ramp meant significant upfront investments that therefore changed the margin profile over time. Some of the wins, not all of them, that have a component where you start with a 1 shot bump when you take over someone else's people and operations, Bridgewater is a great example of that, allows you therefore to amortize the initial investment on that initial revenue itself and then start delivering value to your clients immediately. So one of the first things is client value gets delivered much faster these days than it used to be.
Therefore value to us by definition should get delivered faster and that shows up a little bit in more steady revenue. Having said that, there is enough business that still is intelligent operations, that still has a ramp, that still has initial investments, that still starts with lower margins. So the mix has
changed. Puneet Jain from JP Maven. The 3 transformation components that you talked about, how integrated those are when you offer transformation services to clients? For example, when you automate a process within RPA or any tool, does that always result in reengineering services? Do clients look to reengineer the process also?
And do they
often select the same vendor to provide all of those services? So it's a fantastic question and that's why you actually explained the rationale for us for coining the term transformation services that is coming together of consulting, digital and analytics, it's actually very difficult to separate the 3. It's very rare to have only one of those. It's almost impossible to imagine RPA without first consulting and reengineering, it's first. So RPA is second.
You can't do RPA unless you first redesign the process and reengineer the process. When it comes to AI machine learning, you can't do that unless you actually again redesign the process, line up and clean up, do all that to data, define the lineage and definitions, then implement AI machine learning and then subsequently run it and then subsequently do higher level analytics. Because just AI machine learning by itself delivers only so much. It's how do you use that to then determine action, which includes humans as well. So most often it's all 3 or it's at least 2 of those together that are integral to a delivery of transmission services.
It would be very difficult to imagine a situation where you want to implement an AI or machine learning and or robotics and you have someone else do all the process redesign and all that work and bring in someone else for implementing RPA. Of course, the tool in the case of RPA is one of the RPA providers. And none of them actually implement RPA for a client. They would have someone like us or some of our usual competitors to implement. So again, most often it's the same people.
Other questions before we take a break?
Okay. Roger, do we have a break now? 15 minutes? Yes. Thank you.
Okay. I'd like to begin our second half of our program. I'm going to call up to the stage Sanjay Srivastava. He's our Chief Digital Officer. And as we said earlier, he's going to update you on the evolution of our digital strategy.
Sande? Hello and welcome again. Many familiar faces for those that I haven't met, my name is Sanjay Srivastava. I run our analytics, automation, experience and AI businesses for the company. And I want to spend a few minutes on digital today.
As you've seen, digital is core to Genpact now, but our journey started much earlier. So in the early days, when digital was taking off on the back of the success in the front office, our clients were coming to us and saying, listen, as we think about end to end transactions, we're hitting a wall around middle and back office automation, the back of digital. You could set up a checking account on an iPhone in 30 seconds or 3 minutes. It would still take a while to fund that account because all those processes needed to be digitized. And that was a starting point for us.
And against that market need, our strategy was to focus very sharply and very narrowly at the space we chose to go after, which is at the intersection of domain and digital. From there, the industry has evolved. And the next sort of inflection point in the industry was sort of marked by the crying meat, the burning pain in the industry was how do you integrate all of these new innovative technologies in with the legacy existing IT infrastructure. And to really address that need, we designed, implemented a systems of engagement approach, the notion of a thin layer of technology that was net native, cloud based that could sit atop of existing system of record and drive the transformational benefits for clients whilst leveraging existing investments. And that strategy has worked out for us.
We have many of these up and running now with our clients and they're delivering significant business impact today. The industry then evolved as it continues to do so and the next inflection point in the industry came to be as clients were coming to us and saying, look, digital for us is a journey, it's no longer a destination. And what that meant was a project that started with robotic process automation today, once you actually digitize the data, would become a project in machine learning. And once you had patterns that you could unleash, became a project in conversational AI. And across that spectrum of different steps that you take, how do you actually pull it all together into one journey in a comprehensive whole?
And we introduced and launched Genpact Cora. And then finally, as I look to today, the conversations we're having with our clients, as I meet with boards and other CXOs, I'll tell you 2 things that play on top of mind for most of our clients. 1 is the area of artificial intelligence and the future of work and the second is the world of experience and how do you participate in the experience economy. And so we've double clicked on those elements of Cora that we launched a few years ago and and we're building the strategy forward from here on. So Cora has been incredibly successful for us internally, partly because we've been able to leverage investments clients.
We have it running millions of transactions, in clients. We have it running millions of transactions billions of transactions across millions of users now. So it's actually a pretty big platform and it's done well for us. And the question is why. I want you to look at it from the point of view of 1 of our end users, our customers and our clients.
And they have 2 big problems they have to solve. The first one is curate and contextualize. And here's what that means. There's an ever expanding long list of innovative technologies that are constantly coming through. And for each of those, there are many choices of vendors and components that come through.
And what's really needed is an ability to curate that long list into a meaningful set that can be replicated at scale and to contextualize it in the environment they need to go through for the domains that fit in into the processes that they're going to get interconnected to. And so the first big problem we've solved is actually taking this long list of evolving set of things and make sense out of it in a way that clients can actually implement it in a methodical fashion. The second burning pain point for digital in clients' eyes is the fact that because there are different components of capabilities that will come from different providers necessarily, You need to be able to integrate that into a complete transformation project, but they need to be interconnected with APIs and other capabilities, so they all work with each other. That need to be done in a modular fashion. The decisions I make today will carry into the investments I make tomorrow.
And then you have to be able to govern it in a way that makes business sense. And that governance is becoming even more critical as we move forward in the world. And so Cora really just does those two things, fundamentally allows you to curate and contextualize, so you can actually put that into play in a meaningful fashion and then provide the basics, the framework, the core capabilities of modularity, which gives you this ability to orchestrate different components in a roadmap. It gives you the integration. So you can make all of them come together to a whole that obviously gives you governance.
As a result of this, our business is changing. So when we first started on our journey, we would think of digital as an incremental or perhaps an adjacent or perhaps a connected business
to the larger whole. And it
added a lot of value because it gave us competitive differentiation, it brought business value to our customers, It took us forward in a manner that allowed us to embrace and unlock the value of digital for our clients. And as time has progressed, that journey has changed to where we are today, where digital is actually the core of what we offer. If you talk to our clients, they'll think of it as a company that delivers a digital core, wrapped with managed services for a comprehensive offering. And that's the business we're finding. And if you heard really behind the words of Mark and BK, where we're going in the future is that all of that is going to fuse together into a composite hole almost in a manner that you won't be able to unfuse it back or disintegrate it back, that digital and domain and process get combined into a new transaction as a service offering transformation as a service offering, sorry.
And that's the world we're going into. And along that curve, along that journey, our embedment rates for digital, which we measure and track, have gone up significantly through and through. That's the external story. Look, internally, there's been a significant amount of work that we've done and is now behind us to be able to set ourselves up for the scale that we need to drive this business. And you can see the 5 things, the 5 pillars of that strategy that we've implemented.
The first one being really thinking about our go to market and our client engagement in the changing nature of what we deliver to clients and managing them in the right way. The second key and Katie spoke to this earlier has been very rigorous around our investment choices and making sure that we're building scale, we're building replicatable, repeatable business models. And so we've set up an organization that has actually allowed us to bring the right levels of product development life cycles, practices develop in life cycles and partnerships enable that. We changed the nature of what we do in terms of robust engineering capabilities, CICD, continuous improvement, continuous development, new engineering principles around agile development, how we do devsec ops around deploying these massive technology implementations and we build that arm up completely. We have changed the nature and the demographic of the average gen factor from machine learning experts to computational linguistics experts from InfoSec experts right across to data science officers.
If you look at the average composition of a Genfactor, we've kind of completely changed the sort of the talent curve, if you will. And then last and perhaps the most important is, as we deliver these large complex implementations for clients that are very transformative in the core of their business, we stepped up the level of governance both internally and actually externally to make sure that we're driving that on track. And so these have been 5 pillars that are all internal focus that we spend time on. And I'm actually happy that we're actually now at a point where this work is behind us and it sets us up for the next set of growth objectives. So what does that mean for clients?
And I actually thought I'd take 2 examples. I'm going to abstract it up from a client. I'll talk a little bit about what's happening in these two industries. And I think, The The first example is in the world of unlocking dark data and creating a digital backbone for data that allows the industries and the economies and the value to sort of get unlocked. And this is true for most industries, well, I'll pick healthcare and specifically some work we've done in the healthcare information systems area that I think brings it to life because we can relate to it.
And so we all know that data actually comes from multiple sources and much of it is actually what I call dark, dark data in the sense that it's manual, it's in documents, it's in file in unstructured files. So it can't really be read as a structured data file. That data then kind of moves around and gets used by users, by providers, by influencers and many different kind of bodies come through. And clearly, in the world of medical information systems, you can see that you can go get a x-ray of your ankle, it gets shared with someone else through the podiatrist, goes to someone else, in the insurance industry, etcetera, etcetera, etcetera. And then finally, outcomes are driven on the back of that data.
And so that's generic for the industry, but in the healthcare space, we did some work. I want to bring to life what we've accomplished for that client. So this is a scenario where we're helping them serve 2 thirds of the hospitals in the United States, probably about half the population in the U. S. And helping them manage the medical records from provider to all of the players in the ecosystem.
And the objective here was to take a company that did much of that manually to a company that can do it digitally and deliver a backbone to make that happen. And I'll tell you step 1, step 2, step 3 of the outcomes we got. Step 1 was actually laying down the infrastructure and the backbone that allowed us to digitize the process and thereby enable the client to go from dealing with 40,000,000 transactions a year to up to 4,000,000,000 transactions a year. So they get set up for growth and that's the digital trajectory they're able to put into play. Step 2, you can't just implement digital in a vacuum, but it needs to fit in a larger context.
And so the managed services around that, that changes the operating model to unlock value from this new digital backbone that our client sort of came to have. And step 3, and this is the best part, and this is the beauty of unlocking data or lighting up dark data, is now they have the ability to look at data that's flowing through the streams and introspected with natural language processing and other artificial intelligence techniques. And so you start spotting billing code errors, you start being able to understand drug correlation issues and how you're able to deliver value added services beyond the revenue growth, the cost scaling, the operational benefits you get to applying digital. And that's a great example in my mind with the work that happens and the value that digital drives at the cost layer, at the transformation layer and at the growth layer in terms of additional value added services. I'll give you a second example, again, taking from personal lives.
We're all familiar with what's happening in the banking space. And clearly, there are many, many pressures that are coming through in the banking industry. And on top of them, it's probably the area of growth and how do you drive growth through a digital channel. And so I want to bring to life the work we've done with a client in this space and actually helping them set up from scratch a new digital consumer bank. And if you think about what's involved in making that happen, there are really 3 elements.
You'll see this on the left side of the slide. There's a consumer facing platform that I as a digital consumer of a bank will be able to interact with. There is an internal employee agent facing platform because that experience now needs to blend together in a way that it actually is frictionless. And then there is the human in the loop component, whether it's a call center or other items that need to be delivered, that is part of the mix. And you have to think about all 3 of those components in a comprehensive set.
You can't do one without touching the other 2. And for this client, in short, we've taken him through a journey of doing customer experience mapping, transforming that journey mapping into what the future state needs to be. And on the back of that, designing the entire wireframe and the methodology and then actually instituting that in code and delivering a platform that is up and running that their agents are using today. And on the back of which, they've run about $1,700,000,000 in transactions in loans in the 1st year and they've seen a significant increase in the conversion rate because experience and what was different about this is that experience was the compass we used to drive this transformation. On the back of that, it actually drives growth and we'll be able to see that in the platform.
I want to spend a few minutes on what we're today. And I'm really excited about where we're headed tomorrow, because one of the biggest learnings we've had with artificial intelligence and now doing this with clients for a few years is that the escape velocity, the time it takes to get an AI project off the ground is actually very large by enterprises and most of my clients really struggle with that. And the problem is that if you take an artificial intelligence engine and there's many that are available in the industry from large technology players, increasingly commodity now. The time it takes to tune those engines into a specific business problem around a specific domain and integrate into the processes that it actually impacts is actually very long. By the time you get it done, it's a long exercise.
And so what's needed is a way for us to be able to accelerate that for clients. Now it turns out, if you think about how do you drive accuracy in AI, it just comes down to 3 keys. You have to have the right AI engine and those are increasingly available from our partners. But what you need is you need data to run through the engines to tune it and you need labels for the data, label data and the labels come from domain from understanding of the context and being able to contextualize that. As we thought about ourselves and the role we can play, it became very obvious that we can bring data and labels or this notion of domain that's key to us and put that in a fashion where we can train these subroutines, these Lego blocks, these accelerators, if you will, that can deliver high performance right off the gate.
And so we have this up and running. Katie talked about the fact that we have over 50 of this now in production, from extracting financial statements out of custodial statements and reading 400 based documents in seconds and being able to translate that into a pie chart that shows They're up and running now with clients today. They are up and running now with clients today. And what's really important and this is why I'm really excited about it is that it actually now gives us the ability to take a foundational sort of component we've had all our lives, which is the notion of domain and understanding of the context and encapsulate it in a cognitive engine, in an AI accelerator that allows us a bridge from where we are today to where the world is going. So I couldn't be more excited for where we are with digital and the journey of Genpact.
And I want to actually now turn this over to Ed for the next part.
Okay. So thanks everybody for coming out and spending your morning with us this morning. Really appreciate it. I'm Ed Fitzpatrick. I'm the CFO for Genpact.
I'm going to talk to you a little bit about driving shareholder value, getting a little bit of details on the financials. Hopefully, there won't be too much in here today. You're going to see it's a big surprise, pretty consistent. So a positive chart across the board here. I'll point out just a few things.
If you look at top line growth, since we initiated and kicked off the blueprint strategy exercise in 2014, we've grown revenues by 1.5 times. Also leveraged that top line growth into earnings such that earnings has grown by 2 times, reducing our share count by about 13% and as a result, the valuation of the firm has increased by more than 2x, almost 2.5x over that timeframe. So pretty significant uptick in just about every category here. Drill down a little bit more by year. Global client growth growing at a double digit plus clip.
And again, growing at double digit plus clip, not just CAGR in every year, right? This is double digit, 10% plus in every year over the timeline. Global client BPO growing at an even faster clip. And you can see the adjusted operating earnings growing at a deliberate pace, as we talked about, starting at 15.1% in 2014, growing to what we're expecting this year at 16%, about 10 basis point to 20 basis point improvement per year, again, leveraging off that top line to the bottom. And in EPS, with that improved operating margin profile as well as taking care of capital appropriately by reducing that share count.
We've grown EPS at a 14% CAGR, again, in every year growing 10% plus. So our growth model, not just top line, but all the way through to EPS, growing the top line, in particular, global clients at that double digit plus clip led by Transformation Services. You heard a lot about that from the team today. What we're driving is the new opportunities that we're seeing in Transformation Services. We're then leveraging that.
The operating leverage that we're getting out of G and A, I'll show you the details on that. It's a chart you guys will remember and we're continuing on that trend, leveraging G and A and investing it back into capabilities in R and D such that at the end of that, our operating margins is growing at that deliberate pace and that's flowing through to EPS at a faster clip because of the return of capital and the share repurchase program. Longer duration. This is since the since Genpact went public in 2007, just kind of speaks to again the consistency of that growth over time, total company growth in a double digit place, I think 13% CAGR. That's probably in now double digit place, again led by global client growth in that 10% plus, double digit plus range.
A couple of things to point out. You could see how global clients have become the significant component of our business through 2019, 87% global client, 13% GE. Also GE, that stable base of GE that's been there somewhere between $400,000,000 $450,000,000 almost since inception. We had a couple of years there in 2016 2017 where went through their restructuring and those levels declined. It's now back up to that level $400,000,000 to $450,000,000 So GE is a stable base and we're growing global clients at a faster clip such that you see that as a component of total going up over time.
Again, the hero within Global Client Growth is Transformation Services. It's continuing to grow at a fast clip, 25% CAGR. That's not inconsistent with what we've done in the last few years. It's a pretty consistent higher growth part of what we do and we're continuing to add elements to that such that our TAM, in particular in transmission services, is continuing to grow. Here's the chart I always speak to.
This is the leverage that we're driving in G and A. You're losing a little bit of how we're deploying it back into R and D because we really started this the year before, significantly upticking our spend in selling and marketing as an example. I think selling and marketing was somewhere in the 4% 3.5%, actually below 4%. We grew that to 7% to cover the globe, have better CXO connection. We also increased the R and D budget was I think it was below 2%, somewhere around 1.5% and now we've doubled that to 3%.
So deploying back into R and D, obviously making sure we have the right go to market folks to connect with the CXO level, but also you could see a 400 plus basis point decline in G and A as a percentage of revenue and we expect that to continue into 2019. I've told you this in prior periods, I don't expect that trend to change. As we grow at a double digit clip, we ought to be able to spend at a lesser clip in terms of growing G and A such that we show that leverage going forward. And again, deploying that back into building capabilities. This is the operating margin path that we've been on.
We said we'd be deliberate. We have been deliberate, but consistent, 20 basis points increase every year except 2018 where we did 10 basis points, but effectively a 20 basis point roughly increase year over year, again, driven by top line growth. When you have top line growth in the double digit space, you're able to leverage that and deliver that consistent operating margin profile increase. And then how does that flow through to EPS? All those operating margins that we've been generating are flowing through there.
You could see that $0.72 We've doubled EPS effectively over this 5 plus year period from $1.03 to what we're estimating in the middle of our range $2.01 through 2019. We've also taken care of capital, reduced our share count by 13% through the share repurchase program and that's why we're seeing that disproportionate increase in EPS both through improved operating margins as well as a lower share count. Just another depiction of that kind of accelerated factor, right? Revenue growing total revenue growing in this timeframe at about 9% and growing EPS at a 14% clip, 1.6 times. Again, operating margins growing faster at a faster clip and a lower share base driving that metric.
So this is it, the free cash flow or cash flow generating slide that we like to show you. You heard us talk about free cash flow to net income at a 1:one ratio. That's what we target. That's what we plan. We're not capital intensive.
We got to manage receivables, and we do. This can be impacted in particular in period by CapEx being a bit higher than we might have expected like last year when we did the large capital expenditure related to the big GE deal, which we were happy to do with the returns that we need to generate there. So targeting 1 to 1, we expect that to continue. That's what we've done historically and we expect that trend to continue going forward. So we have a solid balance sheet.
We're an investment grade entity. We've increased our debt over time as we've grown the EBITDA of the firm. So the net debt has grown, but largely aligned with the EBITDA growth. We said we're comfortable between 1 and 2 turns net debt to EBITDA to maintain that investment grade rating. We're okay if we go over 2 turns for a shorter period of time for M and A that we deem to be attractive.
But over the long term, we do expect to stay between 1 2 turns such that we maintain that investment grade rating. You could see where we uptick really in 2017. You heard Tiger talk about some of the investments in Katy that we've made. Really, that's when we started to dial up and get even more focused on acquisitions and you could see the M and A numbers there growing in 2017 and then kind staying at around that level in 2018 and we'll see how we progress. Again, happy with the funnel that we have in terms of the acquisition profile based upon the capability needs that we're looking to grow.
No change in our capital allocation policies and priorities. First order of priority is to support and help drive organic growth. You heard me talk about the investments we've made in R and D and selling and marketing in prior periods. We've also put significant amount of capital to support organic growth in CapEx. So just shy of $600,000,000 put into the business to support that organic growth.
2nd, we'll look to deploy and look for attractive acquisitions. Katie, Tiger and the team talk a little bit more about some of the acquisitions we've added in to build out our capabilities like Dynamic Workflow, with PNMSoft, RAGE and artificial intelligence, Tandem 7 and Experience. These are some of the things that we're looking forward to build out our capabilities. We'll continue to look for those. The 3rd item is returning capital to shareholders.
Of course, we initiated the dividend 2 or 3 years back and we've been increasing that over time. I think we're up about 40% or so since we initiated with nice increases per year to kind of align with the growth that we've seen as a firm. We've also, as I talked about a few times, reduced our share count by 13% over that time line and the return on those shares, remember I said we'd measure the success on the share repurchase program on our return. That's been a 16% annualized return since we started that program. And we've deployed about $1,250,000,000 over that timeline.
So the priorities and our focus on M and A, what we're looking for and how we'll deploy capital in terms of return of capital in the share repurchase program have not changed. We're looking to strengthen the verticals that we're in, strengthen our positioning, strengthen the capabilities that we have to go to market within the service lines that we've chosen. You've seen and we talked about some of the acquisitions that we've done. It's been really in the digital analytics space and in domain expertise within the specific verticals. And they've been tuck in in nature such that we could absorb them.
We could assess the cultural fit to make sure they were the right fit for us. And of course, we're looking at the economic return and we feel like they've paid through very nicely for us since we've really started dialing up the M and A activity in 2017. On the share repurchase front, again, a similar profile. We're going to look at it with the same lens. First of all, doing it based upon a price sensitive model.
So we think the value of the firm is appropriate based upon our own view of the value of the firm. If it's not, we'll go faster on share repurchase. If it's more closely valued to what we think the value of the firm is, we'll go slower. To the extent that there's excess cash, we'll have more capital deployed. To the extent that there's less and we do more M and A, we'll do less.
But again, our measure here will be the success of this program will be what's the return on invested capital that we're getting out of the share repurchase program and so far so good. So what's happened since 2014 in terms of what we've generated and deployed, dollars 1,800,000,000 of operating cash flow that we've generated over that timeframe. Good balance between organic deployment of capital. So CapEx just shy of $600,000,000 right around $600,000,000 in terms of M and A that we've gotten after. We've also returned capital in a meaningful way, dollars 1,250,000,000 of share repurchases and about $150,000,000 or so of dividends over that timeframe.
And again, as I talked about, as we've grown EBITDA of the firm, we've also levered up appropriately. But again, such that our net debt to EBITDA stays within that 1% to 2% range. So the financials, the P and L over the last 5 years, how have we done and kind of what did we say? If you remember, we first showed our chart in terms of what the medium term growth of the firm is, both top line earnings as well as margins as well as EPS growth. We've been pretty consistent and we've delivered to what we said we're going to do.
Look at global client growth, we said double digit to low teens, it's exactly what we've done. Global client BPO in the double digit to mid teens, a little bit higher as you would expect. Operating margin, deliberate improvement, it's exactly what we've done. And EPS growing at an accelerated rate to the top line, because we're operating we're growing operating margins and we're taking care of reducing share count. And you can see that growth rate and the significant growth that we've seen there.
So the medium term outlook that you see there to the right, very consistent with what we've talked to you guys about previously. And we feel good about that going forward because you heard us talk about the pipeline that we've got, the TAM that we've talked about, not only is it not shrinking, it's actually increasing. So the medium term outlook look at the same, double digit to low teen growth Global Client, double digit to mid teen for Global Client BPO, deliberate improvement in operating margin over time and we do expect EPS to grow at an accelerated rate to the top line growth, consistent model. As we've executed, just wanted to show you, hey, look, what we've done, the prior charts, if you didn't see this, you'd be surprised. We've seen the shares appreciate faster than the broader industry, so that's a good thing.
So we're up 280 percent versus the broader indices at somewhere in the 180% range. So a positive outcome as you would expect. Our outlook, kind of stepping back to where are we now. Outlook for 2019, we came out at the beginning of the year, gave guidance for top line growth and bottom EPS, EPS accretion. Those numbers improved as we got into August.
We thought we'd be in the total revenue growth 12% to 14%. It's grown to 16% to 18%. The biggest contributor is GE growth. We also took our global client growth up as well. You can see that it flowed through to the bottom.
The $1.96 to $2 per share is now $2 to $2.02 So no change. The guidance we gave in August is consistent with what we're saying we're going to do today. So the key takeaway slide, this shouldn't be a surprise based upon what you guys have heard from the entire group today. We are in an underpenetrated market. We've been saying that, Tiger and I have been saying that every year.
We believe it's still the case, probably even more so today, given some of the new things that have entered the market. I heard BK talk about the supply chain market, Mark talk a little bit about financial crimes. We think with digital and the markets that we're getting into that are close to what we're doing today and in terms of our domain expertise, they're logical extensions of what we're doing today. The market is under penetrated and it's growing. We have a sticky long term annuity business.
The unique part about this business is also a fast growing business. Global clients growing at a double digit plus clip. You don't typically get fast growth and sticky annuity business. That's really one of the key things that I love about this business. And again, that's continuing.
Annuity based, 95% to 100% kind of renewal rates, very high rates. And in terms of revenue growth, it's really driven by Global Client and Transformation Services. We'll continue to look to grow the bottom line earnings faster than the top line growth. So if you're growing at a double digit top line growth and you can grow the bottom line faster than that, that's a pretty attractive place to be. That cash flow generation of 1 to 1 to net income, we're going to look to continue to drive and target free cash flow to net income of 1 to 1.
And of course, we'll be disciplined about the way we deploy capital. If we continue to execute this way, I really believe that we're extremely well positioned to drive attractive shareholder returns going forward. And with that, I'll turn it back to Tiger for his closing remarks. Thank you.
So let's pause for a moment on execution. So great strategy, very clear path to what we want to do and why, aligned to what the market and the market forces are providing as opportunities. So at some level, execution, we believe, is incredibly important to continue to earn the right to win more. And that execution goes back to execution in all the deals we won, given all the complexity, helping our clients navigate through macro headwinds, if any. Our clients, the deeper we become a trusted adviser to them, the deeper we become a partner to help drive change means that depending on whatever macro headwinds the world faces, their business faces, our partnership and trusted advisor position means that we will help them navigate through that and execute through that change for them.
And finally, continuing to be a great place to attract talent because at the core of our value proposition is how do we continue to find a way to attract and retain talent and drive upskilling at scale. Katie talked about the Genome program. It has caught fire in the company. More importantly, and this is what is fascinating, every one of our clients, bar none, when they see what we've been doing in Genome, which is, by the way, very, very new and it's still early days, they are all over it. Why?
Because every company in the world, in every industry, in every economy is grappling with upskilling as one of the top 3 fundamental deep long term issues that they have to solve for in a scaled way, not in a bespoke, let's just run this program way. So at the core, it is our talent, it is the culture that I called out as the ultimate differentiator in this changing macro disrupting world. And that culture Scott, I was looking at the wrong side. This is the BK moment. So we do have, as BK, as Ed pointed out, a large addressable market and the new services we've added on just increases the size, digital just increases the size, We are more and more being positioned as a problem solver to deliver outcomes.
We are tying the way we get paid more and more to those outcomes. We are driving that end to end transformation at the intersection of all the domain and trust expertise we have with all the disruptive technologies that are being born, that we are including either by building it ourselves, partnering or buying and by continuing to be that employer of choice. As an employer of choice boils down to the culture we have and the best way to describe the culture is the 4 words that we use to drive values in the company. We call this CI Squared, curiosity and courage with incisiveness on a bedrock of integrity. We believe these are very, very important words in today's world, not just for our business.
We believe actually it's important for almost every business, because you can't invent new things, you can't discover new things, you're not curious, if you're not constantly asking questions. You've got to make you've got to experiment, you've got to take bets, you've got to co innovate with clients. That requires courage. You've got to be deep and granular. Nothing at 50,000 feet is going to work.
That depth and granularity is what we bring to the table. And obviously, integrity is a given. That culture includes an inclusiveness that allows different people to sit at the table, the cognitive diversity that I talked about. And to a great extent, that culture, that cognitive diversity, the ability to then build solutions for our clients by bringing new talent and mixing them with people who've been in the company for a long time is our secret sauce. And in parts of our business, not in all our business, but in parts of our business, there are things that we do that actually do change the world in a very positive way.
And we think a lot about that, whether it is patient safety in health care or it is reducing the carbon footprint for equipment that we manage with all the data that streams in from that equipment, whether it's engines or it's turbines or it's health care equipment, given our history with the industrial businesses, we do a lot of that as well. So we and as well as the way we run the company, we are on a big path to eliminate all plastic from use in the company across the globe by December 31. These are things that our employees value. These are things that millennials value. Obviously, our workforce is a much younger workforce than a standard average workforce.
I'll end with 2 things that we as a company are very proud of. We continue to find a way to drive this harder and harder. It's an uphill battle in the world we are in today. 1 is diversity. I already talked about broader cognitive diversity, but within that, one of the pillars of that diversity that we're driving hard is gender diversity.
For us, gender diversity is about access to talent. And a differentiated access to talent, given that half the population of the world and half the talent in the world are women, I don't think we or the industry or the general business population actually accesses that well enough. So we've been driving this for 10 plus years. I think we're just getting better, but we still have a significant portion of the glass half empty. And that starts from the associates to the middle management to my senior leadership team on the Board.
And we do get recognized across the globe for a variety of things on being an employer of choice, one of them being the diversity programs that we drive. And the second is, look, we have 90,000 plus people across 100 plus sites across 25 countries and we keep adding to sites and countries that we deliver services from. In every one of those communities, we have to give back to the community and our employees love doing that, want to do that, are engaged in that and that's actually one of the reasons they want to join us and come to work, one of the reasons. So we drive that hard across the company. It's one of the things that we do well.
One of the things that we do well there itself is focusing on only a few things. We don't do broad corporate social responsibility. So we're focused on education, employability, particularly for women in all the economies that we work in and sustainability as 3 big pillars of our CSR. And finally, I want to end with a phrase that I used last time. We are continuing to be a very different company.
But for some of you who've dealt with us for 15 years, you recognize us. There are things about us that are the same, but we are a very different company as you would agree. Thank you.
So now we're going to have our second Q and A session. At the conclusion of Q and A, our leaders will be around for some networking opportunities. And I believe the demo stations will also be open and we'll be serving lunch. Thanks very much, Roger.
I had 2 related questions. And for Ed and Tiger, you've talked about the transformation journey you're on and you're moving into higher value services. And I just wanted to come back to operating leverage against that. And with a focus on the R and D line item and also the Genome or ongoing training, and so is that ultimately going to limit to some of the upside that you see in margins as you get more into these higher value add services and deeper differentiation? And the second part of the question is, Tiger, for you, how do you think about the partnerships?
And specifically with a lot of the webscale companies, like AWS and Microsoft and Google that want to do more subscription services, And so they want that ongoing revenue stream. So as you're driving deeper into digital, how do you figure out a balancing act of partnering with these folks when they want those more of those same
dollars.
We're by the way working with all three of the names that you just mentioned. And as we speak with their leadership, what we're finding out is that they're driving their business up the value chain. The need for solutions that come on top of their infrastructure services becoming more apparent to them. So we think there's a real foundation for partnership where they're driving compute engine power and that compute engine power is being utilized by solutions we put on top of it and take it to market. And so for all 3 of those, one of them we're working very closely with our computer vision solution and using the GCP platform for.
The other one we're used both of the other ones are big partners for us and we are in deals, building capabilities on top of either Azure or AWS and taking advanced solutions to market that run-in those compute engines. So we think it's the question is right on. We think it's very complementary. We think it's very additive. We're not seeing that as a compression issue for us.
We're seeing it as an expansion. The
more our commercial model for our clients put a stake on the ground on outcomes, the more we are the people or people like us would be in a position to actually deliver that value and capture some of that versus someone in that space because we would deploy and then run and then once we deliver the outcome. Because in the end, these solutions ultimately only when they deliver the outcome they are supposed to deliver is their real value for the client. And then so we are the people who are there at that last stage. So our expectation is that in those partnerships, we will be able to capture a fair share of value. So back to your original question, we are very clear that we are in an underpenetrated growth addressable market situation.
We are very clear, therefore, that we will capture that growth and we will do all the investments both at the front end, at the domain and at the capability end of the equation, both organic and inorganic in order to be able to capture the growth as the market penetrates and as that expanded pie gets penetrated. We will not give up growth in order to drive incremental margin too early. We're very clear about that because that growth requires those investments, which is why Ed in his conversation used the word deliberate margin expansion. We think that's the path for the medium term, whether it is continuing to invest in acquisitions or it's continuing to invest in some of the organic capabilities that we talked about.
This has just become much more focused and a lot more virtual than it had been. So we've gotten, I think, better at the way that we're training our teams
on the world base. So the interesting thing about I mean, this is the reality of all new technologies. Let's pick a number, 10 times more training for 3 times more people with 10 times more forces in much smaller bites all real time and all customized to every single individual based on AI and machine learning. That's the world of digital. The total addressable market has actually increased and the cost of doing that is the same.
And everything is real time and intuitive. And by the way, the experience of people is joyful versus having to come into a classroom, learn something and then forget it as they go out.
Ed Caso, Wells Fargo. Can you update us on how your new business machine has evolved over the last few years as you've sort of reset the way you go to market?
And I'll start by saying that when you say new business machine, it's the front end, it's how you go to market, it's what you enter clients with. So I'll start by saying that we have clearly changed the way we enter a client in 2 significant ways. It's no longer just 1 or 2 buying centers that we enter, CFO being an obvious one that we used to enter. That has got more diversified and we expect that to get even more diversified over the next couple of years. 2, we often start with blueprint, design, consulting, digital consulting, deployment of digital technologies post the consulting in our clients' operations without actually running the operations.
A couple of years later, the client may turn around and say, actually, why don't you run it for me? Those are 2 big changes that have happened. With that change, we've actually got even more focused on which clients at what stage to invest in those engagements in order to then undertake a bigger transformation journey. So we are much more agile in the way we deploy our front end team to those opportunities. We have a very defined set of clients that we go after either as existing clients or new clients.
And we dynamically look at that as their leadership changes, they are trying to drive an agenda that's different from what it was last year and so on. So much more agile allocation of resources. And the kind of resources have changed. Today, the lead client partners that own a number of these relationships, I would say half of them are actually digitally savvy because that's their background. They now own the entire client relationship.
5 years back, not a single one of them I would have called as digitally savvy because that was not their background. That's changed.
I guess my follow-up question is how dependent are you on hunters to drive revenue relative to a few years ago as the business has moved away from sort of pure BPO deals to the current business model?
So Ed, I would say hunting is still incredibly important not for today's revenue, but for tomorrow's revenue. The logo that you win in hunting in 2019 may actually have almost no contribution for that year, may have some contribution for 2020. But a subset of that will be the reason why 2021 will look great. So it's as important as it's always been. We've always been a business where you start and then ramp.
The only difference is some of those starts at this point in time seem to be stepped up starts, Bridgewater being an example of that. And some of those starts are consulting starts. But hunting has never been unimportant, it's always been important. Our focus on mining has always been very strong. I think we've just got better at opening up many more buying centers to mine and therefore our overall addressable market in every one of our clients has gone up significantly.
And by addition of services such as supply chain and financial trends, I think it goes up even more.
So you talked about like over last 5 years, the revenue growth has been very consistent. As we look forward, like look ahead next 5 years, there is much more reliance on Transformation Services for growth and we understand that secular trends there, but how cyclical that growth will be, transformation service, how defensive growth will be if macro economy deteriorate?
Puneet, that is actually a great question. I'll start by saying obviously the ratio of Transformation Services to intelligent operations is different today than it was 5 years back. And therefore, the question is a relevant question. However, I think it will be wrong to assume that all of Transformation Services is projects. It's not.
A significant component of analytics, which is part of Transformation Services is not projects, it's annuity. Then there is a material component of digital is not project. It's actually the Financial Crimes example, the risk canvas platform being part of the Financial Crimes service and being paid for as a service in a 5 year contract. And then a reasonable amount of the consulting work that is done is a multi year consulting engagement as part of an intelligent operations deal that we have won. So in the natural definition of Transformation Services with consulting being there and digital being there, the assumption could be that all of it is project, it's not.
If you want to pick a number, at least half of it is not project, if not more. And that gives and the embed rates that Katie and Sanjay referred to in digital as an example, means that when we win a 5 year intelligent operations deal that has digital and consulting and analytics embedded in it, then the revenue cadence of that is also annuity and is not only project. Having said that, I mean at least half I would say is has a project component to it. Now here's the interesting thing there. Depending on the way that macro change happens, there are going to be industries, there are going to be clients who have to react to that change by driving effectiveness and better outcomes in whatever they have more than ever before.
The tools and methods and technologies to be used to do that are all part of Transformation Services. Will they spend money on a strategy consultant? Question mark. Will they spend money to extract value quickly using transformation services? I don't think it's that big of a question mark.
It may actually be counterintuitive that it may actually accelerate in some form of action at least in some time, which is why identifying the industries, identifying the customers for that change becomes important. Yes, thanks.
Ashwin, Ashwin, Shirvaik here at Citi. Tiger, you started out by making a comment that clients are getting bolder. Just to kind of drill down a little bit more into that comment, Are there things that as clients get bolder that they ask Genpact to do that you're not comfortable doing any certain kinds of deals. Faster ramps are one thing I don't want to say it's easy, but it's more easily dealt with. But is the nature of contracts changing?
Is the nature of your conversations changing taking you in a direction where maybe you have to take more risk and are not comfortable with it?
I think it's a fair question to say that the risk the overall risk of undertaking the journey has changed. And your question is, do we therefore end up taking risks that we are not comfortable with? We shouldn't. We should never undertake risks that we are uncomfortable with. An example would be, if a client says, why don't you take over our operations in a particular location and take those people and then digitize, automate them and then use that as an ecosystem to bring other clients into.
It's something that we do well. However, it has to be the right location. It has to be the right ecosystem where you can attract and retain talent. That talent must be the kind of people who can leverage into similar clients in the industry that they serve. And it's something that you've been searching for at a strategic point in time order to build that capability.
If none of those are true, then you are just doing it for the sake of that deal. That would be an example of doing something that is, I believe, wrong and we would never do it. We actually debate a lot around those types of situation and we go back to the client and say we can't do this because it is not sustainable for the client. Obviously, it's not sustainable for us, but in the end, it won't be sustainable for the client. And that's a discussion that happens.
So it's just that's why all these deals are complex. It's complex and yet decision making is fast. So the cycles of these are really rapid.
Yes, thanks. So Dave Koning up there. So this year, as Ashwin was just saying, I mean, you're kind of crushing it, right? It will be like It will be like 17%, I think constant currency growth or whatever. Even if we exclude GE, it's still 11% or 12%, right?
It's still kind of way at the high end of the high single, low double. What do you think wouldn't be sustainable? Like why can't you just kind of keep operating at 11% Are there
a couple of things just to
call out this year, whether some of the big wins or anything that are just a little better than normal? Or is
the pipeline good enough to
kind of keep that going for a couple more years?
Yes. I think you're talking about the medium term, Dave. So when you're talking about the medium term, you have to take into account that there will be some cycles. It could be a micro cycle in an industry that we are in that is important for us. So I think the moment you if you talk about 1 year, this year versus a multi year and laying a trajectory for a multi year, your range has to increase and that will be a natural increase.
Is our pipeline strong? It's very strong. Is our momentum in that pipeline strong? It is. Is the complexity and the big deal component of that as strong as it's been in the recent past?
Yes. So I think it's natural to expect in the medium term for it to be in that range. We've had a we are having a very good year, you're right. And outside of GE, we're obviously having a great year, but outside of GE, absolutely
right.
Hi, I'm sitting in the front and it's The Longest Journey for the mic, Keith Bachman from BMO. I wanted to ask 2, one was on GE, but you mentioned flat added like that 4 plus range. But how do you think about GE over the next 2 to 3 years? What's the signpost you're getting as they unfold in the journey? And then, Tiger, I did want to come back a little bit on competition.
And you alluded to I think Accenture is who you're seeing most frequently. How is the nature of that changing since the market seems to be filtering up the top on the BPO work between yourself and Accenture? But if you could also just comment on the other Indians who are struggling in the financial services and therefore trying to get more into BPO work, how might that change pricing or some of the other dynamics, particularly in that vertical?
So the Indian legacy IT players in the BPO space have always competed on price. That's been their real first weapon to compete. So to some extent that hasn't changed. Are they are different players in that space visible? They've always been, whether you take a TCS or Cognizant or Infosys and Wipro.
So I don't particularly see that as being any different. A number of them are also trying to get more digital in the technology stack, which is a much bigger stack for them. So I'm not so sure that necessarily it's a question of where do they pay attention. So we don't see them significantly shift towards our kind of a space across the board. Accenture, for sure.
As I said, when we compete, our competition and the basis of our competition is not the usual things that you would anyhow expect from both of us, global delivery capabilities to in the particular space, whether it's a service or an industry, bringing all the technologies to bear there. Our differentiation tends to be the way we approach outcomes, the way we approach driving end to end in order to deliver those outcomes, The way we get specific in delivering those end to end outcomes using digital and analytics, which they have a lot, but the specificity of what we bring to the table is where when we win, we win. Any other question goes on? Yes. If you look at the last 5 or 6 years, 7 years, 8 years with GE, actually last 10 years with GE, it's always been a function of the way GE has changed.
So beyond saying that we have a great relationship, we've always been and we continue to be focused on delivering to all the promises that we've always made, delivering on the outcomes that we are focused on, bringing all the new technologies and solutions that we're building for some other clients into their operating space. And then it's a function of how they change. I don't think I'll be able to comment on how they change. But I think across the board, across a range of their businesses, we are in the right conversations at the right places and understand their trajectory every time they make a decision for us to be able to nimbly change. And our projection for the future is based on we have a significant penetration in the work we do for them.
And we are not assuming that there's going to be another repeat of the kind of growth that we've had this year.
Continue to win new work while we're continuing to deliver the commitments on productivity, right? So that's every year we're winning new work just to stay at that flattish level. That's a given.
I mean that's a given for all our clients. We bring all the technologies to actually compress the work that we're doing, deliver value in that work, automate that work, bring machine learning and AI to that work, that gives us the right to win more work. If the businesses that GE has grows, then by definition, the work that we do will grow it.
It's still fair to say that they are kind of out in front in terms of what they get us into, in terms of the more the most complicated things they come to us. They're one of the first ones to come to us and say, can you guys do this?
I was curious if you've been impacted by any clients moving work in house over the last 2 years And does the change in the model reduce that risk? Or are we getting more mature in the new model such that clients might think about in sourcing again?
So we have been impacted by clients moving back work into themselves, in sourcing work, but not any different than in the past. Every year there's always more new clients who decide across the range of our top 200, 300 clients to do that. There's no pattern to it from an industry at least that I could call out. There's no pattern to it from a services perspective. The pattern that exists is leadership change is the one pattern that I'll call out.
If a set of leaders have a certain perspective on what they think is the right way to drive change and they believe that it's better for them to own it to drive change then that can happen. Will that happen less or more in the future? I think at that rate, it's small enough not to I don't think it's going to be any different, but it's going to be It's part of the course.
Brian McGowan. So we're in obviously a lot more emphasis around design, around product engineering. Can you
talk a bit about how
the M and A pipeline has changed, the competition of that pipeline? How are you seeing valuations in it? And what about the competition that you might be facing in that new pipeline?
A lot of our acquisitions of capabilities have been businesses and companies that we at least in many cases, have partnered with before we acquired. It's allowed us to actually engage together, create the value proposition together, take it to clients together. A number of them have therefore been not a competitive process. It's been a sole source. And that's reflected 3 years later by those same leaders continuing to be in the company, grabbing data agendas in the company.
I don't expect that to change as we go into the future. There'll be 1 or 2 instances where we would compete. The competitors would be depending on the kind of if you're talking about a consulting digital kind of capability that we've acquired in the recent past, That's the kind of acquisitions that we would have in our pipeline today as we look for more capabilities, for example, in data engineering or we look for more capabilities in experience or we look for more capabilities in a particular domain. The nature of our pipeline of acquisitions is completely driven by strategically what are the choices we have made and in order to deliver to those choices, what are the capabilities that we either have to build or partner or buy.