A Fresh Look at Crisis Management

The company recently announced the third quarter 2013 results of its Volatility and Adaptation Index (VAI), a first-of-its-kind framework that monitors approximately 600 large global companies’ volatility events as well as related adaptation.

The VAI total score was 39.0 in Q3 – more than doubling from Q2 – with half of all companies measured manifesting volatility and structural changes.

Genpact analyzed volatility and adaptation events such as profit warnings or the effect of adverse regulatory environments, as well as signals of adaptation, including restructuring plans, acquisitions, or geographic expansions.

“In the third quarter we saw a dramatic increase both in the total number of volatility events and the range of companies across industries impacted by them,” says Gianni Giacomelli, senior vice president and chief marketing officer. “With the easing of pressures in financial conditions, we also saw a rise both in turnover among senior leadership and corporate restructuring.”

He adds that this indicates that companies are focusing on adaptation, realizing that now is the right time to make changes:

“In our experience, they will likely transform their operating structure.”

“Acquisitions and geographic expansions are also on the rise, suggesting that there continues to be a redefinition of the operating perimeter of many companies, as well as consolidation to benefit from scale, scope, and access to clients,” Giacomelli says.

Results across industries included the following:

• Banking firms showed a marked rise – commercial banking, which had registered the lowest score in Q2, had the largest increase during Q3, while retail banking continues to be above all other industries for the third consecutive quarter.
• Healthcare companies continued their rising trend; life sciences remained at elevated levels.
• Consumer products companies displayed higher volatility and adaptation signs in Q3, primarily driven by mergers and acquisitions and restructuring activity.

The VAI’s results are corroborated by Genpact’s own operational measurements derived from the sample of processes and operations the company transforms or manages on behalf of clients as part of transformation and outsourcing agreements.

For example, mortgage operations fluctuations in banks, and life sciences’ and CPG’s keen interest in operations transformation services highlight volatility in those sectors.

Giacomelli says that supply chain managers learned that they could “not change crews in a storm,” and there were other lessons learned by past mistakes.

“When managers have time to calmly evaluate their options, good things are going to happen,” he says. “That time is now.”

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