Fireside Chat between Phil Fersht and Vikas Bhalla

Hi Phil, good to be here. Thank you for having the session. Yeah, you know, I was born in Delhi. I did most of my schooling in Delhi, though for a few years my father decided to move to the hills, which is the Kashmir Valley, and I spent a few years there, which was wonderful. But then for higher education, I did come back to Delhi. I got my engineering degree from IIT Varanasi. And after that, you know, I've worked in various locations, but going back home has always been daily in India. With respect to working at EXL in this industry, that's actually quite interesting. You know, when I was studying engineering after my degree, I wanted to be an engineer. I was very good at engineering, so I wanted to be an engineer. And I started working in the chemicals industry. At a very early stage of my life, I decided that I want to eventually run a business. In my mind, people make careers in one of two dimensions: either it is functionally oriented, so you want to be in finance or marketing or HR and operations, but there are some people who want to be in a particular industry and run a business, run a P&L. And from the very beginning, I was quite intrigued about people who ran businesses as general managers, and I wanted to do that. So when I started my career in chemical engineering, one of the things I realized was it probably wasn't an industry I wanted to be in. It wasn't really a happening industry, a fast-paced industry. It wasn't growing fast. So I started looking for other industries. After spending a few years on the chemical industry side, I looked at outsourcing as an industry, and this was back in 2001. If anyone was looking for an industry to start working in, that was the really in thing in those days. And that's where EXL happened. And of course, when I went into EXL and started my stint at EXL, lots of very interesting things happened. It took me a few years to finally decide that yes, this is the industry I really want to make my long-term career in. And I started working in that economy. It's been over 20 years now that I've been in this industry, all at EXL. I can tell you that there's been never a dull moment. The pace at which this industry has changed has been fascinating.

So, you know, I have been part of a joint family system, something which is still very common in India, and I've been used to three generations living in the same house. That's been an important part of my upbringing, and I really wanted to continue that as long as I could. That was one of the reasons why I wanted daily India to always be the home to go back to. But given that EXL is a global organization with markets all outside India, even though India is still a key delivery location, to be able to do a global job which I've been doing at EXL for the last 10 years based in India has been challenging because you end up doing multiple time zones, you end up traveling a lot. There was a period of time when I was traveling probably 100 days every year. But Phil, you've been doing it, I know that, so you tend to get used to it. So it was basically working multiple time zones and traveling a lot. That's what life was, and I was quite happy doing it. The pandemic changed it because suddenly everyone was remote. There was no location you had to be in, no place you had to be in. All you needed was a computer and good connectivity, and you were at par with everyone else in the world. I think that change, even though it will not remain entirely like this, which is all remote, but there's no 100% going back to the office. So I don't think very location-specific business models will continue. It's going to be a hybrid world. I think we all understand that. And to that extent, I think it's become easier. I am beginning to travel now, but I don't think travel will be as much, and I think the job can be effectively done from wherever you are.

This entrepreneurial zeal was happening before the pandemic. You could find an increasing number of young employees wanting to do something of their own. They all had some idea that they thought was very good and they wanted to pursue that. When I came out of college, the first thing I was told was that the most important thing you have to think about is loyalty and longevity. So go for the right industry, go for the right employer, and then commit yourself to that long term. But I think that is being very fast replaced by experimentation and flexibility. So I'm finding that many of the younger employees are much more comfortable experimenting. They want the flexibility, and with that comes the confidence to pursue your passion and take up entrepreneurial adventures. I started seeing that before the pandemic, and the pandemic accelerated that because people started really believing in following their passion.

Yes, absolutely. I think people are more confident, and there are a lot of success stories today that they can see and try and be adventurous around it. What I'm finding is that if you look at our industry, you've got to broadly break up the talent pool into two broad categories. I think there is the operational talent, and I think that's quite abundant frankly in some other delivery geographies, and there people are beginning to think about how they can actually become more innovative or start doing things which are different. And then there's the second category about what I call the data and digital talent. These are all the employees who are into data, working on AI, or working on digital technologies. And frankly, their thinking of the world, their careers, the paths they want to charter, the goals they want to pursue are just very, very different. And I find that there's a lot of entrepreneurial zeal in those employees. Merging of these two talent pools is where I think success lies, not only for the employer but also for the employee, which is the operational capability and the data and digital talent. That's something that I think most organizations also need to focus on, as to how we merge these two talent pools. But yes, significant changes happening in the industry.

Totally agree. And I think this whole gap, the number of years between two generations, that gap is actually shrinking quite a bit. At least I remember when I was coming out of college, we used to think of generation gap every 20 years or so. I think now there's a generation gap every three or four years. My daughter who's 22 and my nephew who's 14, they're seven and a half years apart, and I think there are a couple of generations between them because my nephew is going through technology at a much earlier stage of his life at a much faster pace. And what that is doing is giving him a very different perspective to what my daughter has, to what I have. And we can see that in our employees. Every three years you get this new fresh wave of very differently thinking talent. And so the pace at which you're finding these new generations and the way of thinking coming in is changing. It really is quite fascinating.

Yeah, so I think you are right. EXL as an organization is extremely focused on specific industry verticals. We realized at a very early stage of our evolution that most differentiation that you can actually create for your customers is based on how well you understand their business, and that really comes from your understanding of their domain. So you need to specialize around those domains. And while we were sort of gravitating towards certain industry verticals because we had momentum, I remember in early 2014 we formally verticalized and created insurance, healthcare, emerging as some of the industry verticals. So we are in a select few verticals. And our management philosophy is that we build everything within the vertical, so you have dedicated delivery teams, thought leaders, solution providers, analytics, digital resources, so that they gain expertise. And the value proposition to our clients is that we will bring to you solutions which are not based on what we learned from you, but things that we have learned over the years having worked with so many insurers. So we can actually bring those solutions. And very importantly, the value proposition to the employee is that we are not actually helping you build a career in the outsourcing industry, but we are helping you build a career in insurance. It's got a very different ring to it. And that's how we've been working. And I think this focus on the domain has really stood its test over many years and continued to do that. Your question about will we be moving to adjacent verticals? Maybe yes, I don't know. But I think one thing that is certainly happening is that even within the verticals, there are underpenetrated areas or white spaces or new product areas. So if you think about cyber insurance, it was a very small, minuscule product line a few years back, and now not only is it already big but growing at a fast pace. So that's a new product line with a very different set of dynamics where the nature of risk is non-tangible risk and sometimes can be very intangible. There's this whole area of intangible assets, NFTs, which gets created. So as these new, what I call modern problems, become larger, cyber risk, intangible assets, I think there's enough headroom for growth within even the insurance vertical. So that is certainly going to happen. We're going to keep going into these new product lines and new service areas. Into adjacent? Like I said, I don't know, but we will know in time.

So I think the role is changing a lot, and it's changing at a very fast pace. And it's all driven by how we see the overall industry evolving and changing and how new technology is actually coming. So let me give you a few areas and examples. A few years ago, you would say that we run operations for an insurance company. So let's take an example of new product launches or new business, and the discussion would be how can we support that by providing you with services which will be provided largely by humans in a global delivery model. So it was like an outsourcing service typically charged by time and material. Now from there, today we are in a situation where we are actually doing end-to-end product launches for insurers. So we bring in the technology, the data, the algorithms, the ecosystem, and the manpower required to be able to do these product launches, and basically get paid by outcome, which means that we have skin in the game. A successful product launch for an insurer will also mean successful revenue streams for us. So this transition from providing human-intensive services to basically helping launch new products is a big journey, and it has happened at a very fast pace. It's happened only in the last two or three years frankly. That gives an example of how service providers are evolving. I think the second big area is really penetration of digital. You cannot be at the receiving end. You don't expect to be strategic partners if you are the recipient of all of this coming to you to bring these solutions to insurers. So whether it is AI-driven data extraction engines or conversational AI to be able to help your insurance clients interact better with their customers digitally, all of these technologies need to be brought to the table. So this is no longer about that. Third, this whole hybrid environment and the way that talent shapes is changing so fast. Frankly, when we went into this remote working and we were there for three months, six months, we were all thinking this is a temporary phenomenon, that in six months' time we'll be all back because we never thought this is sustainable. But if you've done it for two years, it just means it works. You can no longer question. People come and ask me, are the productivity levels suffering? I said no, they're actually better than what they were before. Is collaboration suffering? Well, intuitively I think it suffers, but frankly when you look at outcomes, it has been a great period of innovation. So we're in a situation where we are moving to this new model which I think is hybrid with virtual first. That's what I call it. So by default it's virtual first, but it's going to be hybrid because everything cannot be actually operating. And I think getting our clients and our employees comfortable with that new model is going to be a very key focus for organizations like EXL, and frankly significant change management because it's going to be very different. But the pandemic is no longer forcing us to be working remote. How do we still sustain that and go through difficult times and make sure that model works? So I think that is there. So lots of change on the table. It's about doing end-to-end work for clients. It's about not being recipients but providers, proactive providers of digital transformation. And it's about working with the new normal. And then frankly finally, and I know HFS has done some research on this and published a paper recently, it's about the ecosystem. You can no longer be a solo player and say I do it all. That just does not work. So the transition from my function to my organization to my ecosystem, I think that transition is happening. And we're finding that to be able to provide value to your clients so that they can provide value to their customers, you've got to bring a complete ecosystem and you're part of that ecosystem. And I think success of that ecosystem is going to be very important. It's no longer success of just one organization.

There's so many names that come to my mind. As you go through life, through your childhood, and then when you're getting into your career, and now when you spend many years in the industry, it just changes. The one thing I must say is that my childhood hero has always been my father. There's so many ways I wanted to be like him, and I don't think I'm alone in this. Many of us, if not most of us, find that they believe that their father is their hero. My father has been my hero. Somebody recently asked me this question, who else? And very interestingly, and I don't know whether this resonates with people, my other childhood hero actually is a fictional character. It is Mr. Spock of Star Trek, played by Leonard Nimoy. When I remember being initiated on Star Trek, which by the way is probably my most favored television series ever, I was a young teenager when I got initiated on Star Trek. I could not understand that character so well, but I really liked it. And today when I think I understand that character well, the one thing I'll say is Spock would say it's fascinating. Because I think what he brings to the table, the ability to be different and yet be so effective in what he's trying to do, I think it's just great. So that's something that I've always seen. In terms of career, it's changed. There was a time when I used to really follow Jack Welch, and I did work at GE for a bit. So I thought the way he had built this mega engine and the way that he had used Six Sigma or the internet to change, make a big ship like GE change direction so rapidly and be so effective was fascinating. I think leaders like Jeff Bezos who totally disrupted the way that supply chain works and retail can be thought of. I think all the work and thinking that Elon Musk is bringing to the table with respect to sustainability and achieving that distant dream about human sustainability and driving everything around it, I think those are some of the names that I feel inspired by today.

Yes, we look forward to. I've been wrong at predicting the pandemic so many times over that I don't want to make a prediction, but I see some light now. And I haven't traveled for two years, and I'm going to start traveling this weekend. So hopefully things work out fine, and it'll be great to catch up over a drink.