Leadership

Why Tesco looks to Bangalore for lateral thinking

Low-cost innovation and quirky ideas help power Tesco's India operation...

As well as being responsible for the retail giant's offshored IT, Tesco's Indian operations are also providing a large dose of original thinking, says Saritha Rai.

The traditional case for outsourcing to Bangalore used to rest on cost savings. Later, as well as the economic incentive, outsourcing came to be about tapping into a diverse and vast English-speaking workforce.

Now, in the third decade of outsourcing, a further factor called jugaad, a colloquial term meaning creative ingenuity on the cheap, is coming to the fore.

From process improvements that make Tesco stores greener to cost savings in all aspects of operations, jugaad is at play at Tesco Hindustan Service Centre, says its CEO Sandeep Dhar. He described jugaad - pronounced joo-gaad - as low-cost innovation that comes out of lateral thinking or native genius, an example of which is turning a washing machine into a yogurt churner.

"After six years spent building a centre of excellence in very diverse skills, there is an element of creativity in the solutions we provide," says Dhar.

The captive outsourced unit of global retailer Tesco has 4,000 employees in India, all located in Bangalore - a relatively small part of the chain's workforce, which counts 270,000 employees in the UK alone.

However, Tesco's operations in India face constant demands from around the world. A store computer gone on the blink in Ireland? The helpdesk in Bangalore steps in. Payroll software in Turkey has bugs? Bangalore sorts it out. Long checkout lines at any of the 100 Tesco Fresh & Easy stores in the US? Bangalore fixes it by allocating more cashiers to the tills. A new store in China to be designed from scratch? Bangalore is on the job. A burglar alarm or fire alarm ringing in a store or a Tesco board member's home in the UK? Bangalore acts to monitor the situation.

Tesco Hindustan

Tesco Hindustan supports the retailer's stores around the world
(Photo credit: Tesco)

The bulk of Tesco Hindustan's operations consist of information technology outsourcing such as remote infrastructure management, maintaining legacy systems and developing new applications. The Tesco Operating Model - everything to do with buying, moving, stocking and selling - has been built and documented here.

Building and maintaining financial software that pays suppliers and vendors worldwide is routine but, in a step away from the grunt work, all Tesco's statutory financial reporting is also done out of India.

Tesco Hindustan is also involved in facilities questions. When a location for a new store is identified anywhere in the world, the property services team in Bangalore helps with feasibility studies, with team members preparing a feasibility report looking at minutiae such as the plot's gradient and the nature of the local soil.

Once the decision on acquiring the plot is taken, the team steps in to plan and design the store, looking at aspects such as improved accessibility to supply trucks and designing the car park.

Having taken over the entire standardisation of setting up new Tesco stores, jugaad kicks in. With the most meagre of resources, a lot of inexpensive improvisations are done on the fly.

As the giant retailer moves into new geographical areas, one team in Bangalore came up with the idea of placing rollers in the car parks of all Tesco's retail stores. The idea, which is being tested, is that as cars drive over the rollers, electricity is generated.

Meanwhile, on Tesco's vast campus in Bangalore, an unsused windmill suddenly got a fresh lease of life. It is now placed horizontally and runs on air blowing out of the campus' giant air conditioning plant, producing enough energy to power LED lights in the company car parks.

It is a business where a seemingly innocuous thing such as reducing average customer handling time at the till by one second amounts to a £1m saving annually. The workforce in Bangalore is always looking to reduce that key performance indicator using predictive algorithms and advanced analytics.

Dhar predicts that Tesco Hindustan will grow both in numbers and the complexity of work it handles in the coming years. "Forecasting future products, distribution, banking, store ordering, non-English language territories... there is so much more we can take on," he says.

About

Saritha Rai is an India-based journalist and commentator who covers technology, business and society from her ringside seat in Bangalore.

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