Volatility and Adaptation Increase in Third Quarter

Half of all companies across multiple industries were affected by volatility and structural changes

New YorkDec. 11, 2013Genpact Limited, a global company that transforms and runs business processes and operations, announced the third quarter 2013 results of its Volatility and Adaptation Index (VAI), a 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," said Gianni Giacomelli, senior vice president and chief marketing officer, Genpact. “With the easing of pressures in financial conditions, we also saw a rise both in turnover among senior leadership and corporate restructuring. 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.”

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 consumer packaged goods’ (CPG’s) keen interest in operations transformation services highlight volatility in those sectors.

The Volatility and Adaptation Index, created by Genpact, is a directional, quarterly measure of volatility and signs of adaptation. It was developed through an extensive analysis of nearly 600 large, global enterprises across a wide range of industries. These analyses were “trued up” based on the operational data derived from Genpact’s business process transformation, management and outsourcing footprint across the same industries—from mortgage and procurement to finance and accounting, and credit card processing—driven by its proprietary, analytics-driven Smart Enterprise Processes framework. The VAI is updated each quarter.

Companies in this article