Tesco Hindustan Service Centre (Tesco HSC), the global services arm of the UK-based retailer Tesco, has come a long way since its inception in 2004. When the company commenced operations, Tesco was not a well-known brand name and recruitment was a challenge then. “There were no skilled people available and we were recruiting people fresh from the market. Now, we have built a strong brand name and attracting people isn’t a challenge anymore,” says Sandeep Dhar, chief executive officer. But the company does focus on recruiting people with a customer-centric outlook, who, Dhar believes, will be the right cultural fit in the organisation.
“Many companies spend time in analysing the reasons for why its people are leaving. We spend time on analysing why people are staying with us. Our thrust is to strengthen our strength than worry about OUR weakness.”
With an improvement of 10 per cent in productivity on a year-on-year basis in almost all its activities, the company currently plays an active role in providing key business services to Tesco’s operations globally. From reducing checkout time at the counters to implementing IT applications that support global finance operations, Tesco HSC develops solutions that make the Tesco retail experience simpler and smoother.
Evolving through innovation
The global service operation of the company involves creating strategic initiatives for Tesco retail stores worldwide. Normally, the company goes through three phases of evolution as it picks up work from the UK retail major. “In phase one, we start with the easier part of the work and then gradually progress to offer more complex and higher-end services,” says Dhar. In phase two, the company tries to achieve a transfer of accountability and in phase three, it replicates what it has done for UK across other countries in Asia. Currently, the company has reached phase two and beyond. “A significant part of the work we do is for multiple countries,” shares Dhar.
Operating from Bangalore, Tesco HSC also provides technology services. “This is the team that also houses R&D activities in IT field,” says Dhar. Its innovation initiatives fall under two categories. They encourage their employees to give innovative ideas and implement the ones that are practical. The second initiative is where business problems are identified and the company creates a cross functional team, which works on innovative ways of solving those problems.
The other key areas of operation for this centre is finance and accounting, designing Tesco stores, offering HR services, supporting Tesco with merchandising and running promotions, supporting the dotcom business with digital advertisements, online marketing and marketing analytics. It also optimises Tesco’s supply chain and customer support services.
Getting the right process
Tesco, which has a presence in 13 countries, is the first major international retailer to have a fully-owned support centre in India. To bring it to the current level of operations, Dhar says he had to make cultural changes in the organisation and not many process changes. “To leverage and exploit the potential of a shared service centre, we had to make sure that everyone thinks of only one customer, who is the person walking into the store,” says Dhar. One of the challenges that Dhar faced was to stop his people from considering their UK colleagues as their customer. “It is something which typically a vendor does,” says Dhar. He continues, “When you recruit people, especially from a vendor environment, there is a mindset change that you have to help them go through. If this does not happen, then you operate like a vendor.”
To overcome this challenge, the company orients and communicates with its employees and also shows them the power of what can be realised if they change this mindset. The ultimate aim of the Tesco HSC employees is to make the end customer happy and not those in the UK office. They have to understand the preferences of the European and Asian customers. “While the dynamics of what an Indian customer wants may be little different, the basics of human behaviour don’t change,” says Dhar. For instance, most customers need adequate car parking; a good range of products and predictability of that range attract them. But what’s not consistent among the customers is the display type. Whether a product should be sold fresh or frozen and loose or packaged are preferences which may vary from country to country.
Playing to its strength
The employee count of this shared service unit of Tesco has doubled in three years to 6,000 people. While the company is not spared from attrition, it is at manageable levels of between 15 and 20 per cent, says Dhar. But that’s not Tesco HSC’s concern. It is less focused on reducing attrition and more focused on improving its credentials. “Many companies spend time in analysing the reasons for why their people leave. We spend time on analysing why people are staying with us. Our thrust is to strengthen our strength than worry about weakness,” says Dhar.
The success factors
The critical factor that makes a shared service centre successful is to make it focused on creating business value. “In many shared service centres, there is an obsession with headcount. People think that success is measured by how fast and how large you are growing,” says Dhar. The company’s view is that headcount and growth is the outcome and not the objective. The objective is to help the business service the customers better and to simplify processes. “Hence, the focus is on making things better, simpler and cheaper,” concludes Dhar.
INNOVATION INITIATIVES FOR TESCO
A good portion of research and development in TESCO HSC happens on the mobile application platform. The company has developed a grocery shopping application for an android phone with a voice search facility, where one speaks out what items they are looking for. There is also an iPad recipe application, where one can search for a recipe and once it is found, the visitor can go to the e-commerce site and shop for ingredients needed for that recipe.
It also uses analytics for improving business processes. For its ecommerce business, the Indian team has created an analytical tool or algorithm which predicts the favourites for a customer. For forecasting sales in the stores, the company has made some innovations. It has taken weather forecast as one of the parameters that determine the range and stock levels needed at the store. “Depending on the weather, sale of a particular item goes up or down,” says Dhar.
GOING GREEN AT TESCO HSC
In our desire to become green, we’ve invested in a windmill experiment. After erecting the equipment, we found that it was not rotating at a speed fast enough to generate adequate power. So, we were saddled with this equipment and didn’t know what to do with it. Our team tried to salvage this investment. They decided to use the blast of hot air coming out of the air conditioning (AC) chiller unit to drive the blades of the windmill. And to achieve it, they mounted the windmill blades horizontally on top of the AC chiller unit and as a result the windmill rotated at a good speed to generate electricity. Today, our basement car park is lit up with electricity produced from this horizontally mounted unit.