Genpact Is Shaping the Labor Market With Artificial Intelligence
Genpact Ltd (NYSE:G) is a provider of business process management services. It has clients in multiple industries, including banking and financial services, insurance, capital markets, consumer product goods, life sciences, tech and more. Genpact's services include data and analytics, risk and compliance, sourcing and procurement, finance and accounting, supply chain management, and more recently, artificial intelligence.
This technology company has long embraced AI as part of its future. In fact, it is shaping the future of the labor market by using AI to measure employee engagement and sentiment. This has a very important and wide application across many industries and can potentially help Genpact generate incremental revenue growth.
Benefits of using AI in measuring employee engagement and sentiment
Genpact has believed and invested in AI for many years. It has developed Amber, an employee engagement bot, Genome, an AI-enhanced internal learning and development portal, and Watercooler, which is essentially an AI integration that helps employees forge informal connections companywide.
The goal with Amber is measuring employee engagement and sentiment, which is a very important metric as dissatisfied employees are expected to perform poorly and business productivity will be weak. Genpact has a vast clientele worldwide, about 800 customers, and many of these clients are in the Global Fortune 500 list, which includes the largest companies globally by revenue.
I see a lot of potential for Genpact to grow its revenue with Amber as there are numerous benefits of integrating AI into employee engagement and sentiment analysis, and new customers will most probably find it extremely useful to measure whether their employees perform at their peak performance or not, and what could be changed.
AI algorithms can efficiently process large volumes of employee data, such as surveys, feedback, social media posts and performance metrics. By analyzing this data, AI can identify patterns, trends and correlations, providing valuable insights into employee sentiment and engagement levels.
AI-powered systems can monitor and analyze employee sentiment in real-time, allowing organizations to swiftly identify potential issues, concerns, or areas of low engagement. This timely feedback enables proactive interventions and the ability to address problems before they escalate. AI eliminates subjective biases often associated with human interpretation and evaluation of employee sentiment. By leveraging algorithms, AI can provide an unbiased assessment of employee sentiment, ensuring fair and consistent analysis across the board.
AI can offer personalized recommendations to improve employee engagement based on individual preferences, career aspirations and skill sets. By tailoring interventions and suggesting relevant resources, AI systems can enhance the employee experience and foster a sense of growth and development. AI algorithms can leverage historical data to forecast future employee sentiment and engagement levels. By identifying potential challenges or areas of improvement, organizations can take proactive measures to mitigate risks and boost engagement, ultimately improving overall productivity and retention.
AI can even automate repetitive tasks associated with employee engagement, sentiment analysis and feedback gathering. This automation frees up valuable time for HR professionals to focus on more strategic initiatives, fostering a more efficient and productive work environment. With AI, organizations can continuously monitor and track employee sentiment, rather than relying on periodic surveys or assessments. This real-time monitoring allows for immediate interventions and adjustments, promoting a culture of constant improvement and feedback.
Improved communication and collaboration
AI-powered tools can facilitate improved communication and collaboration within organizations. By analyzing communication patterns and sentiment, AI can suggest appropriate channels, team structures, or collaboration strategies to enhance engagement and foster a positive work environment.
AI offers a data-driven approach to employee engagement and sentiment analysis, providing organizations with valuable insights, proactive interventions and personalized recommendations to boost engagement levels, improve productivity and foster a positive work culture.
I believe that a positive work culture is essential for any business to grow over time, so Genpact may not necessarily be beneficial for all businesses as toxic managers may end up using it the wrong way, resulting in worse employee sentiment and lower productivity. However, Genpact will benefit regardless as it just provides the process management tools.
Valuation
Genpact shares could be undervalued now after a year-to-date decline of 19%. Genpact shares trade at a relatively low price-sales ratio of 1.60. It is notable that over the past 13 years, Genpact's highest price-sales ratio was 2.66., the lowest was 1.39 and the median was 2.13.
The company has shown predictable revenue and earnings growth. Over the past 10 years, the average revenue per share growth rate was 11.10%.
The GF Score of 94 out of 100 shows high outperformance potential based on a historical study by GuruFocus. The GF Value of $50.53 indicates that shares appear to be modestly undervalued.
Returning capital to shareholders
There is another reason to like Genpact, and that is the return of capital to shareholders via dividends and share repurchases.
In 2020, the company had 190.4 million basic shares outstanding, and in 2022, that had decreased to 184.18 million shares. Genpact has been increasing its cash dividends since 2018, having a three-year dividend growth rate of 13.7%.
I believe the company can comfortably continue to grow its dividend growth as the dividend payout ratio of 0.24 is considered very healthy.
With all of these positive factors considered, I believe Genpact has the potential to rebound in the second half of 2023.
This article first appeared on GuruFocus.
