Adam Parks (00:07)
Hello everybody, Adam Parks here with another episode of Receivables Podcast. Very excited to be back in the studio recording today for the first time in a long time. And with a guest that I have had on my guest list for such a long time, I'm really excited that we finally get to do a podcast together, because I feel like I've known you now for at least 20 years, and we have not done this yet.
So, Saket Sahoo, thank you so much for joining me today. I really do appreciate you coming on and sharing your insights.
Saket Sahoo (00:37)
No, thanks. And I don't know if this is politically right to say, but I'm glad to lose my podcast virginity to you. it is, it I myself haven't been in front of the camera a lot, but obviously we've spoken at many different events and I always thought this would be a great platform to kind of share some insights that.
Adam Parks (00:45)
Fair enough.
Saket Sahoo (01:00)
I think your podcast reaches probably more than most in this industry.
Adam Parks (01:04)
I do appreciate it. Everybody I know in the BPO space or that's related to BPO in some way, shape or form has some story about their interactions with you and all of those stories end with and, and then I learned something. And so I'm interested to see how much I can learn today as well because BPO services is something that we've got a lot of challenges in the United States in terms of hiring.
And we've got to, we're working more accounts, we’ve got tightening margins, so we have to do more with less. And I think when we can't hire people locally, BPO is that next best opportunity because we can hire those live people in different locations because the whole world is not going to become AI. We're not going to solve all of our problems with a voice agent. Like that's not realistic. So before we get into all that, Saket, you know, I want to start at the beginning. I'd like to hear your story of how you got into the space.
So, for anyone who's not been as lucky as me to get to know you through the years, can you tell everyone a little about yourself and how you got to the seat that you're in today?
Saket Sahoo (02:04)
Yeah, so I think I've been very fortunate and very lucky to be on several different sides of this industry. So I started off my career on the credit grantor side, and then I transitioned to the debt buying side and then switched to the servicing side, went back to the debt buying side, servicing and then back to debt buying.
So it's been a little over 25 year journey, but the benefit is that, you know, in all these opportunities, I've had the exposure not just to the operations floor, but also to the boardroom of many of these credit grantors, debt buyers, and services. Some that were, you know, say some $5 million in revenue, and some that were like, you know, $50 million plus in revenue, or in some cases $150 million plus in revenue, right?
So such a broad spectrum of different environments, you know, working with very strategic thinkers, but also down to very strong operating teams and operators that have come across in this industry. That's really been, you know, the reason why there's so many people have had the pleasure of interacting with and also why, you know, we've learned from each other in some way, shape or manner, right? So yeah, I think that's what led to where I am today with Connect BPS.
I think the BPO story has evolved quite a lot in the last two and a half decades. I think you are, I'm sure familiar with this, but a lot of people don't know that the first ever phone call made from offshore into the U.S. was not a technical help desk call. It was not a customer service call. It was a debt collection call, right?
Adam Parks (03:23)
I did not know that.
Saket Sahoo (03:40)
So the debt collection, the offshoring of BPO or the, you know, of the collection space is, you know, older than any other type of service, right? And I think I wasn't really part of that journey in the very beginning, but a lot of people who I've spoken to have, you know, given me that perspective of, you know, what it meant from an offshoring perspective then, or from a BPO perspective then.
And then having done it myself in several geographical locations around the world in US, Canada, UK, Australia, India, Philippines, Columbia, Costa Rica, Jamaica, South Africa. I think probably Antarctica is the only continent that I've not been on that I haven't opened a call center in. Right.
Adam Parks (04:21)
Fair.
Saket Sahoo (04:24)
I guess we could get the penguins to start collecting. But no, I mean, think this is, you know, it's a global thing, right? And people don't realize that globally, I mean, the way I sort of looked at, you know, the Connect BPS value proposition, right? Why I got into it. Why when I started my own venture, I thought it would be what it is today. And so if you look at the global market, which is a little over $300 billion in revenue, from a BPO perspective. And I think that is expected to double by 2033. So that's expected to go over, let's say, $700 billion. Of that, I think today, after $300-something billion, finance and accounting, which is broadly under which collections is placed, is about $70 billion.
But only about 14, roughly $14 billion is the US debt collections industry. So even that is a pretty sizable chunk, right? And so in that space, you know, we still have about 5,500 collections businesses that operate in the US, right? So there's a very big gap between the big guns, the big players, the medium ones, and the very small ones, right? And so for us, it was, when we founded the company in 2018, I think I went with one very simple principle that I'd learned, which is that talent and opportunity.
So opportunity is not equally distributed around the globe. Talent is. So you can't always, you know, you either bring the opportunity to the talent or you bring the talent to the opportunity. Right. And that's why a lot of, you know, businesses are global because you can't always bring the talent to the opportunity because of immigration and many other reasons, but you can always bring the opportunity to the talent.
Adam Parks (06:12)
Interesting and so true, you know, I've never considered it that way, Saket. So that's such a true statement, right? Like the talent is evenly distributed, but the opportunity is not. And when you can help bridge that gap, there are solutions to be had. And there's definitely some gaps that we're facing in the collections space right now. And one of the things I thought was interesting, I'd like to get your take on this.
As we were kind of planning for the call and talking, we're talking a little bit about the different types of debt collection organizations, right? Creditors, debt buyers, agencies, law firms, BPO services. And we were talking a little bit about their adoption of technology, of AI technology, and their adoption of BPO service use cases.
And it was my observation, and I didn't really think about it until you kind of started walking me through this, but the use cases for artificial intelligence deployment and the use cases for those same types of organizations from a BPO perspective seem to match up. The law firms are looking at the more administrative services, they're looking at the more administrative technology, the agencies are looking for communications, they're looking in both channels for it.
Have you thought about like, have you come across this before? Do you think that that's going to be a continuing trend as we look at the problems that those US organizations are trying to solve through either the use of technology or BPO services?
Saket Sahoo (07:34)
Yeah. And I think, you know, I continue to keep thinking about where we are headed with AI and AI adoption. There are a lot of very compelling cases, you know, in terms of AI deployment. And I think in order to understand where we are headed, I think it's important to understand where we have come from, right? Where have we been before and why this whole thing started? I think.
So very clear demarcation, I think, in the past few decades, where labor arbitrage and cost would be the main concern. So our industry is a very unique industry because we operate under very heavy regulatory as well as economic pressure. So that means we operate with very, very thin margins. think for most industries, they don't even comprehend how we make money. And I think there's money to be made.
I think one of the challenges we face is, you know, we always try to throw cost solutions and cost solutions often end up being, you know, looking for labor arbitrage, whether it's, you know, domestically or internationally, right? So that's being, that being sort of the, the underlying criteria.
If you look at sort of the, again, the global talent in terms of, you know, where a lot of development is being done on digital as well as on the AI front. You you've got companies, it doesn't matter now where the company is located. It doesn't matter whether they're in the Bay Area or they're in Bangalore, right? And I think, you you yourself, you know, spend some time in a space that is, I think, very ripe for AI adoption.
Adam Parks (08:55)
Sure.
Saket Sahoo (09:08)
So that's QA automation, right? So QA automation or the use of AI in QA, I think if I'm quoting correctly, ACA study was like a little over 70 % of the CCOs use AI today in the debt collection space, right? For QA, right? So QA is almost like a standard now to use some kind of automation or some kind of AI in QA processes, right?
So I think that can be used like an underlying use case for most companies, whether it's collection agencies, law firms. But yes, traditionally collection agencies will look at, you know, what is their biggest cost item, which is labor costs. And then, you know, throw a cost solution at it and say, okay, how can we make this cheaper? And then for the law firms, it's again, what do you least want to do? Right. I think it's also a question of what is the, if I have a problem, how far can I throw it, right?
And offshore is the farthest you can throw it. So if you've got a problem, which is usually administrative work, let's throw it offshore. Let's throw it as far as we can. So you look at the first few, you know, debt collection calls made out of, you know, companies that I don't think even exist today, like NCO, OSI, and all of these guys. They all took their, you know, lowest risk, highest impact portfolios and sent them offshore. Right.
So because I look at the business from a debt buyer lens as well as from a servicer lens, I don't look at collections simply as making a phone call. It's an operating model, right? And an operating model for collections requires you to have two things. It requires you to have an account, and it requires you to have an adept. You can own an account, but that doesn't guarantee collection. You can have the best collector, but that doesn't guarantee collection. So you need to have both.
And what they did is they took their least valuable accounts and through them to their least trained resources. I think where we are today, there's so much maturity that I think that training and that middle management experience that has been developed already offshore. So law firms are finding easy solutions to the problem of the administrative work because again, that can be done easily with a BPO.
And then BPOs have evolved significantly to understand the different contact channels and how to use contact channels to the best ability. And that's why collection companies are looking for that type of work with the BPO. So I guess what used to be a cost solution has now become a value solution. Where do you get the most value?
Adam Parks (11:35)
And I think people are still looking at the cost savings almost a little bit too much. And now the new shiny item for cost savings is that we're going to deploy these AI bots. And as I've been writing some research papers on artificial intelligence and the impact, it's become clear that the best use cases are the most impactful use cases that we've seen full studies done on to this point is those that empower the live agent, meaning it's those copilot type tools that are feeding the agent and making them a super agent.
And so when you think about what you have internally in the United States to conduct that and that that same skill set or tool set is transferable to that third party BPO partnership, I think is really that place where the intersection of the BPO services and the technology capabilities. All the BPO's I'm talking with these days are telling me about their technology stacks. They're all really starting to, I think, move more towards being technology providers in some way, shape or form.
But I see that copilot tool set as being kind of that, that real big opportunity for the future. Have you seen organizations that have deployed that successfully and seen the same results that I've seen in the studies?
Saket Sahoo (12:53)
Yeah, I mean, I think they're all looking at the same research, right? I mean, from an evolution of phone calls to digital channels to now AI, either full blown AI conversations or AI enabled conversations, but the idea is the same, right? I think what was the, was a TrueAccord study, which was 47 % or more prefer digital than I think 25 % millennials and 22 % Gen Z prefer push notifications through the app, right? And so as we are switching more from the traditional say banking to the more fintech world, that digital adoption becomes even more prevalent around the world. But to kind of go back to what you were saying, I think it doesn't matter which direction, whether it's the creditors or the debt buyers or the collection firms who are pushing down the digital or it's the BPO sometimes that are pushing up the digital because I think they're seeing that as a more stable long-term solution to retain their client base.
Either way, it's because sometimes the creditor's not sophisticated enough or the debt buyer is not sophisticated enough and the BPO has that sophistication or the capabilities sets already in production that they can bring to their clients.
So it doesn't matter which direction, but I think it's going to, you know, it's going to eventually get there. So, which is why the, you know, I'll go back to the statement that it is not a, you know, people or a technology or a process. It's an entire operating model, right? So how do you make the operating model better?
If you're just going to throw a bunch of emails and you're going to just throw a bunch of SMSs, you're just going to make, you know, uh, the fanciest AI bots available to your debtors, that's not going to get you the results you're looking for. So it still has to be strategy, meeting execution, but that strategy has to come from all of this available technology, all of the available people resources we have across the globe, and then all the compliance constraints that we have to operate under, right? And then the differentiator.
So, where I think the BPO industry is going to be is that you have the bigger BPO pairs, obviously, Connect BPS is not, it's not there yet and it's never going to be. I don't think we're ever going to be the size of a Teleperformance or a Convergent or whatever. You know, we're never going to have like hundreds of thousands of people around the globe. Right.
What we want to do is we want to be very, very strategic and very focused on the boutique operations. And how do we elevate the operating model of our client? Right. And that is how do we take that strategy? And then bring in sort of laser focused execution to it. That's the differentiation, I think.
Adam Parks (15:38)
Yeah, I think between the very large organizations and I mean, big, big fish in a small pond, I think is what I always go back to. like working in that boutique styling. Now, location, location, location, right? It's it's the rule of real estate. And obviously, it's a big part of the BPO. And you've you've kind of worked in all these different areas. What drew you to your current locations?
What were your of your factors that kind of drove you towards the locations that you've ultimately decided for the current?
Saket Sahoo (16:04)
So I think we, again, I'll go back to my very first experience in the States exactly 20 years back. I was sitting in the office of a very well-traveled, very sophisticated, top-tier collection executive of the US. And his first statement to me, and I'd flown in from, at that time I was based in the UK, I'd flown in from the UK.
It's my first day in the office in the US and he asked me this question that should we go to India or should we just wait for the next flavor of the month?
And I was shocked. was like, you know what? I didn't expect that question. And so 20 years later, I think that question is still very relevant. Where do you want to go? Or you too will just wait for the next flavor of the month. So I think for me, the determination of what destinations to choose has been really again focused on where the talent is and what is the quality of talent that is available.
So not only is there the talent, but is that talent really even interested in doing this kind of a job? So for example, where I think majority of our delivery centers today are in South Africa with over 3,000 people currently that we employ there. If you look at the labor market statistics, so US, Canada, for example, we're hovering between 4.5 to 6.5 % unemployment in these two markets respectively. And if you look at the latest stats for South Africa, the unemployment rate is a little over 30%. Youth unemployment is even higher. So youth unemployment is a little over 50%. That's ages 18 to 35.
Adam Parks (17:40)
Wow.
Saket Sahoo (17:49)
So if you think about kind of what's the labor availability, right? That's number one. Number two, again, very strong base in financial services with South Africa. So it's almost as mature, almost maybe the same age in terms of maturity as India as an outsourcing destination. It's just that US didn't use it much. The UK and Australia used it a lot more. So South Africa's evolution or maturity of the financial services base is very, high. English speaking, obviously, 100 % of the population speaks in English.
You've traveled to India, right? I don't think you will find only one language being spoken in India. So as much as people think there's only, you know, yeah. So between 1.5 billion people, they don't speak the same language. But most of the most of the country is still connected by one language.
Adam Parks (18:27)
I don't think you'll find one language on any dinner table.
Saket Sahoo (18:39)
Which is English, right? So somewhat English is a language that will travel whether you're in Delhi, Bombay or Bangalore, right? So I think that is really helpful context to understand that South Africa is the same. There are 11 languages, but one common language across the country is English. So every all the education is in English. Everything is based in the English language. So that's a very strong foundation for us.
And then for obviously the fact of the distance, you have, you know a large Spanish speaking population in the US that we cater to. So we have a near shore operations in the Dominican Republic as well. ⁓ If you go back to where, again, I think the outsourcing industry got its biggest boosters because not only is business behind it, but also government is you know, supporting it, right?
So as an example, India BPO industry or IT enabled services industry got a 10 year tax break from the government. So you didn't have to pay income taxes on a BPO businesses for offshore services, right? Not the same in South Africa, but there is a lot of government push to grow because of the unemployment situation, right? They want to grow the offshore industry. So in the last six years since we started the company in South Africa, you know, the overall growth has been about 150,000 seats in South Africa. And it's expected to be around half a million seats in South Africa by early 2030s. So when you have so much potential, think that's, you want to be where the growth is going to be over the next five, six, 10 years. So that's how. That's how I got to where I got.
Adam Parks (20:17)
So you've chosen some locations in South Africa, I think is specifically an interesting one considering the proposed rulemaking from the FTC related to accent. How do you think that might have an I know we don't know a lot about it yet. There's no rule for us to read yet. So like we're still speculating a little on the early side. But how do you think having the facilities in South Africa versus India or other locations would play out if that were ever to become a rule?
Saket Sahoo (20:46)
Yeah, so, you know, I still think, and this is, you know, this is the main consistent over decades. The most acceptable or the most pleasing accent for anybody to hear on the phone is a British accent. And for that very reason, I think South Africa has been dominant in the you know, the outsourcing space for the UK because their accents are very similar. They're not the same, right?
Like I think me being ignorant, I thought like that when I was, you know, before my first trip eight years ago. But now that I've spent some time there and, know, also, you know, if you compare it to the Australian accent, New Zealand accent, the South African accent is a little bit different. But the accent actually is quite similar to the UK and is actually quite unique.
And we find that a majority of our interactions have been where, you know, customer has actually stayed on the phone wanting to find out what that accent is. You know, they just hear the accent and they want to keep hearing it for a little bit longer. And then by that time they've already, you know, verified themselves. They've acknowledged the debt, but it's not just about the accent. I think accent is one thing that triggers in our, in our mind, some preconceived notions, right?
But also I think Accent, one of the things that it relates to in terms of customer experience is empathy. So one of the biggest challenges we face with, even if you use very fine accents and you use Accent Utilization technology is that you cannot train empathy, right? Empathy is something that has to be, it has to be inherent, has to be cultural, it has to be something that's developed over generations. And so, if I compare, so for example, if you don't mind, I'll dive into a little small story.
If you've heard of the 26-11 terrorist incident or terror incident in India, in Mumbai, where a very large five-star hotel, think a seven-star hotel, was under siege for three days. They were roughly 100 guests and 500 staff in that hotel throughout that period when the hotel was in siege, right? And these are 100 guests, basically the terrorists targeted US, UK passport holders to hold them as hostage inside that hotel. Everybody else was allowed to go.
Adam Parks (22:39)
Yeah, the Taj.
Saket Sahoo (23:00)
And the 500 staff was in there. if you know, obviously, the Indian hospitality is such that they'll always have more staff than guests in these hotels. So at the end of that incident, a news reporter asked one of the staff members, and they said, these 100 guests that were in there, it's probably their first time in the hotel. They only know the way they came in and they left.
But you've been in this hotel for so long, there are six exits out of this hotel. Why did none of the 500 staff leave?
And you know the answer they gave him. Who would have taken care of the guests?
That is not something you can train in even the best hospitality management schools in the world. You can become the best chef and go to the best hospitality, but that is not a trait that you can train. That is cultural, that comes from the experience of your guest is your God sort of thing.
And so similarly, empathy is something that I think, again, we find in South Africa is something that's a very cultural, cuts across all layers of society and all socioeconomic strata, where I think that sort of empathy and the tone, the communication, the language is very unique. And even though it's a British accent or a somewhat British accent, and you could mirror something like an Australian or a New Zealand accent, but you cannot mirror that empathy anywhere in the world. So that's something that I think is what if proper law, rulemaking lawmakers really understand that that's really what is required. I think we'll come out ahead what the law be.
Adam Parks (24:34)
I think it goes back to what you said originally about the the talent and the opportunity, right? That talent, that empathy, that culture is something that's present in certain areas around the globe. And those are the operative, you can bring the opportunities to those areas. A lot can be said for that. And I'll tell you what Saket everybody who I know in the BPO service has a Saket story about something that they learned from a conversation with you.
And this podcast, I think is that takeaway for me. It's that idea of the opportunity and the talent and its distribution across the globe. That's what I'm gonna take home from this conversation today. And I really, really appreciate you taking some time coming on, sharing your insights. This has been a great episode.
Saket Sahoo (25:09)
Thank you so much, Adam. And again, I will look forward to the next time you invite me, but I assure you that there's so much more that we haven't really even explored. There's so much that we're going to learn about ourselves, about our industry, and as AI develops, how does that change our way of looking at our business completely?
And I really hope that…I'm a very positive minded person. I think very optimistically and I believe the future is going to be very, very bright. And so I'm looking forward to a lot more of these interactions in the future.
Adam Parks (25:54)
Well, I look forward to having you back on again. For those of you that are watching, if you have additional questions you'd like to ask Saket or myself, you can leave those in the comments on LinkedIn and YouTube and we'll be responding to those. Or if you have additional topics you'd like to see us discuss and I can think of at least a few, you can leave those in the comments below as well and hopefully I'll get Saket back here at least one more time to help me continue to create great content for a great industry. But until next time, Saket, I really do appreciate all of your insights.
Saket Sahoo (26:21)
Thanks. Thanks.
Adam Parks (26:21)
And thank you, everybody, for watching. appreciate your time and attention. We'll see y'all again soon.
