i.t. matters
Monday April 10, 2006 | MANILA, PHILIPPINES
News
... after TeleTech acquisition
Philippine-based FinSource, Inc., the first financial back-office provider bought by Nasdaq-listed TeleTech Holdings, Inc., is set to foray into the leading English-speaking markets.
Mohan Kulkarni, FinSource President and Chief Executive, told BusinessWorld in an interview that the combined value of these three markets is about $5 billion per year, in which his company is targeting to get at least 3% in share.
Mr. Kulkarni added that the company is likewise looking at extending its services offer to Singapore and Malaysia, capitalizing on the cost advantage of maintaining an operation from the Philippines.
"Today, I can practically go to any market in the world. And there will be [a] TeleTech [satellite office] and we can always get their assistance," Mr. Kulkarni said.
For all its venture overseas, he said there is no need for FinSource to set up an independent office as it plans to just leverage on the facilities and resources of TeleTech.
Research firm Gartner estimated the worldwide backroom requirements of banks at $7 billion.
"But if you add general insurance and accounting, including the end-to-end processing from pre-screening of loans [credit investigation] to the actual management of account payables and collectibles the value could reach $25 billion yearly," Mr. Kulkarni said.
Even before the TeleTech acquisition, which was completed in November last year, Mr. Kulkarni said FinSource was already keen on betting into the foreign market to expand its client base.
"We were looking around for a strategic partner. TeleTech noticed us, which was at that time was also looking for one to grow its knowledge-based services on top of its voice [call center] offer," he said.
The talks between FinSource and TeleTech, initially centered on the strategic partnership, started in April last year and went on for six months.
"And half-way, TeleTech headquarters in Denver said we are not interested on becoming your strategic partner but in becoming your owner. And after lots of haggling, we came to a price [which he refused to disclose]," Mr. Kulkarni said.
When TeleTech bought FinSource, it was a company with a workforce of 110 people, an increase from six people when it was incorporated in April 2004.
"And this [the acquisition] makes sense because we [FinSource founders] are basically individuals not institutional investors. We grew to 110 people and the ongoing expenses sart mounting up. We reached this certain level of growth but we want to grow further and go to the next level which is international client," he said.
While FinSource was eyeing the international market, TeleTech was interested in digging into the local market.
"TeleTech has enough foreign clients, they needed the expertise in finance and the domestic market as well," Kulkarni said.
He described the local market as totally "untapped" as most banks here oftentimes don't know the true cost of keeping its backroom operation.
"When you ask a bank the cost of maintaining a customer service agent, its usual answer is P15,000 monthly for the salary. But this is not fully-loaded cost because your agent has occupied space, electricity water, technical support and other benefits. You add these up and that P15,000 goes to P80,000," Mr. Kulkarni said.
As a company, FinSource guarantees as much as 30% reduction in total operating expenses of the bank's entire outsourced services.
Mr. Kulkarni, himself, was a fixture in the local banking industry in the 80s and the 90s. He held key positions in Citibank, HSBC and Solid Bank before it was acquired by Metro Bank. When he was in Citibank, he launched the country's first credit card in July 1990.
From its old office inside the Dolmar Gold Towers in Makati City, FinSource is now operating inside TeleTech's 7,000-square meter and single-floor building at the Bay City in Pasay City. -- Maricel E. Estavillo
http://www.itmatters.com.ph/news.php?id=041006a
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