- 7 weeks ago
As global firms move from labour-led outsourcing to intelligence-driven operations, digital-first Business Process Services (BPS) are becoming a key competitive edge.
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00:00Hello and welcome to Niaga Spotlight with me, Tamina Kaosji.
00:12Niaga Spotlight takes us through the week in economic analysis and future affairs.
00:16Now, today on Analysis, our spotlight is on Digital First Business Process Services, or BPS, in ASEAN,
00:23and the future of intelligent operations.
00:26Now, Malaysia's services economy is undergoing a quiet but important shift.
00:32Global companies are no longer just looking for efficient labour.
00:36They are looking for partners who can deliver intelligence, automation, as well as measurable outcomes.
00:43Now, that is the direction the business process services sector is taking across ASEAN,
00:48particularly as the region's digital economy accelerates towards the trillion-dollar mark by 2030.
00:57Now, Malaysia sits in a strategic position here, consistently ranked amongst the world's most attractive destinations for global services
01:05because of our talent base, infrastructure, and multilingual advantage.
01:10But staying ahead now depends on how quickly firms modernize their operating models.
01:16Today, we will be exploring how digital-first business process services are reshaping competitiveness,
01:24how exactly automation and data intelligence are driving new value,
01:29and what all of this means for Malaysia's ambition to move further up the regional value chain.
01:35And, of course, we speak to a Malaysian company that has been recognized regionally
01:41for showing what this transition can look like in practice.
01:45Welcoming to the studio is now Raymond Davadas, CEO and founder of Day3.
01:49Raymond, a very good morning. How are you doing today?
01:52Very good morning. Thanks for having me, Tabina.
01:54Fantastic.
01:54So, Raymond, let's get started off with perhaps anchoring us in where we're coming from on this angle for the conversation today.
02:04Moving from BPO to digital-first BPS.
02:08Let's talk about Malaysia and the fact that we're still ranked in the global top three locations for services.
02:15Offshoring, as well as relying largely on the fact that we are really cost-efficient and situating Day3 within this entire ecosystem.
02:25I think you hit the nail right on the head. You talked about cost-efficient.
02:29You know, if you look at the traditional BPO, you know, and how it was, how it came about.
02:34It was built on the premise that two things.
02:38Organizations were looking at scalability.
02:39They were looking at locations where you could actually scale up in terms of number of people that could deliver your services.
02:46And number two, it was also looking for cost arbitrage.
02:50Looking for places where labor cost was much lower, significantly lower from where they originally operated.
02:55Exactly.
02:56And for Malaysia, I think over the last 20 years also, we've built also a different niche in the sense that we are today delivering services in 53 different languages and dialects.
03:06That is quite the, I would say, a global edge, not just the regional edge, right?
03:11Malaysia, 53 languages, right?
03:13Indeed. So it's become a global multilingual hub.
03:17And we have grown.
03:18And, you know, over the last 20 years, we have benefited from that.
03:21We have seen a lot of shared services and outsourcing organizations setting foot in Malaysia 20 years ago and have grown.
03:28And today we have about close to 750 organizations in the BPS space operating in Malaysia.
03:35But that model has to change.
03:40And it's rapidly shifted, hasn't it, Raymond?
03:42Absolutely.
03:43And something which actually, correct me if I'm wrong, but it really started transition-wise during the 2020 pandemic and lockdown eras, which required us to catch up with speed.
03:55So where are we now, five years later?
03:57Absolutely right.
03:58Post-COVID, things have changed.
04:01The dynamics of BPS has totally changed.
04:03Today we live in a world where speed is of the essence.
04:08Things have become more complex with the proliferation of data.
04:13And customers' expectations as a result, especially with the new generation coming and coming into the workforce,
04:19making it even more difficult for us or more complex for us to deliver these services.
04:24So today we move from what was a traditional BPO to what you call it now as digital GBS.
04:31Yes.
04:31And what are the clear separating parameters between the traditional BPO and this digital first BPS?
04:40That is all the talk now.
04:41So as I was saying earlier, traditional BPO looked at scalability, looked at costs and labour arbitrage.
04:49But today, in the era of digital GBS, we are looking, the whole premise of building a digital GBS centre is grounded on data,
04:58the amount of data you have, how you manage that data, is grounded on automation.
05:03And of course, what every man speaks at every street corner today, AI, seems to be a conversation everywhere.
05:10Constant buzzword, right?
05:11Constant buzzword.
05:12And sometimes can be fearful as well.
05:16And here I am, hopefully, to be able to demystify a little bit in terms of what it really means to the real world
05:22and what it really means to real organisations like us in the BPS space.
05:26Absolutely. So speaking of that, now let's talk about the fact that Day 3 has also, of course, been recognised for your contributions in the sector.
05:35You've just taken home major regional GBS awards, including the overall GBS corporate achievement at the GBS ASEAN Awards.
05:42Now, looking past these trophies and looking into closer look at the numbers then,
05:48what types of changes in automation and AI use allowed you to have this vantage point that you stood out from the rest of the pack?
05:58Let's get deeper now.
05:59So I think the awards is a testament to what we do.
06:01And I always say sometimes it's the hardest bit is to get some form of testimony from peers in the industry.
06:10We've done that really, really well in the sense that we have grown our own products and our own services.
06:16So Day 3 has taken perhaps a hybrid model to how we have been operating.
06:24I always look into this to perhaps either leasing a car or buying a car versus owning the plant.
06:30Right. Fair enough. Brilliant analogy.
06:32So, you know, and some organisations choose to just rent a car or build on applications that are available, that are readily available.
06:40And we do that. We build a huge partner ecosystem to be able to deliver the kind of services that we want to deliver to our clients.
06:46But more importantly, we have also decided to look at certain key areas where we want to embed technology in key workflows that we want to be good at.
06:57And in that score, we have, you know, most of our awards that we have won has been in the area of automation, technology.
07:04More importantly, how we embed technology into our service provisions, into our workflows.
07:12And in that, we have developed four proprietary tools in DAISY, Kaira, SAGE, and FAITH.
07:19If you notice, all four of them have got the word AI in between, stands for, you know, embedding AI into the processes, into the workflow.
07:29And that's our DNA. And that's what we hope to achieve.
07:32And of course, the real litmus test would then be scalability, seeing how you can apply lessons from one client across industries as well as markets.
07:44If you could tell us a little bit more about that, because, of course, every client requires a customized approach to how they are able to enable AI within their systems.
07:57Right. And that's where we take that approach that there are certain core technologies that we want to build, that we want to own, because ownership means control.
08:06Ownership means being able to deliver based on the complexities of the industry that we work in.
08:12We work in a broad-based industry, be it in energy and utilities, in telco, in e-commerce, in retail, and many other industries.
08:21And we bring the best of the practices that are all in these different industries into one common platform and be able to deliver it in different ways and different forms to different clients.
08:34Exactly.
08:34And I think most importantly, as we decide on taking this approach, is that we deal with a lot of clients who have legacy systems.
08:45And that means integration of AI or any form of technology with legacy systems becomes an issue.
08:53And that's where we have decided that in some key areas, we want to own the plant.
08:57We don't want to lease the vehicle.
08:58And it makes sense for us and it makes sense for our client to be able to take them through this journey.
09:05This life cycle and ecosystem.
09:07So I think that segues us perfectly into a big question, which is what does maybe a realistic, let's say a three-year transition plan look like for larger organizations in Malaysia, Raymond,
09:21that want to move from labor-led to an intelligence-led operation.
09:26I'm sure you've come across relevant examples with different industries as well.
09:32I like the fact that you asked, you said there were three years.
09:36Yes, let's be rational and let's also work within timeframes, right?
09:41Yeah, but more importantly, it denotes the fact that it's a journey.
09:44You can't expect it to happen within six months.
09:47It's not a switch, it's not a magic wand.
09:49And everyone seems to think today that AI is a magic wand, it's a switch that you turn on, there are large language models for open AI available before I bring it into my organization and get it running and it works.
10:02More and more use cases today, even within large organizations, they're beginning to realize that a lot of their use cases, their POCs, never see the light of day, right?
10:11And we're beginning to see that.
10:13And why is that not happening?
10:15The main reason is, as you say, it's a journey.
10:17It involves, I won't say it in three years, but let me rephrase that and say in three phases.
10:23Okay, three phases.
10:24And what would those three phases be?
10:26The first phase would be, I think, the hardest thing when it comes to change is always the acknowledgement.
10:32The fact that your competitors may be ahead of the game, ahead of the curve.
10:37The competitors are already on that journey towards AI and you are not.
10:41And if you don't do that, you'll be displaced.
10:43I think that is the first phase.
10:45And many organizations, especially in Malaysia, many of them in ASEAN, are beginning to realize that there was a point of resistance.
10:54But now, you know, and especially post-COVID, people realize that, look, we need to invest.
10:59And where does the investment go?
11:01First one, first phase is in the phase of readiness, investing in readiness.
11:04First, there's a huge amount of data in many organizations, some sitting on top of the pile, some sitting at the bottom of the pile.
11:12Right.
11:12And you don't even realize that you even have this data.
11:16Two is knowledge base.
11:17The knowledge base in an organization, you know, especially with legacy organizations over 20 years, it gets written and rewritten all over again.
11:24And most people think that by dumping most of this knowledge base into any particular LLM, that you would get an answer.
11:31A transformative custom answer.
11:33That's not how it works, though.
11:34It doesn't work.
11:35And that's where this whole terminology becomes that your AI hallucinates because you've got multiple contradicting information fed into the bot.
11:44And so that's the first phase, investing in getting that readiness, making sure that you have the right data sets available, identifying what are the areas that you want to roadmap.
11:59Sorry, put it in a roadmap in terms of what I call an automation pipeline.
12:05Right.
12:05Right.
12:06Yeah.
12:06Your little blueprint, which is for you and your company.
12:09And before you go into phase two, which is basically, you know, getting your POCs done, you know, you will not see the immediate value.
12:17But I think the POCs done correctly with process and workflow design, you know, takes you to the first step.
12:25And ultimately, the third phase, I call it, is where you really see the difference, where you begin to, you know, extrapolate what you do and then also be able to measure your success.
12:37Understood.
12:37Raymond, thank you for the conversation so far on, of course, business process services.
12:42We take a quick break.
12:43Don't go anywhere.
12:43We'll be right back with the rest of this conversation on Niagara Spotlight.
12:46Welcome back to Niagara Spotlight, still with me, Tamina Kausji.
13:08And today, of course, the focus is a conversation on AI and automation and also business process services with Raymond Davidas of Day3 right here in the studios with me.
13:18Raymond, so continuing the conversation and looking at a workforce in an AI-first world, I just think you are the perfect person to be able to articulate this better.
13:28But now Day3 employs roughly around 2,000 people while being known for AI and automation driven services.
13:36Let's talk about that and also redesigning roles on the ground so that there is also a constant workflow and a need for skilled human labour who is working in this highly specialised and ever evolving arena.
13:51I think the first question I always get asked is, and it's always the elephant in the room, will I get displaced by a bot?
14:00Well, and this reminds me, you know, always reminds me of the story of my dad walking home every evening with a huge ledger book, a backus in one hand and a huge mechanical calculator in the other hand, and then doing his work on the calculator and then reaffirming whether the numbers are right using the backus, right?
14:22And it always gets me thinking about what was in his mind and what was people in his generation, what were they thinking about with the advent of Lotus 1-2-3, if you have heard of it, you know, D-Base and then Excel Now.
14:36And I think, you know, for me it was, I think it was, he was in civil service that allowed automation at that point of that age, allowed him to spend more time interacting with the public, perhaps spent more time being able to build a rapport with his staff.
14:53So I think the most important thing that I like to say is with all these changes, the task is definitely going to be eliminated by AI and by bots.
15:04But it doesn't mean that it's going to deprive you of trying to earn a living.
15:11And therefore, what I say is that, and I say this to my people openly, that you need to elevate yourselves, right, to the task at hand.
15:22And what does that mean for us?
15:24And very often that, you know, as an organization, as we try to automate, as we try to embed technology in our workflows, the biggest stumbling block is often the employees who are afraid that they're going to be displaced.
15:38So it's counterproductive to what you want to do.
15:39Exactly. So you also have to have that assurance of specific skill sets as well as KPIs that have to integrate this brand new emerging side of upskilling at work, right?
15:54So there's two important things to it.
15:56One is making them understand that they're going to be displaced, not in the immediate future at least.
16:01Number two is to help them elevate themselves, telling them that, look, you know, that what we are trying to do is remove the mundane work, remove the repetitive work, remove the work that you really don't want to do.
16:17But what is more value, the one that requires judgment, the ones, the works that require relationship building, the ones that require you to display empathy.
16:28Well, that's the first part of having to redefine their roles and jobs.
16:33The higher value work, which basically only humans can do.
16:37And ultimately it comes to the point of getting them to embrace technology.
16:42And this is what we do at Day 3.
16:43We have, for example, a program that every assistant manager doesn't get promoted to an assistant manager unless he does a bit of, gets a certification in process automation.
16:54Right.
16:55Which means that he's exposed to coding or low coding or no coding.
16:58But that's helpful in his work.
17:00But I think this is what we need to do.
17:01We need to elevate and we need to help them understand that what we're trying to do with automation and technology today is to improve their quality of work.
17:10Exactly. So when it comes to a long-term talent pipeline, Raymond, which is also, of course, another perennial question in Malaysia when it comes to industries,
17:19what do young Malaysians have to look forward to from your vantage point in the BPS sector?
17:26I think it's huge.
17:27Let me just give you some statistics.
17:31The GBS industry is huge for Malaysia and ASEAN.
17:34The market size is about 28.1 billion ringgits, which is about 6.8 billion US dollars, right?
17:47They are growing at a compounded annual growth rate of about 6.3%.
17:51Incredible. Yeah. Very, very healthy.
17:55We have 750 BPS companies in Malaysia, 61% surge since 2021, post-COVID, going back to your first question.
18:07Absolutely.
18:09Investments have grown 13.5 times, one, three, from what used to be about slightly lesser than a billion ringgit to now close to 9.87 billion ringgit just for 2024.
18:24So there's huge opportunity for Malaysia and for ASEAN to grow in that space.
18:32And what does, you know, it boils down back to the fact that with automation, with technology, it means you're able to do more with less.
18:42What it means for businesses today is that your margins would improve, your cost to serve would drop, your time to serve would drop,
18:50your customer experience scores would go up, number one.
18:56And number two is also, it's also an opportunity for organisations to develop new revenue streams.
19:03Those who are providing financial and accounting services, be it order to cash, procure to pay, or even records to reports,
19:11are now moving away from the traditional transactional work to providing business insights and data analytics as a service.
19:18Those in the space of customer management are moving away from the traditional voice business to non-voice business to now to content moderation and trust and safety.
19:30And even now people are talking about data annotation, which fuels AI as a service, data annotation as a service.
19:36So there's tremendous opportunity, not just for Malaysia, but for ASEAN to grow in that space.
19:41And what it means for all of us in the workforce is that there's tremendous opportunity to learn and to build a career in those spaces through embracing this technology and this change, this period of change.
19:55The talent pipeline should really also begin right now with partnerships perhaps, even internal academies amongst, as you mentioned, 750 or close to 1,000 BPS companies across Malaysia.
20:07And the government is also doing that as we look at the roadmap for bringing us as a nation to 2020 towards an AI nation, AI developed nation.
20:16If you look at that roadmap, 2026 is going to be a very critical year for us.
20:22Perhaps the year of, as I said, acknowledgement and putting in your investments on ground to get ourselves ready.
20:30But if you look at that roadmap, it's very clear that talent regeneration is a key focus.
20:37When I say talent regeneration, I mean upskilling and I mean reskilling our people to be able to embrace the technology.
20:46And also adapt to shifts within your own job scope very quickly.
20:49So seamlessly speaking, now let's move on into public markets, profitability, and also the fact that Day3 also recently listed on Bursa Malaysia's ACE market in 2023.
21:00So let's talk about, you know, the also emerging risk of AI washing and how Day3, of course, definitely manages this aspect, being very conscious of AI automation and also the applicability for your workforce.
21:16Yeah, I mean, firstly, being a public district entity, you cannot hide behind a narrative anymore.
21:22Our numbers are open in the public.
21:24But I think, you know, when we talk about moving towards this so-called AI world, what is important at every step of the way is to look at whether organizations today are embedding technology into the core of their work,
21:41into the operating models, was vis-a-vis just adopting technologies that are available out there.
21:48Right.
21:48And you speak about AI washing, it's the same with green washing.
21:52Exactly.
21:52Right.
21:54And I think investors today need to be more discerning and looking at the organization, whether it's just a narrative that they put out there, just adopting technologies,
22:03or whether they are embedding technology into the core of their operations.
22:07And this is what we try to do with data, as I was mentioning earlier, you know, with bringing in, developing our own tools, whether it's through our four different tools that we have.
22:14And I think investors are savvy today, you know.
22:19Increasingly so.
22:20Increasingly savvy, you know.
22:21No doubt investors want quick returns.
22:25Quarterly numbers is always a pleasure.
22:26For me, it's always finding a balance between my quarterly numbers and also having to invest on a quarterly basis to make sure that the business survives over a longer period of time.
22:35So, strategically, we need to look from that context as well.
22:39Yeah.
22:40So, speaking of strategy, Raymond, let's finish out the arc of the conversation by looking at, of course, Malaysia as a high-value digital GBS hub and what needs to really change very quickly, indeed,
22:53so that we can be assured of staying ahead of regional rivals who are also upscaling, upscaling at speed.
22:59So, you mentioned the Kearney report.
23:01Yeah.
23:01You know, I think all of us gloat about it and you say we are top three.
23:05And, in fact, we've been top three for the last 20 years, if I'm not mistaken.
23:09But I think it's interesting when you are at the top of the pile not to be, not to take it for granted that you are top three.
23:16No complacency.
23:17No complacency.
23:18But I think, importantly, as you are at the top, it's very important to look at what is happening at the bottom.
23:22And if you look at the last two to three years, the same, very same report that you referred to.
23:26Right.
23:27You are seeing countries like Singapore, like Canada, like Hungary, like Morocco.
23:34You wouldn't have thought I would mention some of these names of some of these countries.
23:38But they are moving up the ranks, 24 spots, 18 spots, very quickly.
23:42Leapfrogging, really.
23:43Leapfrogging, right?
23:44Catching up very quickly.
23:45And then if you begin to look at what are they doing differently, there's a lot of money investment going into digital skills.
23:54There's a lot of money going into education.
23:57There's a lot of money going into re-skilling and up-skilling.
24:00And, of course, you know, the conduciveness of the location as a business service center itself.
24:06But these are things that are getting these countries up the ranking very quickly.
24:15And I think it's important for us as well as a nation.
24:19And, again, I mentioned about the roadmap.
24:20I think we've got the roadmap crafted out really well.
24:25But as they say, the proof of the pudding…
24:26Operationalizing it, right?
24:28Yeah.
24:28The proof of the pudding is the eating, right?
24:30And how do you operationalize it?
24:32And I think there are a few areas.
24:33I think the report has very clearly identified five or six different pillars.
24:37But I think there are two very important pillars for us at this stage.
24:40Number one is obviously to look at the talent regeneration, which is how do we up-skill, how do we re-skill our people,
24:48how do we get our people to be comfortable, more than comfortable, in embracing this technology, this new way of work.
24:54Second nature for work.
24:55Second nature for work.
24:56As I mentioned earlier, we're getting all our peoples certified and upgraded so that they don't feel alienated by the fact that
25:03there's some amount of coding or minimal coding that you can do, even if you're not a programmer, right?
25:08I think that's very, very important.
25:10Obviously, that also means redesigning your workflows and how you work and your operating model.
25:16And I think the second part, you know, for a country like us, what is going to be very important is to have data governance.
25:26There's strong and clear rules that determine data quality, that determine data access, that fosters cross-border enablement of sharing of data.
25:41And also in the spec as well, the ethical use of AI becomes very, very crucial.
25:48So all of these taken together, if we're able to address this soon enough, maybe 2026 is looking better than ever.
25:55Raymond, thank you for the conversation so far. It's been a pleasure.
25:57Thank you. Thank you, Tamina.
25:59Now, so in conclusion, digital-first models, stronger data discipline and also higher value talent pathways are no longer optional for Malaysia.
26:06They're how firms stay competitive.
26:08The companies that embrace this shift early will define Malaysia's next chapter in the regional digital economy, especially come 2026.
26:15That's all we have time for today. I'm Tamina Khosji signing off for now.
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