Butch Valenzuela – Inception of Visaya KPO

Hi, and welcome to another episode of the Outsource Accelerator Podcast. My name is Derek Gallimore, and this is Episode No. 195. So today I’m talking to Butch Valenzuela of Visaya KPO. So Visaya is a BPO in the big ring of town. We dive deeper into what they offer and the processes. And it gives you some insight into how BPO and outsourcing changes with the big ring in town, with the bigger clients, and the bigger contracts.

So really interesting conversation. I previously interviewed Butch in Episode 190. If you want to go back and listen to his backstory, and his journey through his own corporate experience in America, it’s an interesting one. So Visaya KPO is really an interesting BPO not only because it actually has a 350-seat right out in the provinces and this really made headlines worldwide. So Butch shares us his experience and insights on that facility. Really interesting conversation. So, I enjoyed it.

This episode is quite longer but stick with it because it’s an interesting one. So, if you want any of the show notes and if you want to get in touch with Butch, then go to outsourceaccelerator.com/195.

Hi, and welcome back everybody. Today, I’m joined by Butch Valenzuela. Butch is the founder and President of Visaya KPO.

Hi, Butch. How are you?

Butch: Good afternoon, how are you Derek?

Derek: Fantastic. Fantastic, and thank you for your time. So just a brief recap. You are a proud Filipino but went to the US for 30 years, for lot of the formative part of your career. Worked in Fortune 200 company and returned to the Philippines, seeing the opportunity in outsourcing back in 2006, 2007. And now, you have a leading BPO in the call center and medical transcription sector. So, thank you so much for joining us.

We have had you previously but today, I just want to really deep dive into your services as a KPO, exactly what a KPO is even. And, the difference maybe between BPOs that are now maybe more focus on SMEs compared to a BPO such as yours, which is into the bigger corporate clients. So, thank you so much for joining us. I supposed initially, do you want to just give us a brief overview of your background?

Butch: Sure. Let me correct you in two things, Derek.

Derek: Please do.

Butch: One is yes, I was the founder, but my son will actually not be happy, let us actually call him as a co-founder of the corporation. So, both of us actually, we are a father and son tandem that has actually started this business. He actually runs the operational side of the house. So, I’m pretty proud of him as well. The other part is we do not do transcription. We are more in the medical billing and coding space…

Derek: Right.

Butch: … for the healthcare. But Visaya basically is really into four industry segments. We have the contact center service delivery. We have healthcare information management, finance and accounting outsourcing as well as we do IT consulting work. And those four segments, we do believe are the industries that would help catapult us to the next level. We are an 11 year old company. We started out with about 14 people and today have grown to about 850 people, but still growing. Hopefully we will be breaching the thousand FTE level in about a month as well as we have three geographic locations. We are in Makati, this is where we really started, but we have a Dumaguete office today. And we will also be having a Bacolod office that will be opening up first quarter of the year and we’re building about a thousand, 1200 seats over there.

Derek: Wow. That’s a huge facility. And, well done. Well done. So, I suppose initially you have taken the position to have a Makati, Manila, that’s obviously the sort of the central position for most BPOs, but you’ve gone to Visaya and you’re building another facility in the provinces with 1200 staff. How do you weigh up the differences, the pros and cons of a metro based BPO versus a provincial based BPO?

Butch: I guess there are a few things that actually occur in the provinces that don’t work normally. Well that is as predominant, I guess. I don’t know whether predominant is the right word for it, but in the provinces rather than in the metro. And one of those things would be attrition rates. We also have a facility in the town of Tanjay. We are part of or we are an accredited partner of Accenture, so we have a project called rural BPO that we started about five years ago in the town of Tanjay. It’s in the middle of nowhere. And it’s been written up in many different international media magazines and newspapers as well as on TV. I guess maybe…

Derek: Because it’s a huge initiative to get jobs out there, isn’t it? Into the provinces. And I suppose as well as you’ve seen, you’ve seen a lot of public support, a lot of government support maybe from doing them.

Butch: I’m certainly going into the outline. There was a move to go into the next wave cities. We’re taking it two steps farther wherein we put it into a town that really is primarily only agricultural…

Derek: Wow.

Butch: …and fishing.

Derek: Wow.

Derek: And how big is that facility? What sort of numbers are you needing to find them? Groom and manage?

Butch: We have about 350 seats there. At any given time, we have about a 400 FTEs that was working there.

Derek: And what sort of roles are they typically doing? Is it sort of voice based customer service or sort of, what are they doing? What do you find that is best?

Butch: Primarily voice based for the US healthcare industry.

Derek: So again, that’s pretty incredible. You are finding quality language out there in the province? Which again, I’m aware of what’s happening, but people should realize that is a pretty significant, an incredible quality of a developing nation, right there in the provinces to have sort of high English proficiency right out there in the provinces?

Butch: And that would be true here. I mean we have been very happy with the quality of the people that we have there. When you think about it, when you talked about Visayans, Cebuanos, Ilonggos or people from those provinces, it’s very interesting because when they talk to my people, to the people here in Manila, not in the office but outside of the office when you’re just strolling along, or perhaps wanting to just talk to the agents outside of the office. You could be asking a question in English and chances are you, because they do know that I can speak Tagalog, the response would be in Tagalog. In the provinces, you might talk to them in Tagalog, but the response actually comes back in English.

Derek: Yes.

Butch: Because Tagalog is not something that they would be comfortable.

Derek: And I think in some of the provinces, correct me if I’m wrong, but some of the other provinces, there’s so many dialects that are actually English is really the only kind of standardized means of communicating, is that right? And as a result, like English is pretty strong in some of the more provincial locations because of that reason.

Butch: That would be true. I mean, that’s not a generalization by any means, but if people actually go through and either finished college, either finish high school as a matter of fact or college chances are that the proficiency of English is that much better in my opinion.

Derek: And so, in that regional town, you, would you be one of the primary employers there then?

Butch: We are actually the largest employer in the town, outside of the local government.

Derek: Incredible. And then obviously, without sort of being too deep at looking at this too commercially, but, so there’s significant cost advantage there is there for clients, for yourself, but also it’s a win-win for everyone involved?

Butch: You could certainly say that it is a little cheaper in the provinces, but we don’t provide, basically advantages price wise, because the feeling is that the level of service that we can provide is what you are paid for. And…

Derek: Right. So, your pricing based on deliverables as opposed to the bum on the seat basically. Yes.

Butch: Yes. And, and, I guess you’re, the other component of it. The other way of looking at it as well. When you talk about the larger players, they have certainly a large overhead structure that they’d have to contend with. We priced ourselves way below, we’re typical, and we’re trying to make that change as well. But in the beginning to be a flare that is very attractive to SMEs in the United States. You’d have to actually price yourself lower than what the big boys would. But then provide the same or better service than what a big boy could provide.

Derek: Right.

Butch: And that’s our motto, but because of that, the margin differences…

Derek: Are maintained, yes.

Butch: Yes. If we priced ourselves a lot lower in the provinces there would be, I would be honest with you, it wouldn’t be a very fruitful any longer.

Derek: Yes, absolutely. I mean, this is probably, I realize, this is an incredible opportunity for those people in the provinces, isn’t it? To get good jobs out there and a good facility with good environment and a career ladder. It’s really an incredible opportunity for the provinces and the people out there to be involved, isn’t it?

Butch: It has been, and 54% of the people that we employ based upon, because we do track, by virtue of, because this is from an Accenture perspective, part of their corporate social responsibility. Obviously Accenture could not locate themselves in rural town for various reasons. So, they’d have to actually subcontract that work, to a player like us, but the whole intent is to uplift the rural community. And it has been a very successful program for us. Both Accenture and ourselves, in the sense that we’ve helped a lot of people in 54% of the people that we have there are now the breadwinners of the family.

Derek: How long has that facility been there Butch?

Butch: Has been there for five years.

Derek: And did you get a lot of, because you can’t come up against a lot of red tape or things can be made particularly easy? Did you get a lot of support and buy in from the town hall and the community to sort of help this along?

Butch: Absolutely. And also, on the other side of the house, we’ve contributed to not only the growth of that community but also have helped them out in various programs that they might have. For example, on what’s really big in the provinces would be the fiesta and they typically have a parade as well as they have a Miss Tanjay program every year. And we are a big part of that.

Derek: Right. So, it’s really, it’s a kind of two way community vibe, isn’t it? And so, it’s a true partnership, isn’t it?

Butch: Absolutely. I’ve also been asked before by the DOST, and today by the DICT, which is the Department of Information Communication and Technology of the Philippine government to go around the country and talk about it. And the local LGUs have been very interested in getting a program going like this. I guess the other part of that though is really, it’s setting up something like this isn’t a cheap proposition, to setup 300 seats for example is not cheap, so it’s good.

Derek: And proportionally even more because maybe you, it’s harder to get a grade facilities built out in the province. Is that right? Is it almost more logistically complex?

Butch: That would be correct. I guess we were lucky, let’s put it that way. We were lucky when we first started this, that there was an existing, it was built from an old school, an old college that closed down. And the landlord had actually converted it to become a call center but could not get it going. So, we decided, at first we looked at it and I’ll be honest with you, my first thought was, there is no way I’m gonna locate myself out here.

Derek: Right.

Butch: But, then Accenture offered, we’re gonna team along, and I said, ‘guys, I might have a perfect facility for you, you might looked at it,’ and the rest is history.

Derek: Wow. Well done. It’s a success story, isn’t it, for everyone? So, I want to now sort of pull back from that office and more generally about the services that you offer. You offer four core services, or I supposed kind of catering for operational needs. What do you see as your typical client profile and if people approach you, kind of fitting that profile, how do you take them through the sales process, the integration process? How do people get started with you? Can you kind of paint a picture in that regard?

Butch: Sure. Well the first question is, we typically on the contact center service delivery. We look at various industries that are, we tried to stay away from the typical banking financial institution type because, a lot of the larger players were actually, take on that role. We also stay away from the larger Telco companies for the same reason. So, we tried to locate a specific niche. For example, I can’t divulge names, but we handled the technical support work and customer service work for one of the largest drone companies in the world.

Derek: Right.

Butch: We have handled many clients that didn’t either continue on today or have, we actually looked at different processes that are quite honestly true to what we feel should be our core competence would be, we also are very, we had really grown that quickly over the last 10 years to be at 850 mark in this industry that seems to be a fairly slow growth, but we don’t have outside investors. So, we’ve pretty much self-funded the company over the last 11 years. So, when you talk about clients in the contact center space, we have to be very prudent and really look at those clients, do a lot of due diligence on them, perhaps looking at their Dun and Bradstreet’s force looking at really the industry that they’re in, so on and so forth. So, and it’s a lengthy process from that perspective. Some clients really just say, ‘I wouldn’t want to get your services, but you have two weeks to actually get operational.’ We typically would say, ‘you know what, if that’s the way that you like to handle it, then I think we will pass.’ For in this industry with, in the last 11 years, we have gained enough experience that typically that does not really work very well. Stay away from the telemarketing telesales type of work because they typically are very short shot. And that’s the unfortunate part about the smaller players in the Philippines today is, they start a company without really looking at, first of all, I’m not really having true market reach. I’m really not understanding completely what the industry actually can be the type of accounts that would make them successful.

Derek: All right.

Butch: But I guess my experience working in the United States has given me a little bit better insight in working in this field. On the healthcare side, we do deal both on the provider as well as on the payer side. So, we target hospitals and IPA, which are independent physician associations for example, and do a lot of their medical billing and coding. They’re really nothing but managed services.

Derek: Right. And these are pretty specialized niches, aren’t they? They kind of follow a process and have a lot of regulation and security around them. And it’s just really matching up the buyer and seller?

Butch: Absolutely. The other part that, I guess to say that you are a complete HIPAA compliant organization and have yourself audited by US firms is not cheap. It costs us an arm and a leg every year for a US company to come here and do a complete audit of our processes and our systems and the technology the technology that we deploy, and so on and so forth. That’s something that we are really very proud of as well.

Derek: Yeah. Incredible. What are examples of security requirements, because again, I think people listening out there, they might not really appreciate the sophistication of these facilities over here in the Philippines. What are some of the examples of security arrangements you have in your facilities to be compliant?

Butch: There are physical security measures. For example, our facilities have 24 hour security guards that are deployed. We have CCTV cameras all over the place. So, that we can monitor. We have a monitoring room for all our sites so that in this one room we could look at all the sites that we have and monitor how people work. Obviously from another physical security would be, we don’t allow any type of recording devices into the PWA or what’d you call the operations floor. So, you can’t bring cell phones, cameras, whatever type of recording devices. You can’t bring paper and pens into our healthcare operations floor. There’s just so many, so many different things that are done by and I guess the other part is that, we take compliance very seriously, so we have about 10 people today in our compliance department to ensure that we abide by any type of compliance requirements.

Derek: Yes. This is significant to the daily operational costs of that, isn’t it? Just to make sure everyone’s toeing the line and everything’s in place and it’s incredible, isn’t it?

Butch: Yes. When we opened up Bacolod, we’re probably looking at doubling the size of the department as well in order for us to have enough coverage. The other part is, when they come into audit, they only not look at our processes in this inhouse, all the documentation that are required on our end, but they also do, where they come into our systems and try to actually…

Derek: They hack them!

Butch: …hack through it.

Derek: Right.

Butch: And, [crosstalk 00:27:46] and so far…

Derek: Yes, you passed with flying colors every time.

Butch: So far we’ve been doing okay, we get a passing rate and we’ve improved year over year, so this year we will be having our next audit sometime in the month of September again.

Derek: Wow. Well good luck for that. So, again, I like to stress to people the level of sophistication, because a lot of people in the west might think of the Philippines an outsourcing service providers as a bit of a sweatshop, but often it’s the other way, and the incredible levels of sophistication that you see in these facilities. The incredibly kind of expertise and optimize processes that goes on really does blow people away when they see it firsthand. And obviously these secure facilities really are quite something else.

Butch: The other thing that we always insists on with our clients is that we do not bring the data to the Philippines. When we do work, we work with their systems either through a VPN connection into their systems or it would be a cloud based environment. But basically, the data would, we do not actually work with clients, especially in the office space where the client would require us to actually have a copy of that data in the Philippines.

Derek: So, it’s just kind of screen grabbing. So, it’s incredible, isn’t it? In concept that actually, and then because there is this controversy over outsourcing and it really brings into question exactly how do you define outsourcing? How do you define offshoring, remote staffing? Because you’re not actually pulling any data around, are you? Just kind of working on their servers.

Butch: That would be correct. And actually, screen grabbing is not the right technical term for it, we will be out of compliance.

Butch: So, we connect to their systems and actually work with their systems online. It just so happens that the data is not brought into…

Derek: Shore.

Butch: …the territory. It would still be based in the US.

Derek: And I mentioned this fairly standardized protocols for them in terms of how that happens and how that’s engineered.

Butch: Yes, absolutely.

Derek: Fantastic. Incredible. Thank you so much. It’s been really fantastic insight into one of these bigger, more secure operations. And again, your CSR operation is just incredible. So, we will put more information about that in the show notes linked to the article. If anyone wants to get in touch with you Butch and know more about Visaya KPO, how can they do that?

Butch: They can either reach me through our website. We have a fairly robust methodology of being able to leave information and I could respond to it fairly quickly. And the other thing, they could either reach out to me on LinkedIn, under Butch Valenzuela, and my email address is actually listed there as well.

Derek: Fantastic. And will put all of that in the show notes. Thank you so much Butch.

Butch: Thank you very much.

Derek: That was Butch Valenzuela of Visaya KPO. If you want to get in touch with Butch, if you want to know any of his contact details, if you want to read any of those items that we’ve mentioned, I also put a copy of the articles into the show notes about his provincial BPO facility. Then just go to our show notes. You can find all of that at outsourceaccelerator.com/195.

And of course, if you want to ask us anything then just drop us an email to [email protected]

See you next time.