Firstsource ditches labour arbitrage for AI-driven outcomes

Since it established its regional headquarters in Melbourne in September 2024, global business process services provider Firstsource has been helping local businesses move beyond the traditional model of shipping jobs offshore to cut costs.

Despite being a newcomer to the local market – having focused previously on the US and UK – Firstsource CEO Ritesh Idnani said the expansion into Australia and New Zealand (ANZ) was driven by the region’s appetite for technology.

“The Australia and New Zealand market was a very important geography for us to get into, given the market opportunity and, more importantly, the amount of innovation that I have experienced over the years working in this region,” Idnani said.

The company has committed to the Victorian government that it will employ 400 people within five years. In its first year of operation, the local headcount has already reached 200.

The Melbourne office also houses an artificial intelligence (AI) innovation lab that collaborates with Victorian universities on practical applications of the technology.

“We didn’t come here to set up a satellite office,” Idnani said. “We came here to build a sustainable innovation hub for the region.”

Firstsource describes its strategy as an “un-BPO” (business process outsourcing) playbook. Idnani argued that for the last 25 years, the industry relied on labour arbitrage, essentially delivering “your mess for less.”

He believes the sector is now shifting toward technology arbitrage, where a combination of humans and automation improves business outcomes rather than just cutting overheads.

“Our goal in this market is long-term, it’s multi-dimensional. We want to fuel innovation, we want to help create jobs, and we want to provide responsible AI leadership,” he said. “I’ve been coming to the country for the last two decades, and I’ve always found Australian brands being very progressive, very open and amenable to trying out different things.”

Firstsource focuses on financial services, healthcare, telecoms, utilities, and the public sector. While Idnani declined to name specific local clients due to confidentiality, he said they included household names.

“Our strength lies in being able to use technology prudently to help unlock value in the domains in which we operate. But more importantly, we’re able to do this in a manner where we can help underwrite business outcomes for our customers,” he said.

The company delivers services including home loan application processing, health insurance claims processing, and handling credit card transaction enquiries.

“All of these get to the root of a superior customer experience. That’s pivotal for both the enterprise and the consumer,” Idnani said, adding that customers will go elsewhere if they have poor experiences, and conversely an organisation that provides superior customer experiences will attract more customers. “So, I think it’s a win-win for both if we are able to influence and impact that outcome for them.”

Idnani cited a recent example where Firstsource used AI to improve a financial services client’s collections process. By hyper-personalising the timing and channel of communication for each customer, and offering tailored repayment plans, the client improved repayment rates.

Another application involves AI handling the rules-based aspects of loan processing, allowing human underwriters to increase their capacity from six applications a day to eight. “There’s still a human in the loop, the underwriter is still approving the applications, but you’re improving underwriter processing efficiency,” Idnani explained.

Idnani also stressed the importance of responsible AI. “You want to have explainability for what you're doing. You want to have the right kind of guardrails in place, because all of this is making sure that you're protecting the reputational risks associated with the brand,” he said.