Yogesh Bhura has been a highly successful entrepreneur in the area of background verifications and due diligence. He has co-founded Quest Research (acquired by First Advantage), IntegraScreen (acquired by WorldCheck) and Q2 Consulting. Tarun Bangari (Founder & CEO, JantaKhoj) interviews him in this post.
Tarun (T): How did you get to the idea of founding Quest Research?
Yogesh (Y): Quest Research was formed as a result of common vision between four entrepreneurs/co-founders who wanted to create and grow the Background Screening and Due Diligence segment in Asia Pacific region. Thus Quest Research was formed in 2000 in Hong Kong.
T: How were the early days? How did the firm establish itself? Initial challenges?
Y: Early days were challenging as between 2000 and 2002, world went through a recessionary phase. So recruitment and other business activities were severely impacted. Being a start up with zero base, it could not have been worse than what we went through during that phase – so we remained committed and focussed towards our business objectives and goals. This helped us tremendously as we could capitalise during the rapid growth phase which followed 2002, including the boom in outsourcing industry.
T: What do you think made Quest Research so successful?
Y: Combination of many factors –
• Chemistry between founders even though all four of us belonged to different nationalities
• Our focus on being a profitable and specialist provider of background screening services at pan-Asia region
• Our ability to build a good team of professionals to scale up the business
• Redeployment of cash flow back in growing the business
• We created standards for the industry at Asia Pacific region and our brand was synonymous with the trade name – as an example, most of the companies refer “background check” as “Quest check”, even in their tender documents.
T: What were the prevailing attitudes then around employee background verifications?
Y: Most of the time, the attitude was “we know how to do this ourselves” even though they were either not doing it at all or doing it randomly in-house. However, as progressive organisations started using background screening as a “must have” rather than “good to have”, it was a matter of time that most of the companies started adopting this as a good business practise. During early stage of our business, it was expensive for a firm to adopt this practise – but rapid growth, technology adoption and competition allowed for a sharp fall in prices, thus making it affordable for most companies to adopt them.
T: How competitive was the space? How did you beat the competition?
Y: I think Indian market was and is more competitive than the regional market. Even now, there is good scope for a # 2 or # 3 at regional level but am surprised not too many players have tapped this opportunity. However, landscape in India is just opposite – I am told now there are more than 500 vendors competing for business in India and at ridiculous prices. Often, companies are ignorant of the “value’ they are getting even though they may believe they are getting services at “very cheap cost”. There is disconnect and lack of understanding of what people are buying and selling – leading to disparity in pricing.
This business requires highest standard of integrity as slightest deviation could impact on your reputation, key for sustaining your business. We used to be very upfront and honest with clients about practicality and feasibility of where they wanted to spend money, often at the cost of losing revenue. Predictably, this used to work in our favour in most of the cases. Despite serious competition, we would win more than 70% of new businesses being floated in the domestic market.
T: How did the acquisition by First Advantage(FADV) come around?
Y: Around 2004 and 2005, Quest Research became very popular amongst most of the US based players and almost all of them approached us to acquire us. Our board decided to go for a competitive bidding process and FADV was the most aggressive among all US based players. We saw the trend of local/regional contracts becoming global contracts and hence this acquisition created world’s first single platform to fulfil customer’s global needs. Till then, no US player had any meaningful presence in Asia.
T: How did the idea for IntegraScreen come to you?
Y: Quest Research right from beginning had two divisions – Background Screening and Due Diligence. When FADV acquired background screening division of Quest Research, we decided to retain the Due Diligence business and thus hived it into a new entity – IntegraScreen.
T: What was different about IntegraScreen compared to other players?
Y: While Quest Research was an Asian play, IntegraScreen was a global play. The segments were different but similar to Quest Research experience; IntegraScreen created standards for the industry and helped bring down cost/price per unit for our customers. This ‘affordability’ helped our customers to implement vendor/business partner Due Diligence at global scale.
T: What made you go ahead with IntegraScreen’s acquisition by WorldCheck?
Y: Similar to FADV, we went through a competitive bidding process and World-Check emerged as a winner. World-Check has a phenomenal track record in Anti Money Laundering segment and an undisputed global leader. We saw synergy between their and IntegraScreen’s service offerings.
T: How would you summarize the background verifications industry in India today?
Y: Even though I don’t have enough visibility, I do understand that it is still highly fragmented and competitive and there is a serious need for consolidation whether through acquisitions or other mechanism. I think the industry is under-invested on technology leading to high cost and low service levels for end-customers. I believe consolidation would help bring investments in technology to bring down cost and improve service levels.
Except for FADV, no serious US player has considered India for ridiculously low productivity – when they compare revenue per employee in India vis-a-vis US or for that matter even productivity per employee, it appears scary to them. However, I see this as an opportunity for us to improve this through use of technology and database.
T: How would you compare it to equivalent space in a developed economy like USA?
Y: USA is highly technology driven market – the average turnaround time is 2-3 days where as it is weeks in India. This has helped in a very stable pricing environment as delivery/processes are predictable. In most of Asian countries, the required information is either not digitised or not easily accessible, resulting in huge delay in fulfilment. Ironically, despite India having a low cost environment in most of goods and services, cost of background screening is higher in India than US!
T: Why has B2C (individual consumer) verification market lagged in India?
Y: Awareness, Accessibility and Affordability are three key factors responsible for scaling up of any segment. It is a matter of when rather than if. Also if we can improvise on productivity and reduce cost/price, this would help accelerate growth of this segment. I am hopeful on this as I know few players who are focused on Tenant Screening, Student Screening and Matrimonial Screening – these are early days but have tremendous potential.
T: What is your new venture – Q2 Consulting about?
Y: Q2 is based in Singapore and provides informational resources to governments, multinationals and the background check industry.
T: Thank you very much for joining us today. And best of luck with Q2-Consulting!