NelsonHall recently attended Teleperformance’s annual analyst event in Xi’an, China. The location was selected to highlight the strong growth of Teleperformance in China, and to showcase latest initiatives to extend its influence in this very distinctive customer experience market.

Early entrant in China’s BPO market

Teleperformance entered Beijing in 2007 with ~300 employees. The initial focus was on multinationals requiring a high-quality standard of support for the domestic market and eventually offshore support for Japan. Today, the company has ~5.5k employees and ~5k seats with two sites in Beijing, and one each in Nanning, Kunming, Foshan outside Guangzhou, and Xi’an. Together with the company’s visa application processing service, TLScontact, it has 21 locations nationally. The company’s revenues from the country increased fivefold since 2013.

The different locations in China have their own specific offerings, with a clear differentiation between tier 1 and tier 2 cities. For example, Beijing offers language capabilities in north Asian languages, and Teleperformance hires native speakers or near-native speakers to support Japanese and Korean markets. Others such as Nanning cater for Vietnamese, while Foshan offers Cantonese language capability (and Teleperformance can recruit from the larger labor pool nearby). And others such as Kunming, where Teleperformance opened its 400-workstation site in June 2016, provide unique greenfield opportunities. In this tier 2 city with a population of six million, Teleperformance is the only multinational customer experience service provider, and the only other major contact center is run by the state-owned China Telecom.

One of the last delivery destinations offering scale

From a customer experience services perspective, China is one of the last countries where providers can achieve large scale delivery. The northwestern city of Xi’an is a good illustration. Teleperformance entered the eight-million metropolitan area three years ago, starting with 100 staff, to become currently its largest Chinese center with 3k employees supporting domestic and multinational clients in the e-commerce, logistics, and high-tech sectors. Xi’an is an attractive city for BPO, serving as an educational hub for the province and boasting a high-tech and engineering history with a dedicated economic and technology development zone, available office space, the support of the local government through tax incentives, and overall cost savings of ~10% compared to Beijing.

The challenges for entering a market such as Xi’an are twofold. The first is the unique business environment where private enterprise and foreign investments can be established under the economic plans of the state and party. Even before the company’s official entry into the country, Teleperformance founder Daniel Julien traveled to China, including Xi’an, and selected an experienced country CEO, Joseph Wai, who previously worked with locally-owned BPO companies. For a market where even global multinationals such as Google and Facebook cannot enforce their position, the importance of the local executive team should not be underestimated.

The challenges of the Chinese labor market

The other challenge is the labor market. The BPO sector is an unknown for young Chinese graduates. The direct competitors for agent roles are not other BPOs or contact centers but the wider service economy. Teleperformance addresses this issue by promoting its career development program, which offers quick progression opportunities, the strength of the brands it supports (seen as a prestige factor by applicants), its social program (which in Xi’an includes a transport service), and even the modern setup of its centers, consistent across the locations.

For management roles, factors such as limited English skills and difficulty of relocating due to residency benefits tied to a city, but above all the historical lack of customer experience culture in China, necessitate the selection of management talent from within.

Customer service in China is undergoing a shift

The customer experience services market in China is highly fragmented, with thousands of local contact centers supporting even nationwide brands on low cost, low standard models. Traditionally, state-owned service companies have very limited practice in customer experience, and private brands similarly have made only limited investment in support, including basics such as 24-hour operations or non-voice channels. This situation is changing rapidly.

Migration from a manufacturing to a service economy, raising wealth creation by the private sector, an exponentially increasing urban middle class population, and digital enablement are combining for the first time to create a need for providers of international standard customer experience services such as Teleperformance. This shift is being seen by Teleperformance, which began to add domestic clients in the last two years, including some of the largest national e-commerce brands. One of these e-tailers has asked Teleperformance to host customer experience roundtables to establish best practices.

A digital leap in customer experience through WeChat

Probably the biggest opportunity in the Chinese customer experience market is the high adoption rates of mobile and digital technology. With ~700m mobile internet users currently, with double-digit year-on-year growth in user numbers, and significant growth in levels of internet usage, the country has embraced digital entertainment, gaming, shopping, payment, travel, and communications. The flagship of this digital wave is the instant messaging platform WeChat. Tencent’s WeChat dominates Chinese internet with an estimated 880 million monthly active users. WeChat is a ‘super app’, an ecosystem of apps for messaging, calls, social networking, media consumption, shopping, payments, video, music streaming, and gaming. It is a preferred internet entry point and the main communications channel between B2C and C2C. Its proliferation in the offline world is achieved through widespread usage of QR codes, with payments over the platform reaching everything from online purchases and utility payments to personal fund transfers and gifts such as ‘virtual red envelopes’ (based on the Chinese tradition of hongbao, where money is given to family and friends as a gift).

For domestic brands, WeChat is the channel of choice to market, sell, and now support. Teleperformance is also focusing on the channel. It has developed integration between its proprietary CRM platform TP Client and WeChat, and is currently working with clients to pilot customer care voice and chat programs before the Q4 seasonal sales peak and the 11^th November shopping day.

Teleperformance’s continuing growth in China

China will remain a target market for Teleperformance in the coming years. The company wants to create its own pipeline of potential locations supported by government incentives and considering factors such as accents and language capabilities. The share of domestic logos is expanding, with clients realizing the benefits of working with global providers, and fueled by the evolving customer experience culture. A key part of this growth is WeChat, where it aims for more client programs, and eventually to add automation functionality.