Sitel celebrates its 30th anniversary in a year in which it was acquired by French-based Groupe Acticall, whose controlling shareholder Creadev is the entrepreneurial investment arm of the Mulliez family. Sitel had been looking for an investor for more than a year, while the Mulliez family was planning to build a global platform and saw Sitel as an opportunity to fulfill that goal. At its recent analyst day, the Sitel executive team shared updates on this key acquisition, which saw an investment financed by a combination of new debt and $400m in cash. This investment significantly reduces Sitel’s debt and increases cash flow.

Groupe Acticall insisted that the Sitel management team remain intact as part of the acquisition agreement, as the majority of the team had been working together since 2009. And, according to Sitel CEO, Bert Quintana, “Sitel is here to stay with the support of a strong industrial investor.” Sitel will continue to operate as an independent entity.

Most of Groupe Acticall’s presence is in France, with some in Brazil, Ivory Coast, and Morocco, primarily in the contact center business, though it also has a professional services, digital services, learning CRM and IT offering.

Sitel has had organic growth of 8% y/y (Q2 2014 to Q2 2015), though it is behind in EBITDA: its competitive set has ~12% EBITDA compared to Sitel’s 8%. One major change with this acquisition is that Sitel will be less focused on quarter by quarter earnings, and rather more on annual earnings, due to the focus of its new investor. Groupe Acticall is interested in five to ten year plans, though Sitel will still have annual plans. Over the next couple of years, Sitel plans to double its rate of growth and increase its investments in research and innovation. And in the first year, Sitel plans for its 2016 overall capital spending to increase by 40% over its historical spending levels. 

From a delivery perspective, France, Brazil and Morocco are the only delivery locations with operational overlap between Sitel and Groupe Acticall. Scale is important to Sitel’s clients, with 70% of its revenue coming from clients served in two or more countries; with this in mind it has opened several new contact centers this past year: Coventry (U.K.), a second center in Varna (Bulgaria), Porto (Portugal), and several in the U.S. (Knoxville, TN; Spartanburg, SC; and Pompano Beach, FL). It also recently opened a new contact center in the Tarlac, Philippines. As it continues to grow its delivery footprint, it is considering nearshore U.S. locations in Latin America.  

Sitel is focused on growing its work at home agent (WAHA) support. It expects to see in excess of 20% growth in the next three to five years for its WAHA business as it is less capital intensive than its brick and mortar contact center business. Sitel’s WAHA delivery started in the U.S. and it is also providing WAHA delivery in Germany to fulfill a client need. It plans to expand WAHA delivery to the U.K. over the next year. 

It is positive to see Sitel continue to focus on a range of industry sectors. Sitel’s win/loss survey data indicates that it is selected by clients due to its ability to show sector expertise. It is executing a sector strategy it began in 2014 in which it is working to grow its largest sectors. Its top five clients account for ~23% of its total revenue, while its top revenue generating client accounts for 6% of revenue. Sitel does not have a large dependence on a single client, as do many of its competitors (e.g. some depending on large telecoms providers, including Convergys, Sykes, and STARTEK).   

Communications is Sitel’s largest sector, making up 39% of revenues. It sees further growth opportunities in the sector due to the amount of contact centers currently in-house, and is focused on showing clients and prospects how it can provide stronger revenue generation and CSAT increases than in-house contact centers.

Financial services is Sitel’s second largest sector, where they are expecting to see growth within its insurance client base. The third largest sector is retail, which is also the fastest growing. Sitel is supporting both traditional and e-commerce retailers, and also providing e-commerce support for its traditional retail clients. The retail business has the highest WAHA adoption rate of all the sectors Sitel supports, and it is in the process of hiring an executive with deep retail expertise to lead the sector.  

Sitel is also focused on technology. It is investing in a cloud-based ERP (SAP) system for its financial and HR functions, expected to go live by the end of 2015. Sitel believes its legacy systems are why its SG&A is high compared to the market, and is looking for this technology investment to provide real-time data for decision making in an effort to lower its SG&A. In addition, it has hired talent management experts with SG&A constraints in mind. 

It is good to see the Sitel management team remain intact, something that is helping them guide clients and employees through the transition. And, as the team evaluates strategic capital investments, they have clear growth ambitions. We wait to see how Sitel will fare under the new regime, but at this stage the indicators are positive.