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Sitel's New Commercial Model Bears Fruit Following Transformational Contract Win with TDC

Sitel has been awarded a two year 800 FTE CMS contract by Danish telecom provider TDC, following an initial contact that was made with twelve potential suppliers in November 2013.

This is TDC’s largest foray into outsourcing its CMS function by agent number and by total value, with headcount representing approximately one third of total CMS capacity. The contract includes the transfer of 800 agents from TDC’s five captive operation in Copenhagen, Aarhus and Sondenberg to Sitel as part of a larger initiative to eventually outsource all 1,850 in-house CMS roles.

TDC’s primary business need in outsourcing is a desire to increase CSAT, followed by reducing costs and to focus on core competencies. TDC had experienced sharply declining CSAT scores including a 37% call answer rate within 60 seconds.

Sitel will initially transfer roles from four centers in Copenhagen and Aarhus to a single center in Sonderberg followed in spring 2015 by the opening of an additional center in Kingston, London. By year end 2015 Sitel expects to have ~150 agents supporting TDC in London. London was selected as a near shore delivery location over more typical destinations such as Bulgaria due to the high number of native Danish speaking undergraduates in London. Having native speaking agents was viewed as a priority in order to improve CSAT, despite the obvious price disparity in near shoring selection, London should still deliver a 10%-15% cost reduction over onshore delivery.  London agents are to provide simpler billing and customer care support with higher complexity customer care and up and cross sell services kept onshore.

Service delivery will include an overall of internal processes and work flow management. All current workflow management will transition to Sitel’s proprietary system. A hybrid IVR system will be introduced with all call avoidance incentivised via a cost reduction gainshare pricing model. Sales, including up and cross sell functions, will be supported via specialist agents while customer care and level 1 technical support will transition to cross trained agents in order to reduce AHT and improve CSAT.

This contract is indicative of Sitel’s wider strategy to focus on higher margin activities in order to address nagging and severe profitability concerns. Sitel has actively branded and marketed its SaaS offerings over the last twelve months and this contract bears the fruit of those efforts. This drive to focus on higher margin activities including transformational CMS contracts (such as this one), SaaS offerings, WAHA, multi-channel and social media support could well be make or break for Sitel as its parent company Onex seldom holds on to investments for as long as it has with Sitel and will undoubtedly be looking for an exit should ROI not improve.

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