This week, Concentrix announced the planned acquisition of Webhelp in the largest CX services deal yet. The total transaction value for Concentrix is $4.8bn in the form of cash, stock, and a seller note for 100% of Webhelp. Upon closing the deal by the end of the year, Concentrix shareholders will own ~78% of the combined company, with Webhelp shareholders ~22%.

Number 1 CX services player

At the end of 2023, the combined company will have ~$9.8bn estimated pro forma revenues, making it the largest CX services provider, followed by Teleperformance and Foundever. At that time, Concentrix will have:

• ~$1.6bn estimated Adjusted EBITDA for 2023
• ~2k clients, including ~155 Fortune 500 brands
• ~420k employees in ~500 delivery locations in ~70 countries, with 52% in Asia
• A client base almost equally diversified across the Americas, EMEA, and APAC
• A client vertical mix led by technology & consumer electronics with 28%, retail, travel & ecommerce 22%, and media & communications 18%
• A diversified delivery mix with 43% onshore, 27% nearshore, and 30% offshore
• Expected run-rate cost synergies of $120m by year 3 of the transaction.

Concentrix CEO Chris Caldwell will lead the combined organization, while Webhelp CEO Olivier Duha and Groupe Bruxelles Lambert (the majority stakeholder in Webhelp) director Nicolas Gheysens will join the Concentrix Board of Directors.

Webhelp’s specialized units – cherries on the cake

In addition to the CX services operations and client scale, particularly the complementary delivery and client presence in Europe, Africa, and LATAM, Webhelp also adds a range of specialized BPS units and CX services augmentation capabilities:

• Dedicated KYC and legal claims management practice
• Payment processing unit providing credit management, online payments, and collections with ~2k resources covering ~35 countries
• Webhelp Medica for healthcare BPO, sector sales and promotion, and patient support, with a client footprint in France
• Software, web application, and RPA development company PitechPlus, headquartered in Romania
• Content management, content moderation, community management, trust and safety, and data annotation, with proprietary platforms (Netino), and strong client base in the French-speaking world, and ~3.3k dedicated resources
• Telecats, a Dutch software company developing platforms for intelligent routing, speech recognition, recording and transcription algorithms
• Mature B2B lead generation and sales practice with an enterprise client base, for example, in high-tech
• The NEST, startup and scaleup program with a bespoke operational model offering new CX program launch, expansion, internationalization, flexible commercial and delivery model, and startup advisory. See this NelsonHall profile for more details
• Experience design and CX consulting firm Gobeyond Partners, headquartered in London, U.K. Gobeyond Partners offers strategy design, UX/UI development, management consulting, innovation services, data and analytics, model office with a lab in Oxford, organizational excellence, and change management. It also recently folded in the in-house digital agency Gobeyond Studio for creative services.

The new company will expand the reach of IT services and consulting, part of Concentrix Catalyst, entering new locations such as France, Germany, Hungary, Romania, Brazil, Colombia, and El Salvador. The LATAM locations come on the heels of several Webhelp acquisitions in the region between 2021 and 2022.

Getting the most of diversified BPS

For Concentrix, the deal presents an opportunity to achieve traditional cost savings through rationalizing the real estate, removing redundant corporate costs, harmonizing IT systems, consolidating data servers, and standardizing client contracts. Concentrix already has significant experience with large-scale acquisitions with Convergys in the past, and most recently PK and ServiceSource (check out the NelsonHall blog on this latest capability). However, Webhelp is the larger firm in terms of size and diversity of services, delivery locations, and markets.

The biggest promise for growth comes from the unification under a single outsourcing organization of a broad range of BPS and ITS capabilities to help the different functions within multinational brands achieve digital transformation. As enterprises face significant challenges from external systemic factors (e.g., environmental disruption), accelerating technology iteration (e.g., conversational AI), and new generations of employees and customers (e.g., Gen Z), point solutions or single department transformations are not effective. Instead, clients look for a multi-tower approach.

This pattern is seen throughout the CX services market, with ITS vendors looking to build front-office capabilities, including for marketing and brand services, while pureplay BPOs actively boost their IT and consulting practices to enable automation, cloud, and AI.

The CX market (finally) reaches a mature stage 

The Concentrix-Webhelp acquisition will be the largest market deal for CX services, but it also aligns with the growing consolidation of the top 10 vendors. Separating the leading 15-20 players from the hundreds of small, regional, or industry-specific CXS providers is an expected pattern, creating a more natural two-tier market. The biggest risk here is for the mid-sized ($500m to $1bn annual revenue) BPOs, which face sizable requirements to invest in platforms, expensive consulting and technology talent, and a truly global delivery network.

On the positive side, the sheer scale of the addressable CX services market (Concentrix estimates it at $550bn) and its underutilization by vendors at ~$119bn (NelsonHall estimate for 2023) offers unabridged growth opportunities for the next several years for providers willing to be innovative and aggressive.