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Konecta and Comdata Merger Intensifies CXS Top 10 Competition


After several months of speculation, Konecta and Comdata announced their planned merger, creating a $2bn CX services provider that positions it in the global top 10. The deal is a strategic move to respond to the growing market demand for CX transformation capabilities, greater technology investments, and a multinational scale.

Konecta-Comdata combined

The merger, subject to approval by authorities, is expected in Q3 2022. It will create a combined company with ~130k employees in 24 countries, supporting ~30 languages. It will be headquartered in Madrid and will be chaired by the president of Konecta and led by the CEOs of both companies.

The new unit would have had over $2bn in revenues for 2021 and will become the market leader in Spain and Italy with a strong presence in LATAM domestic markets such as Mexico, Colombia, Brazil, Peru, Guatemala, Argentina and Chile. Through Comdata, it will also have a sizable presence in the French market. It will have over 500 large corporate clients in Europe and LATAM. In these markets, the joint company will have a significant role in telecom, BFSI, utilities and energy, the consumer goods sector, and several big tech and new economy global brands.

Particularly interesting is the Spanish domestic market, where Konecta has been aggressively expanding in the last few years, especially by acquiring four different Spanish companies, part of the Rockethall Group, in 2020.

Another dimension is the financial stability and required funding for growth expansion. In the case of Konecta and Comdata, the two private companies received investment from PE ICG.

Merging of tech, digital marketing, and CX consulting

The merger will allow the sharing and cross-sell of specific CX transformation capabilities. Some of these transformation assets include:

  • Konecta’s software development factory in Medellín, Colombia, building CX automation, analytics, knowledge management, and collection tools
  • Comdata’s CX consulting and operational redesign services unit and teams of development engineers. A strength is Comdata Digital’s established positioning in Italy and France
  • Comdata’s innovation center in Milan and Konecta’s innovation hub in Madrid
  • Comdata’s expertise in VOC and customer feedback management
  • Konecta’s content and performance marketing and conversational commerce offerings via a dedicated digital agency, B12 in Spain.

Both companies also bring proprietary tool stacks such as Comdata’s C.Suite with a range of tools for intelligent back-office automation, predictive analytics engines, and remote visual assistance. Konecta adds its Uranet subsidiary in Brazil, which has its own platforms for customer journey orchestration, knowledge management, and contact center infrastructure.

Within the larger industry trend for CX clients prioritizing value-add across multiple transformation dimensions of outsourcing, these digital assets and resources are the key levers to deliver the next stage of contact center operations optimization, omnichannel maturity, and effective integration of machines for self-service and agent augmentation.

LATAM attracts attention

The growth of the regional CX services markets of Brazil, Chile, Peru, Colombia, and Mexico has attracted attention for the last several years. The three most recent sizable deals include:

  • Intelcia’s acquisition of Spanish Unisono for an estimated €200m in 2021, adding operations in Chile and Colombia
  • Webhelp’s deals for OneLinkBPO, adding ~14k employees in 17 contact centers in LATAM, and Dynamicall with ~4.5k employees, both in 2021.

Historically, LATAM was dominated by small local players and few multinational BPS providers, the latter often accepting low margins and sometimes loss-making contracts. The current appeal of the domestic markets in the region is more in line with the global shift to higher value, transformational deals.  

The other not-so-secret appeal of Mexico, Colombia, Central American countries, and the Caribbean states is that they are nearshore delivery locations for U.S. and Canada. It is fueled by, among other things, labor-cost pressures and talent shortage in onshore North America and the desire to relocate some offshore operations closer after the pandemic. Some of the latest examples include Transcom’s re-entry in Colombia, new sites opening in Trinidad and Tobago by Teleperformance, iQor, and Valenta BPO, and Itel’s acquisition of Emerge BPO with employees in Guyana and Honduras.

Along with this trend, the Konecta-Comdata merger offers a strong launching pad to target U.S. clients, offering a multi-country delivery model across the entire LATAM region at scale. For example, the new company will have 20 sites in Colombia and seven in Mexico. Colombia, in particular, has been a success story for the CX market as a whole, but also for Konecta and Comdata, where both companies place some of their most innovative programs.

The consolidation enables the new company to work with large clients across multiple delivery countries and end markets, a capability that is of rising importance for CX clients. The drivers behind this need are the desire to achieve consistency and quality of CX at a global level and the acceleration of borderless commerce such as Mercado Libre or hyperscalers such as Brazilian Nubank or Uruguayan dLocal.

New top 10 player

While the new entity branding is still unknown, some of the next steps are clearer. Konecta-Comdata will:

  • Reinforce its presence in core markets
  • Make a concerted push to utilize and cross-sell CX transformation products and services
  • Target U.S. clients, including by establishing onshore delivery
  • Likely pursue further M&A activity in 2023-2024.

In 2022, CX market M&A activity continues to accelerate, reaching a maturity stage similar to other BPS sectors and improving the overall quality, ideally placing it higher on the client’s partnership wishlist.

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