NelsonHall recently visited CSS Corp’s contact center in Chennai, India to learn more about its operations and its current focus on developing its premium technical support services. The center opened in July 2010, supports 28 clients (primarily in the high tech and telecoms sectors), and has ~2,200 employees providing customer care, technical support, premium technical support, and analytics offerings.

Agent recruitment & advancement

In terms of agent recruitment, CSS Corp hires from colleges, and has a summer training program that sees approx. 65% of program participants go on to become CSS Corp employees. The hiring profile includes engineers and non-high tech customer care agents.

CSS Corp is working to address customer channel shifts from voice to chat, and this is reflected in its recruitment priorities. In recruiting customer care agents for chat work, CSS Corp is initially more focused on typing accuracy than speed, and requires candidates with typing speeds of just 20 words per minute minimum. Ideally, agents progress to 35 wpm, but speed is not a deal breaker.

Hired agents typically spend 12 months with the company before advancing to premium technical support, and currently there are ~380 CMS agents at this level. CMS agents can move up to engineering, enterprise, and applications positions, and these advancement opportunities are used as an incentive at recruitment time. CSS Corp has ~400 engineers trained in IoT and ‘smart home’.

Technical support initiatives

CSS Corp’s technical support initiatives include:

• Increased focus on automation, omnichannel, and analytics
• Increased focus on inbound sales, especially for a high tech electronics client
• Using social media (Facebook) to update customers of high tech clients in an effort to reduce calls to contact centers
• Encouraging collaboration with other providers to deliver strong premium level customer care – e.g. when other service providers are closely involved in providing support services to the customer, CSS Corp premium support agents will call the other provider(s) and conduct a joint call until the customer’s issue is resolved
• Focus on revenue generation for clients – e.g. in providing white labeled premium technical support for a global networking company, CSS Corp is working with the client to move from FTE-based pricing to outcome based-pricing.

CSS Corp’s premium support offerings are built on its Active Delivery Framework, which is supported by a suite of proprietary tools including:

• Active Edge – a social CRM and knowledge management tool providing agents with a full omnichannel CRM view of interactions in voice, email, webchat, and social media formats. This offering is not licensed as a stand-alone, but this could change in future based on customer demand
• Active-I – a support augmenting tool with proactive fault detection and resolution, asset intelligence, and call scheduler support
• Active Insights – a platform solution providing analytics and business intelligence support. It provides a unified view of the customer, and an analytical engine for insights and recommended actions, in an effort to drive cost reduction and revenue growth.

NelsonHall recently visited Convergys’ contact center in Bangalore to learn more about its operations, and here I reflect briefly on three areas:

• The center’s ongoing channel shift to webchat
• An interesting development in the center’s analytics work
• An initiative to hire more women in an effort to have a more balanced workforce.

Background

Convergys Bangalore is a 167,430 sq. ft. facility with ~1. 5k seats and ~2. 5k agents. It also has ten training rooms with 220 seats. Around 70 people are hired each week at the center, which operates 24/7 and supports telecommunications, cable, financial services, and high tech clients. It was established in 2003 and was the second Convergys site in India. The support provided from this site includes customer support, sales, and technical support. Convergys sees more room to grow in Bangalore, and is looking for a possible second site in another area of the city.

Shift to Webchat

Convergys would like to make its locations in India webchat CoEs. The webchat agent turnover rate is lower than voice, as webchat agents do not have to handle concerns from N. American customers of their clients regarding their accents. The move to more webchat agents also positions Convergys Bangalore strongly for the channel growth expected in chat.

Strong training in typing skills, multitasking, and prioritizing are needed for webchat agents. Common webchats can have standardized answers that should be personalized by each agent, not simply copied and pasted from a knowledge base. To improve service, Convergys maintains a library of the successful chats of top agents to see how they resolved issues. Convergys is currently providing webchat support for high tech and telecommunications clients from the Bangalore contact center. From a pricing perspective, support through webchat is typically priced on a per minute or a per webchat model.

Agents in the Bangalore center support Convergys’ clients’ customers in N. America, Europe, and Australia, and it hopes to support the India domestic market in the future. From a language perspective, it primarily supports English, but it also has 30-40 agents at this location speaking French, Spanish, German, French Canadian, and Italian.

Convergys Bangalore is using the Kenexa HR tool for all online applications and typing tests. As typing is not taught in Indian schools, ramping up typing speeds is often slow, typically taking agents three months to increase from 30 to 60 words per minute. During the first two weeks of training, agents focus one hour a day on typing skills. Typing skills are critical for not only call notes but for supporting the webchat channel. Convergys has a telecommunications client supported from this site that only wants agents focused on a single webchat at a time, but other clients are comfortable with agents conducting two and three webchats at a time.

Voice/webchat agents have about 8-9 weeks of training, including accent and culture training, which takes about two weeks. Agents also engage in experiential learning; for example, playing video games that help them to better understand the N. American financial services industry. Agents are also playing video games to get hands on knowledge of gaming companies it is supporting. In addition, webchat training on prioritization techniques is provided to teach agents to handle up to three webchats simultaneously.

Analytics with a Twist

Convergys is conducting some interesting analytics work from its Bangalore center, not only handling analytics for its own client’s customers, but also handling analytics for the clients of many of its competitors (where the end client has decided that Convergys is their preferred choice for analytics). After analyzing the calls, Convergys provides feedback on recommended improvements. This feedback is broader than many other analytics programs, as it encompasses interactions from multiple vendors.

Aiming for a More Balanced Workforce

Many contact center employees in India work evenings/nights to serve U.S.-based clients and customers. Contact centers are a vital industry in India, and the Indian government even mandates contact center organizations to provide transportation for female employees during the night. As part of the company’s ongoing efforts to have a diverse and balanced workforce, Convergys Bangalore is continually working to make it an easy choice for potential candidates. For example, Convergys has developed an app which female employees use to report back to the company when they have made it home safely; and female employees also have access to the Convergys Global Women’s Network.

Furthermore, CEO Andrea Ayers is highlighted in training videos as inspiration, telling her story of starting out as a trainer in a contact center and years later becoming CEO. 

EGS is a portfolio company managed by One Equity Partners (OEP), a middle-market private equity firm. Post EGS acquisition, Alorica will employ over 91k people in 154 locations across 16 countries in five continents. Lee will be CEO and Chairman of the new organization, based in Irvine, California. He will also be the majority shareholder. The companies expect to complete the transaction by early Q3 2016. The purchase price is not being shared at this time but Alorica plans to release this information over the next few months.

Lee founded Alorica 16 years ago with $10k and a vision. Fast forward to 2015, and Alorica had beome a $1.2bn company with the West Corp. Agent Services acquisition. And with EGS, Alorica will be generating ~$2.3bn in global revenue, behind only Teleperformance and Convergys as a pure play CMS BPO provider. In CMS BPO, scale is critical; clients want fewer partners, for one. By acquiring EGS, Alorica also avoids becoming a consolidation target.

Beyond the increased scale:

• EGS will expand Alorica’s healthcare sector business, reducing its dependence on the communications sector (currently its largest sector, accounting for ~28% of global revenues), healthcare, media/entertainment, financial services, and retail. It is also looking to grow its business in the technology, energy/utilities, travel and hospitality sectors. Alorica supports payers, providers, PBMs, pharmacies, and (to a small extent) medical device companies, providing primarily customer care and technical support services. EGS brings a number of healthcare industry accounts and pharmacy business. Alorica’s healthcare business currently represents ~9% of its total company revenue; it anticipates that this will increase to ~14% post-acquisition
• Alorica will benefit from the EGS collections business which will be branded under Alorica Financial Care. The focus will be first-party collections in the 30 to 90 day time period
• EGS also brings in some customer analytics capabilities offerings.

Just over a year ago, Alorica doubled in size with the acquisition of West Corporation’s Agent Services. The integration has been smooth, and Alorica claims that it has not lost any of the clients it obtained from West. One of the lessons learned from that acquisition was the importance of not over burdening its operations, HR, technology, and communications teams with integration work. With the EGS acquisition, it will have personnel dedicated to the integration, supported by McKinsey consultants.

Alorica and EGS have a limited delivery overlap. The network IP will be Alorica branded. It took one year to integrate West Corporation’s Agent Services business and the same amount of time is anticipated for the EGS integration.

Client overlap is 10-12 clients, from the communications, retail, and technology sectors. Post-acquisition, Alorica will serve ~600 clients, supporting ~30 languages. It will employ 52k people in North America (including 6k work at home agents), 26.3k in the Philippines, and 11.8k in Latin America.

EGS is Alorica’s second key acquisition in two years. In integrating West, it has learned to manage business integration smoothly, handle significant growth, and retain clients. Far from being a consolidation target, Alorica is becoming a consolidator.

One year on from my chat with Andy Lee, it’s good to see a leader articulate a clear goal and successfully lead a team on the road to making it a reality.

Postcript: This deal was completed on June 30, 2016.

The report also reveals how voice interactions are increasingly being deflected to non-voice channels, primarily webchat, by high tech organizations. Complex interactions tend to remain in the voice channel, though some high tech organizations have moved entirely to a digital, non-voice, customer care and technical support framework. High tech organizations are experiencing reductions in product returns as a result of utilizing video chat and online videos for product installation. 

The report identifies the following shifts in channel usage for outsourced CMS in the high tech sector between now and 2020:

• Voice/IVR usage decreasing from 87% to 65%
• Email decreasing from 23% to 15%
• Webchat increasing from 17% to 33%
• Social media increasing from 5% to 15%
• Video chat increasing from 1% to 10%.

The scope of outsourced CMS activity in the high tech sector has moved beyond customer care and retention, technical support, and collections/credit management, with increased emphasis now on revenue generation through paid-for technical support, analyzing end-to-end processes to reduce product returns and truck rolls, and enhanced installation support.

The report shares a variety of case examples quantifying how CMS vendors have delivered the benefits sought by high tech organizations from outsourcing. It also includes details of the current and future shape of CMS in the high tech sector, outsourcing drivers, vendor delivery capabilities, channel usage, market size and growth, and critical success factors.

‘Targeting CMS in High Tech’ is now available, along with a NEAT vendor assessment tool which enables sourcing managers to assess and compare the performance of vendors offering CMS services to high tech organizations. For more information, please contact Guy Saunders at [email protected]. You can also view a brief video with highlights from the report here. 

Alison Hilton, Deputy Director, Personal Tax Operations, HMRC, spoke about how her organization handles ~60m customer transactions a year, and decided to go digital to provide stronger customer care, and reduce customer effort. However, customer education was an important part of the transition: Hilton discussed how HMRC had to remind customers not to share sensitive personal information on social media, for example.

Katie Downs, Omni Channels Growth Partner at Barclays explained how they have embraced video chat to personalize banking. Barclays initially focused on ensuring a secure connection before offering video chat to its customers. It also provided specialized training to video chat agents, including what clothes to wear, how to fix their hair, and how to maintain focus on the customer on screen. James Gough, Social Media Operations Manager, Tesco, described the European retailer’s Twitter activity, having recently shared its one millionth tweet. Gough’s team responds to ~40k inbound social media interactions a week, ranging from store related questions and complaints, to customers just looking to find out information from the retailer. Tesco has been meeting its commitment to have its 180 social media agents respond to customers via social media within 24 hours.

I had the pleasure of sharing a session with Melanie Howard, Chair, Future Foundation, and we used our looking glass to see what customer care will look like in 2020. Melanie addressed the themes of responding to clients in a more personalized manner, and contact centers powered by robots with minimal human interactions. I primarily focused on where we see digital channel usage changing over the next five years and how business process outsourcers in the customer management services (CMS) market can assist companies in utilizing digital channels. The high tech and telecoms sectors are trailblazers when it comes to digital channel usage, and in my most recent report on CMS in the high tech sector, I identified the following shifts in channel usage between now and 2020:

• Voice/IVR usage decreasing from 87% to 65%
• Email decreasing from 23% to 15%
• Webchat increasing from 17% to 33%
• Social media increasing from 5% to 15%
• Video chat increasing from 1% to 10%.

Voice interactions are increasingly being deflected to non-voice channels, primarily webchat, with complex interactions tending to remain in the voice channel (though a small number of high tech organizations are utilizing only non-voice channels). Video chat still has obstacles in terms of the quality of customer/agent interaction, though it has proven to be of benefit in reducing truck rolls and providing installation support which can reduce product returns and cost.

The presentations at the CCA Convention showed how the adoption of digital channels is increasing and creating additional ways to enhance the customer experience. You can see a brief highlights video from the convention here.

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.

CSS Corp’s roots are in supporting the high tech sector, and while its focus remains on high tech, it is positive to see it branching out to closely aligned areas such as consumer electronics, retail, and telecommunications.

CSS Corp has two business units for its technical support services: enterprise and consumer, both primarily providing level 1 technical support, with some level 2 and 3 support. The consumer technical support business also includes an element of up-sell and cross-sell, and the company also has a small number of agents providing level 4 technical support.

When NelsonHall attended this conference in 2014, CSS Corp was developing a mobile and desktop application Active i to allow for easier consumer use of premium technical support. It had launched its Active Insights suite which includes real time feedback of findings to a client facing dashboard, support of voice to text analytics and machine learning, predictive analytics and performance management, and voice and video analysis. Currently, it has two clients using the full Active i suite. 

CSS Corp continues to focus on analytics, launching its new analytics offering, Analance, during the conference this year. This offering uses structured and unstructured data to drive real-time feedback and simplify the customer experience. It recently signed a multi-year contract worth several million dollars for the use of cloud and analytics insights, which Ramesh believes will position CSS Corp as a key player in the market. 

CSS Corp continues to aggressively market multi-device, white-label paid-for premium technical support (PTS). It is piloting an ‘Internet of Things’ (IoT) PTS contract with a networking client, and this technical support add-on service is an important part of its growth strategy. Its PTS platform integrates proactive support.

CCS Corp is looking to grow its PTS offering in the following ways: 

• By partnering with OEMs to grow its technical support and premium technical support services. In Europe and North America it plans to partner with point of sale manufacturers (retailers) and carriers, to get paid technical support bundled with the device when sold
• By providing support for all devices sold by OEMs
• Through platform manufacturers, to integrate devices (develop products on platforms/use common protocols)
• Through partnerships with retailers and carriers, to provide premium technical support for all devices purchased from a store/carrier, as one ecosystem, in an effort to support the entire smart home.

While many vendors are focused on supporting the entire smart home, CSS Corp is slightly ahead of many of its competitors for its focus on platform manufacturers as well as how it plans to partner with point of sale manufacturers to get paid technical support bundled with the devices when they are purchased. 

CSS Corp is putting a lot of emphasis on its analytics offering to enhance customer experiences for its clients’ customers, including piloting video submissions of trouble tickets with a high tech client (with customers submitting a video recording online in an effort to better explain issues to agents). It is also looking to use video support to assist with installation needs, which it plans to offer in future once a pilot has been secured. Instead of providing a generic video, agents will be able to provide support by having access to the same device as the customer in an effort to show how to install the product through a personalized video for the customer, and answer questions in real-time. The use of video communication puts CSS Corp ahead of the curve among many of its peers as it works to simplify the customer experience – though many of them are considering it to support high tech clients, they have yet to take action.         

Company background

CSS Corp is a private company headquartered in Chennai, India. Currently, it provides technical support for enterprise and consumer products, manages IT infrastructure, provides remote infrastructure support including mobility solutions and cloud enablement, and provides carrier network support. It has ~5.5k employees across four continents, has 13 delivery locations, and supports 25 languages. NelsonHall estimates CSS Corp’s CY 14 revenues to be ~$220m, of which ~90% is from U.S. based clients. Last year, it began focusing on growing its business in EMEA.

Minacs has ~4K employees supporting the automotive sector, with ~3.5K providing customer care and ~500 supporting marketing programs. Support is provided from delivery centers in the U.S, Canada, Mexico, and Europe, where agents with special technical skills  support mechanics in the dealerships, and can see the customer relationship management (CRM) history of the customer. Minacs also has ~1.5k agents supporting an emergency assistance program for one of its automotive clients; many of the agents supporting this program are emergency response trained and have 911 dispatch certifications.  

From a channel perspective, Minacs is using the traditional channels such as voice, e-mail, and web chat, but is also using video chat with its dealers for proactive and reactive communication (e.g. to allow agents to see a vehicle part being discussed). Minacs is also using digital and social marketing through advertisements on Facebook, Google, and Twitter for the OEMs.

Minacs provides marketing services for its automotive clients. This includes managing service reminders for vehicle owners, and using analytics to provide targeted offers to customers (e.g. targeting special offers to customers identified as not using dealerships for vehicle servicing). Minacs also cleanses customer data for marketing accuracy.

Minacs uses telematics to transmit data in real-time back to the contact center. Its connected consumer strategy leverages ALT CRM, a business operations model that utilizes big data analytics, algorithmic logic, and technology. Minacs developed ALT CRM as an alternative CRM model to support clients by predicting purchasing behavior, applying algorithmic logic to deliver timely and personalized messages, while utilizing multiple channels and devices for interactions. It also shares with clients insights gained from customers and vehicles through its support of emergency driver assistance, traffic and navigation, infotainment, usage based insurance, smart device integration, fleet management, and energy management.

OEM support includes mediation services, trade assistance buyback, service, parts, digital marketing, social customer service, marketing enablement technology services, affiliates rewards/owner loyalty and retention programs, rebates and incentives, outbound cross-sell/up-sell, customer acquisition analytics, and digital test drive campaigns.

Dealer support includes product and parts services, electronic parts catalog assistance, support of parts information center, warranty claims and recall inquiries, dealer inquiries and compliments, help desk and escalation technical support to dealer technicians, field assistance, outbound cross-sell/up-sell, customer acquisition analytics, and digital test drive campaigns.

Customer support includes welcome and education calls, customer lifecycle marketing programs, complaint management, vehicle location inquiries, customer care escalation, payment incentives, and warranty claims support.

Minacs anticipates growth in its digital marketing support service in the near future, as it is seeing growth in mobile and social support. It is seeing dealers moving television and radio marketing funds to digital marketing. Minacs has invested in its North American team and plans to focus on business growth in Asia as well. As it supports and sells services for offerings such as Sirius satellite radio subscriptions for OEMs, it is looking to package credit card processing and subscription marketing. On the financial side of the automotive business it also supports Ford and Honda credit/lease retention and looks to increase this business support as well.

In summary, while customer management services (CMS) in the automotive sector is not as mature as in, say, telecoms or high tech, Minacs understands that this is a growth area, as the needs of the digitally connected consumer continue to increase and vehicles join the digitally connected world.

In March 2015, privately held Alorica acquired West’s Agent Services business for $275m in cash. In 2014, the Agent Services business generated ~$580m in revenue. Alorica anticipates $1.2bn in combined revenue for 2015, making it a top 10 CMS player globally.

West will continue its focus on the healthcare sector, and on analytics and technology, retaining its specialist agent services businesses, Health Advocate (a health plan advocacy services provider which utilizes agents, purchased in June 2014 for ~$265m), and its business-to-business, and cost containment services.

Alorica’s acquisition of West’s Agent Services business will:

• Expand its services offering, adding receivables management and direct response, outbound business, and consumer sales services
• Enable it to enter new sectors including healthcare, utilities, and government, and enhance its presence in the communications, retail, travel, financial services, and consumer products sectors
• Increase its delivery capabilities: Alorica will gain ~25.3k employees from West’s Agent Services business, of whom ~1.5k are nearshore (Jamaica and Mexico), ~5.4k offshore (in the Philippines) and ~18.4k in the U.S., of whom 5k are work at home agents (WAHA).

Over the past 5 years, Alorica has completed two other transformational acquisitions. They were:

• In 2010, Georgia-based Ryla, Inc., a provider of outsourced customer care. Alorica gained a significant number of employees from the acquisition
• In 2010, Florida-based PRC, LLC, a provider of outsourced customer care. Alorica increased its global footprint and gained ~10K employees from the acquisition.

Five months into the West acquisition, Alorica CEO Andy Lee described how he founded Alorica 16 years ago with $10k and a vision, back when it was ‘all about surviving’. Fast forward to 2015, and Alorica has gone from a ~$600m to a $1.2bn company with the West acquisition, and is launching a new brand campaign to create a new corporate identity.

Looking ahead, Alorica is aiming for 5% revenue growth in the next year. Lee’s goal is for Alorica to become number one CMS vendor (by revenue) serving North America.

Alorica highlighted its four core competencies as revenue generation, customer care, technical support, and receivables management, the latter being integrated from West into some of Alorica’s legacy clients. Alorica anticipates receivables management to be its highest area of growth over the next year. In future Alorica may also consider offering full revenue cycle management to its clients.

Entry to New Industry Sectors & Increased Delivery Footprint

The acquisition of West Agent Services allowed Alorica to enter two new industry sectors: healthcare and utilities. In healthcare it obtained contracts with two of the three largest healthcare insurance payers in the U.S. Coincidentally, both vendors were shortlisted for one of those healthcare deals, West having come out on top. The utilities business it acquired from West includes small contracts only, but Alorica plans to grow its utilities business.

The acquisition included a small amount of client overlap, mostly in the telecommunications/cable/satellite industry sectors. However, Alorica has been able to provide benefits to the overlap clients such as new site options and additional WAHA delivery. 

Alorica’s WAHA delivery footprint was enhanced significantly through the West acquisition, growing from ~800 to ~5.8k home agents. All of the agents are currently based in the U.S., but based on client demand, Alorica may consider WAHA delivery from Mexico as well. Alorica will leverage the West at Home platform, Spectrum, to manage and grow its WAHA agent delivery capability, allowing agents to create their own schedules.

There are few overlaps in terms of delivery. In most cases, the acquisition has created an opportunity to fill open capacity. Jamaica and Mexico were new delivery locations added through the acquisition, and Alorica now has 48K employees working from 72 locations.

Summary

This is a pivotal growth move for Alorica, and the company was able to point to several examples of clients benefiting from the move, including:

• A legacy U.S. retail client is now adding WAHA services from West to solve e-commerce staffing peaks, and is also taking advantage of West’s more sophisticated collections offering
• A legacy U.S. telecommunications client is now using the WAHA delivery to cover peak times, starting with a small pilot
• Another large U.S. telecommunications client, finding itself out of capacity with West Agent Services, was able to add brick and mortar capacity through Alorica.

This acquisition has more than doubled Alorica’s revenue, increased its headcount especially for WAHA delivery, added new service offerings such as direct response and receivables management, increased its delivery footprint, and expertise, and allowed for entry into the healthcare and utilities sectors. 

Clearly, this was a fire sale, presumably of an unprofitable business. We were intrigued as to why HGS was buying further Indian contact center business - and indeed there is a story behind the announcement. The main reason for the acquisition is to more broadly expand the domestic Indian business as well as add banking and financial services clients.  This domestic Indian expansion will help HGS handle domestic India business for international accounts (it recently won some business in India for a global CPG client).

HGS is picking up two telecoms clients, which together account for ~88% of the acquired business, plus four insurance and banking sector clients.

This acquisition may have been opportunistic, but it has some other benefits:

• It will significantly expand HGS’ footprint for servicing the India domestic market (India CMS BPO accounts for ~6% of HGS global business, its India payroll business another 2%). As well as adding to HGS’ existing nine cities with contact centers (with ~7800people) for domestic business in  India, the Mphasis centers will bring in delivery capability in the northern Hindi-speaking states in India
• HGS will also acquire some premium level support capabilities for the Indian telecoms sector – for services which are often slightly less price sensitive
• And it will provide HGS with some referenceability in the key CMS BPO banking and insurance sectors. Expect HGS to look to win more BFSI BPO business in the region.

In short, what is a fire sale for Mphasis looks like as if it as the potential to become a great asset for HGS.

It comes as no surprise that Onex is selling its stake in Sitel. What is perhaps a surprise is the size of the company making the acquisition - and the price.

Groupe Acticall, a national player in the French CMS market CY 2014 revenues of $196m, has grown through largely inorganic means since its inception in 1994. t is owned by Creadev (55%) and founders and exec officers Laurent Uberti, Olivier Camino and Arnaud De Lacoste (45%).

The much larger Sitel Worldwide has been majority owned by PE firm Onex Corp. since January 2007 when ClientLogic, which Onex owned, merged with the larger Sitel. Onex has to date invested $320m into Sitel. Onex’s general strategy would be to realize an investment of this nature by 15 years at the latest. In this case Onex has decided to sell its stake in a company that has been struggling with profitability for years.

In mid-2013 Sitel restructured to support a focus on higher margin activities such as its SaaS offerings, transformational CMS contracts (such as the win with TDC in September 2014), WAHA, multi-channel and social media support. By the end of 2014 these measures had not yet had a chance to have much effect, with Sitel’s operating margin reducing from 4.6% in 2013 to 3.4% in 2014. Q1 2015 performance was more favorable, with revenues up 1.2% y/y, up 10% in CC, to $355m, and operating margin up 1.6 pts to 4.4%. The company has been exiting low margin/unprofitable contracts and closing some contact centers, while opening others (e.g. in Nashville, TE, Pompano Beach, FL, Coventry, U.K. and Bulgaria).

At end Q1 2015, Sitel had ~ 59k employees, with approximately 41.4k in the Americas (which includes APAC) and 17.6k in EMEA. The company has 108 contact centers across 21 countries.

Following the acquisition the combined company will have ~68k employees and 128 contact centers globally.

This is a fire sale by Onex, the purchase price of $55m representing just 1.1 x 2014 EBIT and a fraction of its $1.44bn revenues.

Sitel was the fourth largest CMS vendor (in terms of CMS BPS revenue) in CY 2014. This is a reverse takeover with the well-established Sitel name being retained and its current management team remaining in place… though it is not yet clear where the combined entity’s head office will be. Like Teleperformance, the largest CMS vendors globally, Sitel will have French ownership.

We look forward to hearing more about the strategic intentions for the future Sitel & Groupe Acticall.

While the concept of isolated sales-focused call centers is nothing new in the outsourced CMS space, the way in which IC conducts itself, especially now that it is a division of a large CMS pure play, is particularly interesting. IC seems to have maintained its “small company“ agility and go-to-market strategy; for example, the vast majority of the division’s contracts are run on a pure outcomes-based pricing model, a concept that many of the larger CMS vendors would baulk at! This pricing model is also reflected in agents’ compensation, ensuring an incentivized and motivated workforce.

The division has also proved to be an early mover in adopting and developing some of the more interesting and actionable analytics and agent-facing platforms. IC has developed a customer profiling tool, icConsumer, which uses a combination of data sources, including information entered online by the customer prior to an outbound call, multi-channel contact history (including previous purchasing information), lifestyle and interest data gathered from social networks, and data from third party providers. The aggregated data from icConsumer is segmented, then fed into icDial, a managed dialer service which proactively prompts an agent to call a profiled customer at a particular time.

Once an agent is speaking to a customer, another tool, icEngage, displays relevant customer information, including age, gender, marital status, number of children/dependents, interests, a geographic map of the customer’s location, local weather and local news. With this information agents are able to build rapport with the customer before using the customer’s spending history to make the most relevant suggestions for an initial sale. Once the initial sale is completed, agents can then use information such as number of dependents, marital status, interests, etc. to make up-sell and cross-sell suggestions – e.g. family contracts, insurance, or extra data bundles if selling on behalf of a telecom client.

IC currently has clients in the telecoms, BFSI and utilities verticals. For a large U.K. telecom, IC has become a major sales channel, operating 100% of the client’s outbound sales, accounting for a third of the client’s new contracts per annum.  For this client, IC-acquired customers generally remain ~20% longer than customers acquired through the client’s other sales channels. Similarly, for another large U.K. telecom, IC acquired the equivalent of ~300 high street stores.

Moving forward, Convergys is planning to target the U.S. market by opening additional IC centers in the U.S. and the Philippines later on this year. Convergys is also looking to sell IC technology, including icConsumer, icEngage, and icDial on a SaaS basis in the future.

Given that the vast majority of its contracts have an outcomes-based pricing model, which is then filtered down throughout the organization, IC has fostered an entrepreneurial and sales-focused mindset across its operations. This high-pressure, results-driven environment, which requires a particular type of agent, can often lead to extremely high attrition levels; however, IC’s attrition of between 5%-7% per month is better than would normally be expected of a large outbound sales call center.

See related article Convergys to Acquire Stream Global Services, Becoming Number Two CMS BPO Vendor Globally

Founded in 1993 and headquartered in Jeffersonville, IN, Accent has 2.3k employees and delivers services from six locations in the U.S. and Jamaica. It has 18 clients in the telecoms, technology, retail, financial services, and consumer products sectors. Current annual revenue run rate is ~$67m, hence the $16m purchase price indicates that it is not a profitable company.

The acquisition is expected to close by the end of May, and STARTEK expects the majority of the integration to be completed by year end 2015. With the addition of Accent, STARTEK will have ~50 clients and ~14k employees operating in five countries.

This is an important acquisition for STARTEK. Not only will it broaden its client base and sector mix, it will reduce its heavy dependence on the telecoms sector, which has accounted for ~80% of total revenues, and where it is exposed to vendor consolidation and reduced contact center volumes in the industry. Just three clients (T-Mobile USA, AT&T and Comcast) account for nearly 60% of global revenues, and in Q1 2015 STARTEK was impacted by a 30% revenue reduction from AT&T. STARTEK has been close to bankruptcy several times in the past four years, and has had to close several of its call centers, most recently in Oklahoma and Costa Rica.

The acquisition will boost global revenues by around 26%, and enhance STARTEK’s omni-channel customer engagement offerings. Accent’s customer engagement agency model will complement and enhance the analytics capabilities gained with the acquisition of Ideal Dialogue in 2013.

STARTEK has clearly been focused on diversifying its client base, having signed $10.5m of new business in Q1 2015 across clients in healthcare, financial services, and consumer products. However, it is the acquisition of Accent that will be the key determinant of STARTEK’s future success as it looks to shake off its dependence on the telecoms sector.

For analytics, a popular claim is the use of big data for predictive modeling within contact centers. But is it really happening? The reality is that, while certain vendors are using data for simple predictive modeling, this is still a distinct differentiator among vendors and there is significant room for improvement. It is simply too early to claim that vendors are systematically using big data for predictive modeling.

An example highlighting this is a contract with a telco in which big data (including multi-channel contact history, lifestyle information from social media channels, information from third-party reference agencies, and customer local data such as weather and news reports), are simultaneously displayed via infographics and text to an agent’s desktop to help the agent better understand the consumer’s needs, build greater rapport and, in revenue generation contracts, retain, up-sell and cross-sell to a greater degree. However, in terms of predictive analytics, the data presented to the agent suggesting offers for the customer is based only on previous spend history and does not combine all of the above-mentioned big data sources.

So, are real-time analytics solutions currently being used in contact centers to either change agent behavior or provide customized offers to consumers?

While there are some interesting real-time analytics applications currently being used, this is limited at present. One example is a platform that analyses offshore agents’ rate of speech and displays the ‘sweet spot’ for this via an avatar on the agent’s desktop. This is done in real-time and assists with rapport-building with customers through the NLP technique of matching and mirroring.

Another innovation being piloted is a voice analytics platform that tracks a consumer’s words, phrases, and voice stress levels. These can then be used for compliance and industry-specific regulatory requirements in outbound campaigns, whereby a prompt appears in real-time on an agent’s desktop to recite a compliance statement, or proactively offer to remove a customer from a calling list if the customer is becoming stressed.

The move to using this type of real-time analytics for personalized offers and promotions is underway, but it will be a while before it is widespread.

Another common claim from CMS vendors is their ability to deliver transformation in their client contracts. What is the reality?

There has been a shift in recent years in how CMS transformation is delivered. When CMS was largely about agent numbers, a vendor would look to incentivize agents, improve training, and look to hire more skilled agents, in order to improve service delivery and reduce costs.

Then, about five years ago, there was a big shift: multi-channel, analytics, and social media became the new transformational levers, and are now considered an essential part of CMS delivery, though by no means have these yet reached maturity. Also, now that agents have access to increasingly complex customer data, and customers are now only interacting across live agent channels for high-complexity queries, the quality of the agent delivering this service is vitally important. Therefore, most of the transformation we are now seeing revolves around the HR aspect of service delivery. Training complexity and length is increasing, with many vendors now adopting a continuous agent learning and development scheme within their operations. And with the additional training investments vendors are now making, attrition is becoming even more costly; hiring agents who are more likely to deliver a high quality service, and stay with the company, is now more important than ever.

Hence, behavioral-based hiring methods are now been used in transformational deals over traditional skills-based hiring approaches. These methods are able to identify agents who might not have all of the required skills, but who have the correct mindset with which to learn and improve, and are more resilient. This type of hiring approach is already proving to reduce attrition levels and improve initial KPI adherence.

In summary, there’s no shortage of big claims from CMS vendors about the extent and effectiveness of their offerings in the areas of analytics and transformation. And big changes are happening in both areas, but not always quite as the vendors would have you believe.

In total, 24 languages are supported, and the center is able to draw upon London’s rich cultural mix to recruit students and recent college graduates with broad language capabilities.

In the government sector, HGS runs a multi-channel helpline for the U.K. Visas & Immigration department, supporting people in 222 countries in 21 languages through voice, e-mail, webchat, and self-service. It provides customer care as well as market insight and reporting for this client.

In the automotive sector, HGS agents utilize video chat in addition to traditional channel support such as voice, e-mail, webchat, and social media, to provide sales and road-side assistance to the European and Middle Eastern divisions of a luxury automotive client. HGS has found that customers consider webchat to be impersonal, and is planning to extend the use of video chat beyond the client’s U.K. customers to Europe over the next year.

The Chiswick center supports several bespoke client programs that go beyond traditional customer care. For example, HGS is conducting on-site product testing as part of complaint handling for a global client in the CPG sector. In a recent instance, HGS tested one of the client’s consumer products (bottled bleach) in order to determine whether the product cap was defective as part of a customer complaint; on this occasion it was able to establish that the product was not defective, though tests on other similar products have necessitated changes to product packaging in the past. HGS is at liberty to recommend product changes, replace damaged items for the client’s customers where warranted, and send the customer complimentary products based on inconvenience caused.

HGS is supporting Danone U.K., a provider of early life nutrition, water, and fresh dairy products, with customer care by providing nutrition and health information to new parents. The care is provided through voice, email, and webchat, with plans to provide video chat support within a year. HGS supports this client through a 30-strong agent team which includes five qualified midwives and nutritionists. It also has a group of agents with experience caring for children, handling complaints, and providing out-of-hours support for the early life nutrition line.

In the healthcare sector, HGS is supporting a healthcare provider, Virgin Health, that offers parents the ability to have their babies’ stem cells collected at birth and stored, preserving them for research and potential treatment of serious illnesses. HGS is involved in the entire process, from initial inquiry to stem cell collection to the final checks which take place six months after the birth of the child. HGS coordinates the work of medical professionals, arranges the distribution of the collection kits to hospitals, and organizes the delivery of collected samples to the storage unit. This program has multi-lingual capabilities as it supports customers in the U.K and the Middle East.

The HGS Chiswick center is a good example of a vendor effectively leveraging the language diversity and high education standards of a location to offer strong multi-language, multi-country, and multi-channel support, and to develop bespoke support programs that add value to the customer relationship.

A year ago Convergys acquired fellow contact center vendor Stream, making it the second largest CMS BPS provider by revenue behind Teleperformance. NelsonHall CMS analysts Vicki Jenkins and Mike Cook caught up with key members of Convergys’ leadership team on the anniversary of the acquisition to discuss how the new organization is shaping up.

The importance of cultural alignment

Convergys learned about the importance of cultural alignment through its $335m acquisition of Intervoice in 2008 to strengthen its IVR capabilities. Convergys was a conservative, Cincinnati, OH-based company focused primarily on BPO, while Intervoice was a technology company based in Richardson, Texas and a far less conservative company. Convergys put those cultural lessons into practice with its $820m Stream acquisition in March 2014. Stream was a far better cultural fit for Convergys, being focused on BPO and also based in the Midwest, in Eagan, Minnesota. From a capacity and client perspective, Convergys had little overlap with Stream.

While Convergys has not lost any clients due to the acquisition, there was understandably a degree of hesitancy from some clients due to service continuity concerns. One such client was a high-tech firm that was previously with Stream. The client was initially planning on reducing headcount at the time of the acquisition, but following the implementation of analytic enhancements leveraged from Convergys, the client has since increased capacity and is now set to have Convergys as the sole vendor of a new strategic offering.

Convergys traditionally had a robust analytics offering with ~400 consultants, and these services are now being rolled out to previous Stream clients.  Examples of analytic services include VOC and customer journey mapping.

Another factor that calmed the concerns of previous Stream clients following the acquisition was the joint company’s more stable balance sheet, a concern that had stunted expansions with existing clients.

Impact of the acquisition: clients, delivery and growth

The Stream acquisition has created a broader global client and delivery footprint for Convergys, bringing opportunities for clients. An example has been a U.S. telecommunications client which has now begun using nearshore delivery from the Convergys (formerly Stream) location in the Dominican Republic. Convergys sees the opportunity to more than triple the work it is providing for this client.

However, while Convergys is benefitting from a larger nearshore footprint in Central America, it is also facing some problems in the region; for example, the technological infrastructure of Honduras is not to the same standard as Costa Rica and the U.S. Convergys currently has two clients in need of telecommunications infrastructure updates in Honduras, and is in the final steps of solving these issues.   

As a result of the Stream acquisition, Convergys has seen growth in EMEA and LATAM.  Prior to the acquisition, Convergys had 1% of its headcount in EMEA, and this has now increased to 10%. Convergys was able to speed up its plans for LATAM expansion, with headcount in the region increasing from 3% to 7% post-acquisition. Convergys had a small presence in the U.K., but shortly after the acquisition it opened a new center in Derry/Londonderry, Northern Ireland and the Stream operations team was instrumental in launching the new site. 

The two companies have been able to leverage strengths to retain clients and secure new business. An EMEA-based telecommunications client was concerned about Stream’s financial position as it progressed towards a new deal, but the improved financial stability brought about by Stream being acquired by Convergys helped to secure the deal. In addition, an online financial services and an e-commerce retail client, both legacy Convergys clients, expanded in EMEA with the assistance of Stream. And a new EMEA-based telecommunications client is in the process of launching with Convergys to provide customer care support. 

Convergys has grown with 16 of its top 20 clients during this past year. It has specifically grown with two U.S.-based high technology clients, and it plans to leverage this growth to obtain new business.

Still work to do, but the signs are good

So, does Convergys have further work to do? Of course. They have plans for the second year focused on system integration, market positioning and branding, particularly in EMEA. The combined organization had numerous payroll systems prior to the acquisition. During 2014, it has been working to integrate systems and plans to complete this integration in Q4 2015. 

Convergys sees EMEA as an opportunity for growth and aims to become the largest CMS vendor in EMEA. While it looks for additional capacity in EMEA, M&A is possible. External marketing and branding is a focus for Convergys in the region, and it is starting to gain some traction. A U.S.-based media client that came from the Stream portfolio has conducted a pilot and launch in the U.K. by utilizing the Convergys analytics offerings. 

Convergys aims to grow all of its sectors in EMEA, with a particular focus on financial services. It is also looking to further grow its high technology sector business, even though it has already doubled as a result of the Stream acquisition.

And finally, how has Convergys performed financially in the year since the Stream acquisition?

Revenues for the year were up 40%, although organic growth was negative 1%, indicating that Convergys has seen contractions and/or client losses from its own legacy portfolio. However, from a profitability stand point, the company has performed  well, with adjusted EBITDA margin up 30 bps during the period to 12.5%.

All of which points to a successful first year for the combined organization, and though some integration work remains to be done, the signs are good for 2015 and beyond.  

• Revenues were $64.2m, up 1.2% y/y
• LBIT was $1.5m, a negative margin of 2.4%, down 98 bps y/y.

Full year 2014:

• Revenues were $250.1m, up 8.1%
• LBIT was $4.9m, a negative margin of 2%, up 72 bps.

Q4 revenue contribution from largest clients was:

• T-Mobile: 30.6%
• AT&T: 19.6%
• Comcast 15.7%.

During 2014, STARTEK:

• Added 17 new clients and $48.6m of annual contract value
• Signed two new clients with annual contract value of $5.5m
• Invested $17.4m in opening four new contact centers: two in the U.S., one in Honduras and one in the Philippines, with a total of 2.9k seats. It also closed two under-performing sites, in Jonesboro, AK and Heredia, Costa Rica. In total, it added 2k seats on a net basis in 2014
• Incurred revenue headwinds in relation to the closure of its Costa Rica contact center, had delayed ramps due to its IP platform migration, and saw softer than anticipated volume from a few large clients.

It plans in 2015 to invest ~$20m in adding ~2.5k seats for future growth.

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Revenue growth has slowed right down (2013 saw 15% y/y revenue growth in Q4 and the full year 16.7%). But at least margins are improving. Closing the sites in Jonesboro and Heredia should lead to further margin improvement in 2015.
Nearly 66% of its Q4 revenues came from just three clients, all in the telecoms, cable, and satellite industry. STARTEK is focused on sector diversification:

• The immediate priority is the healthcare sector, following its 2013 acquisition of Registered Nurses on Call (RNOC) and its launch of its healthcare division. In 2014, it invested $400k in building out its STARTEK Health offering.  Healthcare is a growing market and an attractive sector to CMS vendors
• STARTEK is also for momentum in 2015 to come from its receivables management and back office services businesses.

Growth in GDP is, to a large extent, driven by increasing private consumption, which alone will look to outstrip real GDP growth in 2015. Growth in private consumption indicates the need for increased customer facing capability of organizations, hence potentially a rise in the need for outsourced CMS.

There has been over the last 14 months a flurry of acquisitive activity highlighting the potential both vendors and PE firms are seeing in this market. Examples include:

• Xerox’s acquisition of Invoco in December 2013 (1,800 FTEs, 10 centers)
• arvato’s acquisition of Walter Service’s German operations in April 2014  (1,100 FTEs, 5 centers)
• Livia Group’s acquisition of SNT Deutschland
• Capita's focus on the region. The firm has made two contact center acquisitions in Germany over the last eight months:
  • In July last year tricontes, a Munich based telemargeting vendor with a retail, telecoms, utilities and insurance focus
  • Last month, customer management consultancy Scholand and Beiling
  • And this month, avocis for £210m. avocis has ~5,000 seats in Germany, where it is one of the largest CMS vendors, accounts for 53% of total revenue, and Switzerland, which is where its foundations lie, and where it claims to be market leader in . avocis was created as an umbrella brand in 2011 from the amalgamation of six companies. It services clients in the telecoms/IT, utilities, financial services, and healthcare sectors
  • In its first acquisition since Andy Parker started as CEO, Capita is paying 1x 2014 revenue for avocis, which is a growing business: 2014 revenues were up 21%, and its EBITDA margin was 14.2%, up from 11.4% in 2013. Capita expects avocis to achieve its target for a post-tax ROC of 15% within two years. Significant in being Capita’s largest acquisition to date, avocis is s one of the largest CMS BPO vendors in Germany, It is a capacity move in the region: avocis' vertical focus aligns with that of tricontes. Together with tricontes, Capita will have a significant presence in the German commercial sector CMS BPO market. That is a phrase that one (German, commercial sector CMS) would not have expected to say of Capita even four years ago! This move into Germany for CMS BPO has been an extremely interesting strategic decision by Capita, who outside its specialist activities in financial services and insurance, is known as a U.K. public sector specialist.

With a large addressable market that is showing increased interest in outsourcing, positive consumer consumption, a stable economic & political environment and the above mentioned buy-ins from vendors and PE firms. The region has historically been services by small to mid-sized vendors. With companies such as Capita now building scale, the vendor landscape is now changing, Expect to see some large CMS BPO deals in the region over the next few years, led by the telecoms, banking and retail sectors.

Honduras, and specifically the city of San Pedro Sula, have battled negative perceptions which stem from statistical data indicating high murder and kidnapping rates as well as a military coup and near civil war in 2009. The Honduran government understands that they still have work to do to reduce crime rates, and believes education and job creation are key components to making this happen.

Honduran President, Juan Orlando Hernandez, studied in New York and is aiming to put the Honduran education system on a par with the U.S. His educational initiatives include a bonus system for teachers meeting the curriculum, and a target student graduation rate of 98%.  Currently 80% of the country’s public schools have computers and internet access. In November 2014 the Honduran government signed an agreement supporting a program to train English teachers, in which 116 trainers will train 1,000 teachers. High school students (preferably 9th grade and up), contact center and BPO employees, and mono-lingual high school or college graduates are targets for this program.

The centerpiece of hi-tech business in San Pedro Sula is Altia Business Park, the first class A sustainable technology park in the region, which includes smart city amenities. This was the brainchild of Yusuf Amdani, CEO of real estate and textile company Grupo Karim, whom I met during my visit. His vision to create a smart city in San Pedro Sula began in 2007, starting with $25m of investment. To date, the smart city has created ~19,000 jobs.

Amdani has focused on creating opportunities in contact center services, initially targeting the telecommunications industry due to its maturity in contact center outsourcing. 

Grupo Karim operates the services Altia Business Park offers to its tenants, including recruitment, support with all legal processes to start operations, floor plan designs, and construction support.  Its tenants’ employees have access to a variety of social facilities and a shopping and lifestyle center in the smart city. From a contact center perspective it has a strong foundation, with current tenants including several large U.S. based organizations such as Alorica, Convergys, and StarTek.

Altia Business Park currently has three office towers, is planning to build a fourth tower for completion by the end of 2015, and then a further two towers thereafter. Altia also plans to replicate the smart city in Tegucigalpa, the capital of Honduras, in 2015. Nicaragua and El Salvador are also being considered by Altia for smart cities. 

UNITEC University is located in the smart city and is affiliated with Laureate, an international private network of universities. It offers graduate, undergraduate, and vocational programs. At the end of January 2015 it plans to launch a vocational program to prepare students to work in the contact center industry, focusing on English, IT, empathy, and soft skills.  It will take students a year to 18 months to complete the program and it has a goal to enroll 500 students.  A scholarship program is in place for students from public schools.

According to the Asociacion de Maquiladores and the Altia Business Park, in the region of forty U.S. companies are conducting business in San Pedro Sula, including Texaco, Holiday Inn, McDonald’s, Hilton, Tommy Hilfiger, Office Depot, NCR Corporation, Marriott, Fruit of the Loom, Lear Corporation, Burger King, and Citi Bank. 

The following outsourcing vendors are operating in San Pedro Sula (with estimated headcounts): Allied Global (~2,000), StarTek (~1,000), Collective Solutions (~1,000), Convergys (~600), KM2 Solutions (~350), Myron (~150), Alorica  (~120), Zero Variance (~100), Levanter Global (~85), and Serve 5 (~50).

Alorica opened its contact center in San Pedro Sula in May of 2014. It has the capacity for 630 seats at the site. It currently has ~120 filled and looks to bring the site close to capacity in 2015. It is primarily targeting clients in the telecommunications, cable, satellite and hi-tech industry sectors.

Companies that have already made the decision to outsource contact center delivery to Honduras include Kyocera, Time Warner Cable, Sirius XM, Straight Talk Wireless, Tracfone, Blue Fusion, Greyhound, AT&T/AIO-Cricket Wireless.

In summary, Honduras (and specifically San Pedro Sula) is making strides to become a viable location for contact center services. Specifically:

• It is currently a viable delivery location for Spanish-speaking services
• With its focus on accelerating English-speaking capability, it promises to become a more viable location for English language contact center services in the near future
• Security and crime remain areas for improvement in Honduras, but the government’s focus on education and job creation, particularly in the hi-tech services industry, with some early successes, suggest that the country will emerge as an attractive nearshore service delivery location.

• Webhelp setting up centers in Cape Town and Johannesburg with an agent headcount approaching 1,000
• Capita transitioning part of its O2 support to Cape Town in the form of a ~1,400 seat operation.

One (of many) attributes that make South Africa such an attractive destination to CMS BPO vendors (and to organizations looking to setup captives) is the tax grants offered. Recent announcements by the South African DTI have indicated that in order to qualify for future tax grants foreign BPO providers would need to have a level four BEE status, the qualification of which is soon to become more stringent. Serco South Africa is ideally positioned to take advantage of this, given its 100% South African management team and partial black ownership. Serco is in a fortunate position in that it can comply with the new BEE Level 4 requirements which kick off soon, although they are due to be reviewed again at the end of next year.

Serco initially opened a 500 seat center in Cape Town in March 2013, as part of a move to transition some of the CMS support for U.K retail client Shop Direct from onshore to offshore locations in India and South Africa. Serco has built up a thriving center in Cape Town, and currently has ~700 FTEs deployed on the Shop Direct contract. 

When Serco originally entered South Africa its sole aim was to provide offshore support to U.K. and potentially Australian clients; this strategy has since undergone a rethink with the upheaval of its U.K. reputation following the e-tagging scandal in 2013 which, although happening in a different part of the Serco Group impacted the ability of its private sector BPO business to win new deals. Serco is now also actively courting domestic South African clients in the telecoms, media, BFSI and retail verticals. It is currently running a customer care webchat pilot for a domestic telco and is also in talks with a local retailer to provide in-store e-commerce support. If all goes to plan Serco should have ~700 FTEs providing domestic support in its Cape Town operation by end of Q2 2015.

Serco’s agent acquisition program in Cape Town has a very personal flavor with the country MD Fagri Semaar, conducting radio appearances as well as University and school presentations in order to acquire talent. Currently the company has 64k applicants on its database. 45% of applicants are inexperienced in contact center delivery, though the vast majority are from a previous customer service background. Serco has moved away from a purely skills-based hiring approach in its Cape Town operations with applicants initially completing a psychometric evaluation that is weighted towards the vertical, service line and end user position the applicant is applying for. Currently Serco is hiring one in five applicants in its Cape Town operation. 

Now with Serco’s recently announced strategy review, what does this mean for its South African operation? As part of Serco’s private sector business, it will be one of the units to be sold off. Whilst this will result in uncertainty in the near term, the dropping of the Serco brand should help the U.K. private sector business in its go-to-market efforts which potentially means increased work for South Africa.

Sitel wants to be known for creating great experiences, and its focus now is ‘people first’. It recently hired a new chief HR officer, Elsa Zambrano, who has created a new executive position to focus on global talent management efforts. Brandyn Payne, in the role as VP of global talent management, is focused on talent development and measures for attrition and absenteeism. In addition, Sitel has created a new index with contacts at Vanderbilt and outside consultants. Sitel stated that it is ‘in the third inning of a nine inning game’ with this investment.

Sitel explained how it is leveraging technology to assist its agents in supporting clients. In an effort to improve agent coaching, Sitel is rolling out a proprietary platform, 20/20, so coaches will be able to provide ongoing documented feedback to agents and learn from tracking common issues. Sitel also highlighted its Intelligent Desktop, a cloud-based CEM platform that provides agents with a full view of all customer interactions across all contact channels.

Improving employee communication is another focus area for Sitel, and CEO Bert Quintana is acting on his commitment to connect with Sitel’s employees by recording a five-minute video segment for employees each Friday, wherever he happens to be in the world (including, to date, from Colombia, Germany, the Philippines, the U.K. and the U.S.). He has also introduced his leadership team, clients, agents, and industry analysts to Sitel employees: my colleague Mike Coo, and I had the pleasure of participating in one of these segments.  

Listening to its clients is another Sitel commitment. It illustrated this by providing more in-depth interactions with industry analysts at the meeting this year than in the past. The clients benefitted by posing questions to a panel of analysts, with topics ranging from site selection to use of work at home agents (WAHA), to vertical market questions and many more. The clients also participated in round table discussions with analysts on topics including site location selection, multi-channel, flexible labor force, metrics, analytics, agent retention, and web based engagement. Sitel even took that tough yet courageous step of asking clients to discuss with analysts what Sitel could do better; the feedback was shared with Sitel. This is a bold move, and it now has the opportunity to turn that feedback into positive change. 

Sitel also showcased its success in supporting clients in the retail industry sector and with its use of WAHA. Sitel supports 12 industry sectors in total but, based on expertise and revenue opportunities, is focused primarily on retail, communications, manufacturing (high tech), and financial services. The retail business has grown four-fold in the past five years, and Sitel is working to leverage best practices in the sector to support its business in other sectors. Another success story is Sitel’s WAHA program, which experienced two-fold growth in three consecutive years. In 2013, it hired a new leader for WAHA, Felix Serrano, Sr. VP & General Manager. In addition, it has leveraged WAHA virtual hiring for its brick and mortar sites.

From a financial perspective, Sitel has been focused on margin improvement - between 2010 and 2013 its revenue grew just 2.4%. It is now also targeting stronger topline growth in North America, plus continued growth in the U.K.and has appointed a head of EMEA sales.

From a delivery perspective, it plans to grow its language hubs in Portugal and Serbia. It also anticipates delivery growth in Eastern Europe, LATAM, Germany and Morocco. If client interest increases, it will grow its delivery capabilities in India and the Philippines as well. China is not a priority delivery location as it can be supported from the Philippines.

Sitel is recovering from a significant client loss at the end of 2013, which resulted in a $27.3m reduction in revenues for Q2 2014. Sitel has largely mitigated this loss with new business and some expansions from its current client base. Profitability continues to be an issue for Sitel. As mentioned earlier, it is focused on agent development and retention. Margin expansion should also be assisted by expansion in the Philippines, where Sitel is to open a new site before the end of the year. This, plus expansion in some U.S. sites, will be supported by additional funding from ONEX of $75m that was closed in Q2, 2014.

CSS Corp has traditionally focused on the high-tech sector: this is now expanding beyond organizations in the high-tech industries, to retailers and telecoms organizations which market electronic devices.

The company’s annual revenues are currently ~$200m, of which  ~90% from the U.S.  Its attention is now turning to EMEA. Currently CSS Corp has 13 delivery centers with ~5,500 FTEs supporting 20 languages. Around 3,000 of these employees are based in Chennai, India. All domestic U.S. agents are U.S. citizens (besides a handful of traiers). The company is looking to open additional centers in the U.S., Canada, the Nordics and the Middle East but has not given a timeframe on this.

CSS Corp is willing to take on small contracts of less than 50 FTEs, a strategy that has previously proved effective with many of the company’s largest clients starting out in this manner. Tiger repeatedly emphasized CSS Corp’s goal of remaining agile.

The company’s has two business units for its tech support services: enterprise and consumer.

In its enterprise tech support business, most activity is level 1 support with a small degree of level 2 and 3 support. The company also has a small number of agents providing level 4 technical support. CSS Corp has recently opened two monitoring centers in India which track client’s products and look to anticipate support queries by identifying threshold violations, etc. This service is labelled Active 360 and will be bundled in with other enterprise tech support offerings but will also be offered as a standalone service. CSS Corp’s aim is to move into end of life support and grow its level 4 support business.

Its consumer tech support business encompasses level 1, 2 and 3 support including an element of up and cross sell. As with its enterprise business, most activity is level 1 tech support, with level 3 the smallest element, handled on client site. CSS Corp also offers social media support; at this stage, this is limited to monitoring services. The company has centralized its workforce management support in India.

CSS Corp is aggressively marketing a multi-device white-label paid for tech support offering Premium Support.  It currently has three clients using this service. CSS Corp is currently developing a mobile and desktop application “Active i” which will allow for easier consumer use of Premium Support. The aim of this application is to make consumer interaction across the service easier, also to continuously make consumers aware of the service, increasing the likelihood of them extending their service contracts. It enables to consumers to schedule a call back, chat with agents, hand over remote control of device and email agents. “Active i” is set to go-live in six weeks; the future aim is to sell this directly to consumers.

CSS Corp is also offering analytics as a separate service. Labelled “Active insights”, this offering is currently in its first iteration: at this stage reporting is delivered on a scheduled basis, quantitative data only is measured and the service is hosted. The plans are for the service to develop over the next 18 months as follows:

• Active 2.0: this will include real time feedback of findings to a client facing dashboard including alerts for outlying results. Analysis will also expand to include SMS and social analytics
• Active 3.0: the service will support voice to text analytics and machine learning
• Active 3.1: will include predictive analytics and performance management
• Active 4.0: will include self-healing support to devices and voice and video analysis.

With current annual revenues of $200m, CSS Corp has an ambitious goal of becoming the largest tech support provider globally. A refresh of the management team and a focus on the high growth market of consumer technical support is setting the tone. Nevertheless, in order to reach the scale needed achieve its lofty ambition, inorganic growth will be necessary.

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.

TeleTech has licensed and unlicensed agents conducting Medicare enrollment. Last year was the first year for enrollment under the new U.S. government programs, and this year will be the first involving both new enrollment and re-enrollment under the new programs. This will mean very high volumes of seasonal calls. TeleTech is seeking to address this seasonality, in part, through use of Work at Home Agents (WAHAs) and has recently secured one large WAHA deal, though some healthcare organizations remain hesitant to use WAHAs because of concerns about data security.

Major Agent Recruitment Programs Underway

Over the past few months, TeleTech has been hiring an additional 1,150 agents to provide support to healthcare industry clients. Centers where TeleTech is hiring include Jonesboro, AR; Sherwood, AR; Melbourne, FL; Hopkinsville, KY; Paducah, KY; and Ennis, TX.

Most of TeleTech’s current healthcare business is for customer care services. It is also promoting its eLoyalty cloud platform, which in July 2014 received HIPPA and PCI compliance.  The platform has yet to be used by a healthcare payer client but it is being used by a large laboratory supply and distribution company.

Digital Marketing to Increase Enrollment for Healthcare Payer

One health insurance client was experiencing disruption as its enrollment was being impacted by the introduction of increased competition through HIXs. The client looked to TeleTech to deliver more enrollments for every marketing dollar spent. TeleTech expanded the client’s digital marketing program to additional media channels including mobile, display, and email campaigns, and placed advertising on selected web sites. The new campaigns increased click-through rates and phone calls for information, but the focus was on increasing enrollments. The data was further analyzed to understand how each piece of media contributed to acquiring new members. Analytics models were also created to test new ideas to make the campaigns more effective. The program then delivered a 150% increase in leads and a 56% increase in enrollment over the previous year’s online efforts. Cost per enrollment was reduced by 12%.

Improving Turnaround Time for a Specialty Pharmacy Client

Chronically ill patients are often referred to multiple pharmacies. When this occurs, the first pharmacy that responds tends to retain the business. With some customers representing $100k in annual revenue, a quick response by a pharmacist is clearly important. This client, however, had an average TAT of fourteen days and looked to TeleTech to provide assistance in improving that number.

TeleTech created a cross-functional improvement team representing all elements of the referral-capture process, including managers, nurses, pharmacists and non-operational staff. The team tracked every process in detail. It became clear that the staff lacked appropriate technology and that inconsistent processes were slowing down the order processing. The following improvements were implemented:

• Standardization of both clinical and non-clinical work processes
• Implementation of order tracking protocols that enabled resources to be scaled up or down according to demand
• Reconfiguration of work spaces for better efficiency
• Streamlining of approval steps
• Engagement of staff-level associates to drive adoption of new processes

As a result, the overall process went from 151 to 40 steps, and the number of handovers from 44 to four. The mean lead-time (TAT) for referrals decreased from 14 days to 6 days. As a consequence, the volume of retained referrals doubled and the cost per referral was decreased by 56%.

Ramping Up to 1,000 Agents at Speed to Handle Enrollments for one Client

A health insurance payer serving multiple U.S. states and ~14m members needed assistance responding to increased enrollments as a consequence of the Affordable Care Act. 

TeleTech performed a volumes analysis to validate the client’s volume estimates and determine staffing needs. It then applied its integrated talent and learning innovation program to the client’s agent training program, reducing the new agent training time from ten weeks to six weeks, a savings of ~$5m. Its team identified agent knowledge, process, and behavioral gaps that extended hold times and after-call work such as documenting call discussions. Implementing real-time documentation processes and time management procedures reduced hold times and after-call work.

As call volume increased for this client, TeleTech opened a new 800 seat contact center in Texas, and also utilized 200 additional seats in Kentucky and Florida. The client was able to extend its hours of customer support by staggering the hours of operation across the various locations.

Current activities for his client include training agents to handle additional questions including processing medical claims, and the analytics team identifying opportunities for additional time saving opportunities.

TeleTech has been winning new clients across different segments of the healthcare industry. In 2013, healthcare represented 7% of TeleTech’s revenue. With volume expansions in existing clients, and additional new signings in 2014, that proportion looks to become significantly larger very soon.

Are you looking to learn more about CMS in healthcare?  NelsonHall will shortly be launching a research study on CMS in the healthcare sector.

Its Brazil business is contending with a stalling economy and a sharply depreciating currency, although it is still profitable and remains a core focus for Teleperformance. The currency fluctuation in the Argentinian peso (with the currency depreciating by ~40% this year) has continued to dent Teleperformance's reported Ibero-LATAM revenues for the third consecutive quarter. The Mexican and Portuguese businesses continue to perform well this half.

Teleperformance's Chinese operations are seeing y/y growth of nearly 30% y/y, albeit from a small base with revenues approaching €30m annually. Much of the contract wins in this region are with local operations of U.S. multi-nationals. The Aegis acquisition, expected to close by August 1, will increase the company's revenue contribution in its English Speaking & Asia Pac business from 39% to 45%; it will also increase the proportion of revenues from offshore/nearshore delivery from 29% to 32%. This region has also benefitted this half from new contracts won in the U.S. in the healthcare, banking, insurance, and retail sectors during 2013.

The Continental Europe and MEA region experienced the greatest growth this half in spite of France continuing to be an area of concern due to volume reductions in the telecoms sector - although France is no longer a major market for Teleperformance, who now has just around 4k agents in France (plus around 5k in Tunisia). The company made a loss of ~€14m in the country during 2013; this is expected to decrease to a net loss of ~€10m in 2014, New sales initiatives, likely aimed at diversifying vertical spread, should start to bear fruit by the end of the year. The region has grown significantly in the Netherlands, Russia, Italy, Greece and Turkey. The "TLS Contact" account is not only enjoying revenue growth of over 100%, it is also generating significantly higher margins than other Teleperformance business units, although due to the spring time bias in this market's seasonality, this growth should soften slightly in H2.

Teleperformance has uprated its EBITDA margin outlook for the full year to at least 9.7%; this is likely largely due to the acquisitions of Aegis and City Park Technologies as the company has previously been unable to make a significant impact on margin improvements in H2.

The City Park acquisition, a move to build U.K. market share, will push Teleperformance into the top three U.K. CMS BPO vendors by headcount, ahead of Serco and Capita (both of whom have grown in the U.K. through acquisition in recent years). City Park Technologies industry focus in BFSI, telecoms, retail, travel and utilities is broadly similar to Teleperformance's current U.K. vertical presence. City Park is expected to add $26m to annual revenues.

Aegis will bring to Teleperformance the following operations:

• The U.S: nine sites with ~5,300 total seats
• The Philippines: six sites with ~11,500 total seats
• Costa Rica: one site, with ~800 seats.

This acquisition fits in with Teleperformance's long-established, but until recently stalled, strategy of inorganic expansion. As a result of this acquisition Teleperformance should achieve annual revenues of ~$4bn, (2013 revenues: $3,236m) further cementing its place as the largest CMS BPO provider globally, and putting clear water between it and 2013 number two player Atento (2013 revenues: $2,821m) and Convergys, which this year has overtaken Atento as the second largest CMS BPO provider with expected 2014 revenues of ~$3bn. 

What does this mean for Aegis?

This disposal represents around half of what was left of Aegis' global revenues (~$800m) after the inter-company transfer of AGC Networks to Aegis' parent organization the Essar Group.

Post-disposal, Aegis will have 37,000 agents across 37 centers and will look to continue to grow its portfolio in India, Malaysia, Australia, Middle East, Europe and LATAM. Aegis indicated its intent to remain in these markets with the acquisition of Malysian based Symphony BPO in January 2014.

What does this mean for Teleperformance?

This acquisition will boost Teleperformance's onshore, nearshore and offshore  support to the U.S., which it has been indicating as a priority for acquisiton (followed by BRICS markets): 

• Onshore, Aegis' footprint in the U.S. complements Teleperformance's current geographic footprint, in particular bringing in centers in the west and central regions, increasing its geographic coverage across the nation
• In terms of U.S. offshore, Aegis' centers in the Philippines are largely in the delivery hubs of Manila and Cebu, in proximity to Teleperformance's operations, and will increase its delivery capabilities in this key CMS delivery geography (where Teleperformance has been expanding) to nearly 34,000
• And nearshore, in Costa Rica, Aegis will bring in a second delivery location in San Jose, augmenting Teleperformance's existing capability in Santa Ana. 

Secondly, the acquisition will mean a slight change in sectorial mix for Teleperformance's business in the U.S., reducing its dependence on the telecoms sector, and increasing its revenue contribution from the BFSI verticals (from 13% to 14%), from healthcare (more than doubling, but only to 5%), and the travel sector (from 4% to 6%). The U.S. BFSI and healthcare verticals in particular are attractive sectors for CMS BPO service providers, as they provide opportunities for higher margin services. 

Overall, this acquisition is more about geography than it is about client vertical or portfolio enhancement. Teleperformance is targeting higher margin verticals and services: will we see futher, smaller, inorganic growth to boost its onshore presence in these verticals? It has to be a possibility.

Most of the acquisitions so far this year have been to enhance, and in some case establish, geographic presence, for example:

• Webhelp acquiring SNT Netherlands in February
• TeleTech acquiring the Bulgaria based Sofica Group also in February
• arvato acquiring five contact centers in Germany from Walter Services in April

Whereas what we have seen in the couple of acquisitions in 2013 and in a number of the acquisitions in 2012 was a definitive move to enter new verticals and enhance technological capabilities.

While the acquisitions noted above are essentially business as usual in within the CMS space, two other recent transactions are truly representative of the consolidation that is beginning to take place in this market.

Firstly we had IBM divesting its ~$1.2bn CMS business to Synnex Corp. in September last year for $505m. This bumped up Synnex Corp. to one of the top ten largest CMS BPO vendors by revenue at the time.

Then we had Convergys acquiring stream for $820m (an impressive 26.7 times expected 2013 EBIT) in January this year. This expanded Convergys’ geographic presence from being heavily weighted towards a U.S. client base, to a more balanced North America/EMEA split following the acquisition. This transaction propelled Convergys to become the second largest CMS BPO provider with revenues of ~$3bn. This deal had being in the pipeline for a number of years and represented a key milestone in the company’s multi-year turnaround that included the divestment of its Information Management business in 2012.

The big news as we move into the second half of 2014 is that the Essar Group is looking to sell off Aegis. Aegis is headquartered in Mumbai, India and operates 55 call centers in 13 countries with 55,000 personnel and 40,000 seat capacity. The company has a diverse portfolio with clients in the telecoms, high-tech, healthcare, BFSI, manufacturing, travel & tourism, and retail verticals. This potential transaction is a particularly interesting development as Aegis has recently closed the acquisition of Symphony BPO to expand its presence in Malaysia and has since increased capacity in the country from 1,000 to 1,600 seats. This move looks to confirm reports that the organization will look to retain its domestic APAC operations and divest its U.S. and offshore Philippines centers. Aegis’ domestic APAC operations account for ~45% of its revenues (~$360m). The Essar Group is reporting to be looking to raise ~$600m from the sale, approximately 136% of annual revenues.

Who might look to purchase Aegis?

There is a possibility that a private equity firm would pick them up, as happened with Aditya Birla Minacs (acquired by CX Partners and Capital Square Partners in January), and Atento (acquired by Bain Capital in December 2012).

What is more likely however is that a competing vendor will look to acquire the Indian headquartered firm. If we had to examine a few of the top CMS BPO providers:

With CY 2013 revenues of $1,264m, Sykes was one of the top 6 CMS BPO providers by revenue for the period. The companies EBIT of $53.5m (4.2% EBIT margin) for CY 2013 coupled with its $212m of net cash available could make it a likely candidate for this acquisition. Although following the acquisition of Alpine Access in July 2012 and its move to rationalize a portion of its bricks and mortar U.S. delivery, it is unlikely that Sykes would look to acquire Aegis’ sole bricks and mortar capabilities.

Sitel achieved CY 2013 revenues of $1.4bn although profitability is a key concern, the vendor is currently in the midst of a turnaround in order to address this (see also: Evolution of Outsourced Social Media Services) and is therefore not in a position to make an acquisition of this size.

Convergys is currently the second largest CMS BPO vendor by revenues although with its $820m acquisition of Stream this year an acquisition the size of Aegis is not likely to be on the cards.

Teleperformance achieved CY 2013 revenues of $3.2bn making it the largest CMS BPO vendors by revenue. The company achieved an EBIT of $265m (giving a margin of 8.1%), had a net cash position of ~$117m at the end of 2013 and also has access to further credit. The firm has also continued to reiterate its intention to acquire in 2014, something it has not done since January 2013 (TLS Contact). Of the top CMS BPO vendors Teleperformance is therefore the most able to take advantage of this opportunity and cement itself as the largest player in this market.

Using Analytics to Improve CSAT

I participated in two well attended sessions on analytics, which took different approaches to the same topic.

The session sponsored by TeleTech took the form of a workshop on understanding drivers and how to extract and make big data actionable to improve CSAT and increase revenue. Companies using contact centers discussed their pain points and were given guidance on how to utilize analytics tools as solutions. This was thus based on actionable points - some audience members took photos of some of the slides, so impatient were they to receive the deck.

The session sponsored by Convergys session was a presentation by a client, Comcast. Graham Tutton, VP of Customer Insights at Comcast shared how things were not pretty from a CSAT perspective when he joined the company in 2011. Tutton has been a part of a turnaround initiative and shared how Comcast looked to other industries for guidance and is learning from the actions of companies such as Southwest Airlines, Zappos, Amazon.com, L.L. Bean, Westin, Harrah’s, and Nordstrom. Comcast has been working with Convergys to conduct and analyze 11m customer feedback surveys annually. The surveys, conducted primarily through phone/IVR with a few through email, revealed that the major issues were in its ordering process, account management and the repair process. Comcast also found it was under-utilizing the internet for its onboarding process; now it is better utilizing this channel, it has seen reduced customer churn. Its CEO and execs from each region have been riding in company trucks and taking calls in the contact center in an effort to uncover changes that are needed. The contact center is pivotal as it is where issues created by sales, marketing, network, product care, and technical operations are often resolved. Comcast has now developed CSAT metrics for these areas of the company and tied these metrics to employee bonuses. It was encouraging to see the cross-industry learning, increased channel usage, and senior exec involvement applied to this key initiative to improve the customer experience.

How the "Pursuit of Happyness" Can Support a Business Model

Jenn Lim of Zappos, now part of Amazon.com, was the keynote speaker. She discussed being involved in the creation of Zappos and how happiness (both employee and customer) can be used to support a business model. Personal Emotional Connection (PEC) with customers is a focus at Zappos - it does not use call-time KPIs or scripts. The longest call an agent had with a customer was 10 hours and it resulted in a $49 order of shoes – somewhat amazingly, this is alright with Zappos because it is aligned with the culture where PEC is a priority. Zappos hires and fires based on culture and skills, with a 50/50 split between the two. At the end of the first year of employment, an offer of $4,000 is made to employees to quit. This has been done because the company wants employees to align with its values and culture. She claims this has actually saved the company money because the financial offer is rarely accepted by employees, and it has reduced the cost of employee turnover. Zappos wants its employees to “be themselves” by showing their creative, fun, and even weird sides.

Video Chat: How it Can Help Drive More Business in Specialist Retail

Doug Sash, SVP, Customer Experience for Experian, and Rich Brecht, Executive Leader, Contact Center and Retail Operations for J&P Cycles, led a discussion about the use of video chat.

J&P Cycles decided to use video chat because it only has two show rooms and is able to broaden its customer care. It currently has a virtual agent counter using voice and web chat, but is on the verge of moving to video chat. With the use of video chat, agents will be able to select parts for motorcycles in its customers’ garages. Its agents are particularly well qualified to do this, as they are primarily keen former motorcyclists. J&P sees several challenges in being a pioneer in using video chat, including how the videos will be stored and the size of the files. It is using one-way video initially, until its customers are ready to use the channel. J&P is using an Interact IQ platform. AHT is not a focus for J&P: its calls average ten minutes because of their technical nature. It expects video chat will reduce AHT but this is not a priority: rather it wants to drive more customers to its website. It has 170k products and customers need help navigating the website; the use of video chat should support agents in doing this, also in cross-selling other products.

Experian, being in the financial services industry, has to comply with many regulations, so video chat is several years out, though it is following the video chat usage of companies such as J&P in other industries with interest. 

Video chat, a new kid on the multi-channel block, is particularly well suited for specialist retailers like J&P (and the consumer electronic sector) that have high value goods and/or a complex product catalog. It provides the potential to increase sales by supporting customers on website navigation and cross-selling. Expect to see some innovative applications of video chat in other sectors as well as this channel evolves.

Having put an emphasis on social media, Sitel has become a leader in the delivery of outsourced social media services (NelsonHall, NEAT, Social Media Services 2013). Like any winning formula, the need to keep the service up to date is crucial, and it is doing this.

Sitel is in the process of changing the look and feel of the organization, now branding as a customer experience management provider, and categorizing its offerings into five areas:

• Engagement services
• Omni-channel services
• Cloud services
• Insight services
• Advisory services.

Sitel’s new social media service, launched last month, fits into the omni-channel services category, although aspects of it also creep into engagement, cloud and insight services. The offering is broadly split into two service lines:

• Social monitoring services: involves the analysis of trends, sentiments, and actionable opportunities and presents these to clients in a dashboard format. The majority of CMS BPO providers are now offering these services
• Social engagement services: agents interact with consumers to facilitate customer care, technical support and sales. A more advanced offering than social media monitoring, this is more differentiated, and is where Sitel is focusing.

So besides a change in structure, how has Sitel’s social media offering changed?

Sitel’s focus on this service has changed from mainly monitoring to active engagement, which now also includes lead generation and up- and cross-sell activities, something that was missing in the previous itineration of the service. Notably, Sitel has switched the core of its social media platform from Oracle RightNow to Lithium’s social media platform. One of the key drivers for this transition is the need to engage in close to real time as possible across social channels, something that the Oracle platform was not geared to provide, only updating its feed every 15 minutes; whereas Lithium uses twitter FireHose to update feeds in close to real time. The Lithium platform also offers a smoother transition to private messaging than Oracle, something that is key to improving response times and, of course, increasing agent efficiency. This platform now integrates in the same way as other channels in Sitel’s Intelligent Desktop. Sitel is now also the sole reseller for this Lithium platform. Given Sitel’s new structure now including cloud services, this indicates Sitel’s intention to also move into the SaaS market.

Sitel’s target focus for social media has also changed, from a primarily U.S. focus with a small degree of EMEA exposure to a much more balanced U.S./EMEA split. Two key signings that have dramatically ramped up recently include:

• A global media company looking to expand its multi-lingual social engagement throughout Continental Europe in support of its retail stores. FTE count has increased from three FTEs, initially conducting listening to 20 FTEs providing both listening and engagement
• A U.K. high street fashion retailer, for whom Sitel has increased its social media headcount from two last year to 25 currently. This number is set to grow further as Sitel rolls out a personal “concierge” or personal fashion advice service across twitter and Facebook later this year. This is something that has been proposed by many vendors, though there is little evidence of it actually been rolled out.

This development of its social media offering and its focus on cloud based and advisory services reflect Sitel positioning for higher margin services –profitability has been a long-term concern for the company. It’s still early days for Sitel’s cloud services, but its social media service is booming. While these services will not rectify profitability issues, they will certainly help. 

Growth in the English-speaking market & Asia-Pacific SBU was led by new contracts in North America, and China where Teleperformance has won business to support multi-nationals’ expansion in China, also domestic and locally based foreign government agencies in China. Teleperformance has been rapidly expanding operations in China, including through its acquisition of TLS Contact in January last year.

Ibero-LATAM was hard hit by negative exchange rates, turning moderate constant currency growth to a 6.4% negative growth as reported. The Brazilian real lost 20% of its value against the Euro while the Argentine Peso lost a staggering 40% compared with Q1 2013. Colombia, Mexico and Portugal reported the highest growth while the Brazilian business continues to experience reducing volumes, a reflection of Brazil’s economically challenging periods in Q1 and Q3 last year. Brazil is an important market to Teleperformance: all the delivery is domestic, and it has ~13,000 agents in the country, its fourth largest country operation, with nearly 10% of the global agent headcount.  The Brazilian economy is once again growing relatively strongly this year, 0.7% in Q1 2014 and expected growth of 1.62% in Q2 2014. However, much of this growth is due to the temporary GDP injection from the football World Cup starting in June; whether this will transfer into growth in the domestic CMS BPO market, other than temporary contract expansions during the tournament, remains to be seen.

Within the Continental Europe & MEA SBU, there is a return to growth in several Continental European countries including Italy, and three countries - the Netherlands, Greece and Turkey - which have benefited from a refresh of the sales force. The telecoms vertical in France continues to be a challenging market.

Teleperformance has reiterated its desire to acquire during 2014. It is looking to enhance its higher margin capabilities in developed regions such as the U.K. and U.S, probably including capabilities in automated services and e-commerce, with a possible foray into the paid-for tech support market.

Teleperformance’s 2014 EBIT guidance of between 9.5% and 9.7% is a major improvement from the 8.1% margin achieved in 2013. The firm is looking to exit some unprofitable contracts and focus on higher margin activities although recent contract activity does not indicate a big take up by clients as yet. Acquisitions undertaken from this point on in the year would be highly unlikely to dramatically shift margins in the time available. Topline like-for-like guidance for 2014 is more conservative then the company’s margin aspirations with growth of between 5% and 7% expected for the full year; this is a softening of what the company has achieved since Q1 2012 and indicates a shift towards margin expansions over out and out topline growth. 

• Revenue wsas $606m, up 23% y/y. Excluding the four week contribution of ~$86m from Stream, revenue was u- 5% y/y
• EBIT was $22m, an EBIT margin of 3.6%, down 376 bps y/y

End of Q1 2014, combined footprint of contact center employees:

• Philippines 46%
• North America 26%
• India, Southeast Asia and China 12%
• EMEA 10%
• Latin America 6%

Its contract with the U.S. Postal Service was completed in Q1, 2014. It expects to see headwinds from this client loss.

Convergys has revised its revenue guidance for ful year 2014 to at least $2.9b, a growth of ~40%. This outlook includes an increase in program churn during the first year of combined business operations. Given the prorated contributions from Stream, Convergys anticipates recognizing ~55% of full year revenue in H2 this year.

This business outlook does not include Stream-related acquisition impacts such as fair value write-up depreciation, intangible amortization, integration costs or transaction costs. Also not included in the guidance are the impacts of any noncash pension settlement charges or future share repurchase activities.

Convergys has completed its contract with long-time client USPS who a few years ago decided to begin moving its CMS work back in-house.

On a positive note, during the quarter Convergys:

• Signed new business worth $75m of 2014 revenue. Stream clients contributed ~$20m. These bookings include business in the telecoms, technology, retail and health care industry sectors
• Achieved revenues growth in the Philippines
• Saw y/y growth with 15 of its top 20 clients.

This acquisition will give Webhelp a significant Dutch presence and will bolster its global agent headcount to ~21,500, and increase its annual revenues to €450m.

This announcement signals that Webhelp is continuing with its aggressive acquisitive strategy, aiming to become the third largest CMS BPO provider in Europe by 2015. Last year the firm:

• AcquiredHeroTSC in Februar
• Annunced its intentoin in September to invest £100m in further acquisitions in the U.K. over the following 24 months 
• Established a South African operation in Johannesburg and Cape Town.

South Africa is occasionally used to deliver offshore support to the Netherlands due to the similarities between South Africa’s native Afrikaans dialect and Dutch, but this is rare (accent differences). Webhelp has decided to establish onshore support in the Netherlands and use its South African centers to service U.K. and domestic clients.

Webhelp is clearly making progress in its ambition to become the third largest CMS BPO provider in Europe by 2015. Currently the company has ~18,000 agents throughout 37 centers supporting European clients and is the 2nd largest CMS BPO provider in France and the fourth largest in U.K.

Telecoms and media, Firstsource’s dominant sector (44% of revenues this quarter, around $56m), was the slowest growing vertical. The fastest growing was healthcare, with 15.8% y/y growth to ~$41m. This vertical was a contributor to the 17% growth in the U.S. Growth in the U.K. (15.3%) has been fuelled by the BFSI sector.

Attrition has decreased considerably in offshore centers in India and the Philippines (49.2% from 57.3% in Q2 FY 2014) and especially in onshore centers in the U.S. and Europe (33.8% from 47.4% in Q2 FY 2014); although these figures are still dramatically higher than its European and U.S. based peers. Attrition in its domestic serving centers continues to be a concern (92.8% from 85.6% in Q2 FY 2014).

Guidance for full FY 2014 remains upbeat:

• Moderate revenue growth fuelled by expansions from current customer management contracts, continued growth in the healthcare vertical and expected ramp up in BFSI collections
• Operating margin expansion of 150 to 200 bps, due to ongoing consolidations of low margin accounts, increasing efficiencies across business units, growth in offshore delivery and increasing collections business in Q4. 

This marks a turnaround for Arise after what was a difficult 2013 marked by loss of volume in some key contracts and delays in new signings. These hires will represent a 26% increase in headcount on Arise’s current network of 25,000 WAHAs. Arise is targeting topline growth of 20% and 30% this year.

So where is the growth coming from? Arise’s growth plans are both geographic and vertical in dimension

• Arise intends to add to its current geographies of North America and U.K/ Ireland through hiring schemes in Continental Europe, starting in France, Italy and Germany
• Arise is looking to penetrate the financial services industry in the U.K., where it intends to move up the value chain by offering services such as collections and claims query handling in the insurance sector.  Provided as an onshore WAHA service, this is significantly lower cost than traditional onshore CMS BPO. It will address security concerns through a combination of its proprietary security platforms which include data encryption, desktop lockdown, “thin” operating platform, multi-factor authentication and IVR data collection, with a client’s in-house security measures.

In the U.S. Arise is aiming to secure further deals this year in the healthcare industry for services including physician referral, survey handling, centralized scheduling, switchboard management, and complaints and grievance processing.

Over the last six months we have seen a marked upswing in the adoption of WAHA. Notable examples include Sitel's hiring of 400 WAHA's in December last year and Transcom's development of a WAHA delivery model; this announcement from Arise marks the single largest WAHA hiring by revenue to date. This hiring is also notable for the large number of agents hired outside of the U.S., traditionally the stronghold of WAHA delivery. As acceptability of this model continues to gain traction in areas outside of the U.S. it is likely we will see acquisitions of smaller WAHA specialists by tier-1 CMS BPO providers.

The purchase price of $820m represents ~80% of Stream’s annual revenues but an impressive (NelsonHall estimated) 26.7 times projected 2013 EBIT. Stream has been improving its margins this year on the back of acquisitive-led revenue growth: Q1-Q3 2013 EBIT margin was 3.1% (up 167 bps y/y). Convergys has also been improving margins, achieving a significantly higher EBIT margin in Q1-Q3 2013 of 6.5% (up 748 bps y/y). However, the company expects ~$0.35 incremental non-GAAP EPS within the first year.

Convergys funded this acquisition through $400m of cash, and $420m of credit, of which $150m from existing credit facilities.

The main drivers behind this acquisition incllude:

• Expanding Convergys’ geographic presence from being heavily weighted towards a U.S. client base (~85% of revenues). Stream has a large client base in EMEA and LATAM: when the acquisition is complete Convergys will derive ~20% of its revenue from these two regions, which currently account for just ~7%. Convergys expanded its geographic footprint in 2013 with the acquisition of Datacom’s contact center operation which expanded its presence in Malaysia and the Philippines. The Stream acquisition will involve the transfer of ~40,000 employees across 56 contact centers in 22 countries.
• Building Convergys’ capabilities beyond customer care support. Stream has established technical support and revenue optimization capabilities (enhanced in 2013 through the acquisition of LBM)
• Reducing Convergys dependence on three telco clients (currently account for ~47% of revenues; following the acquisition this client concentration will reduce to ~33%) an diversifying Convergys’ client portfolio in terms of vertical penetration. Currently telecoms accounts for ~62% of Convergys’ revenues with high-tech accounting for ~9%; the acquisition will increase high-tech to ~18% of revenue. And the high-tech sector presents possibilities for higher-margin CMS BPO services.

This is a key milestone in what has been a multi-year turnaround for Convergys. Since its divestment of its Information Management business in 2012; it has been aggressively taking out cost. This acquisition will help accelerate topline growth coming from a broader offerings portfolio with enhanced technical support and revenue optimization capability, and more global delivery capabilities that allow for multi-shore delivery, and improved language skills in LATAM and EMEA. This acquisition will result in a company with a well-rounded service line capability and an extensive global footprint with expected revenues approaching that of the current market leader Teleperformance.  

The purchase price of $820m represents ~80% of Stream’s annual revenues but an impressive (NelsonHall estimated) 26.7 times projected 2013 EBIT. Stream has been improving its margins this year on the back of acquisitive-led revenue growth: Q1-Q3 2013 EBIT margin was 3.1% (up 167 bps y/y). Convergys has also been improving margins, achieving a significantly higher EBIT margin in Q1-Q3 2013 of 6.5% (up 748 bps y/y). However, the company expects ~$0.35 incremental non-GAAP EPS within the first year.

While multi-channel is increasingly important, not all multi-channel CMS delivery is created equal. NelsonHall has identified three distinct multi-channel delivery models:

• Unlinked multi-channel, the most simplistic form of multi-channel delivery, entails delivery of a service in various channels by separate agents, with no connectivity between the channels
• Linked multi-channel; here services are delivered by different agents but they are able to view a customer’s lifecycle of interactions across all channels
• Unified multi-channel, the delivery of a multi-channel interaction by a single agent. As with the linked model, the agent has a complete view of previous customer interactions.

In 2014, we can expect to see a slowdown in the growth of the unlinked multi-channel model, but much greater growth of the linked multi-channel delivery model as a consequence of the increased focus of customer experience enhancement. This model is effective at delivering a better customer experience, greater conversion rate, and a reduction in customer churn for larger scale interactions. The telecoms and retail sectors will lead this adoption, particularly in support of customer care and up/cross sell strategies.

The unified multi-channel model will also grow during 2014 although at a slightly slower rate than the linked model. This model will continue to be used for lower volume, higher value engagements. While the adoption of this model is unlikely to match that of the linked multi-channel platform, due to its limited application in high volume engagements, organizations are recognizing the potential of this model for strategic applications. Some voice-only contracts are now being won and lost on a vendor’s ability to provide this unified agent model of delivery. Vendors who we see capitalizing on this include Sitel, Serco, Teleperformance and Sutherland.

Vendors offering wraparound desktops to adapt client’s legacy systems to multi-channel delivery will continue to lead the growth in the multi-channel CMS market during 2014. The majority of the leading CMS vendors will have launched their multi-channel platforms by mid-2014.

One of the key channels of this multi-channel CMS delivery model is social media. The growth of this channel during 2014 will be huge with growth outstripping any other area of BPO, albeit from a small base. The drive behind this adoption in 2014 will be the need for increased customer experience enhancement although social media will also increasingly be adopted for revenue optimization strategies. The high-tech, manufacturing and retail verticals will lead growth in the social media management BPO market in 2014. Manufacturing will continue to focus on using social media BPO for gaining market insight and competitor intelligence while the retail & consumer electronics sectors will use it for customer care and lead generation opportunities.

So what are the trends in global delivery?

Nearshore destinations have previously mainly handled voice interactions. We are now seeing these destinations also being increasingly used for non-voice services such as webchat, email and social media.

There is a seismic shift in the CMS BPO vendor landscape, with M&A activity leading to the emergence of two new heavy hitters:

• Concentrix’s acquisition of IBM’s CMS business will shift it this year into the top ten global CMS vendors by revenue
• Convergys’ acquisition of Stream will create a pure play CMS organization with annual revenues of ~$3bn, making it number two in size globally, behind Teleperformance. The deal has been in the pipeline for a number of years. The acquisition will bring together two well-performing organizations with complementary capabilities in terms of global delivery and offering portfolio which will result in a company capable of winning high-value, transformational contracts, including outside the U.S.

Looking at some other CMS BPO vendors who are ones to watch in 2014:

• Xerox continues to grow its European footprint with the imminent acquisition of Invoco, a German CMS vendor. And it is still only January! Expect to see further M&A activity in 2014: LATAM is a region of interest for several major players, both because of growth in the domestic market and also to serve the U.S.
• Sitel has made significant headway in addressing its profitability also in developing its multi-channel and social media capabilities. Holding company Onex has now held a majority stakeholding in Sitel for 15 years; given vendor consolidation, could this situation change in 2014?
• Transcom is still going through a transitionary period. The firm made divestments in unprofitable locations including Canada, Chile and France in 2013 and has begun to divest its credit management services division. In spite of these divestments, topline growth has been promising with Transcom averaging double digit growth over the last five quarters.

Much of the growth from this region is fuelled by demand from the domestic Brazilian market, as well as the continued high uptake of near shore support to the U.S. from the likes of Argentina, Mexico, Colombia and to a lesser degree Peru. Currently there is a degree of domestic support from Latin American countries outside Brazil although this is vastly overshadowed by support to the U.S. Teleperformance alone has opened six centers in Latin America during 2013, expanding current capabilities in Brazil, Colombia (2), Mexico and the Dominican Republic. Other major players such as Transcom, Atento and Convergys have also opened new centers in the region over in 2013.

How does support to the U.S. from Latin America differ from offshore U.S. support from the Philippines? The Latin American market is unable to compete with the Philippines for price but where Latin America does come up trumps is in Hispanic support, the ease of management of the region, due to close time zone matching and shorter flights, and the ability of agents to engage in a non-scripted environment.

The vast majority of support to the U.S. from Latin America is for customer care services distantly followed by sales and then lastly technical support.

Recent contract activity has highlighted the push for higher complexity, multi-channel contracts in support of the domestic Brazilian market and the near shore Hispanic U.S. market. In addition to the opening of further centers in the region, Teleperformance has established a social media center in Brazil. Aegis is another vendor with established social media presence in Latin America; although current uptake of social media outsourcing in the domestic Latin American is limited, NelsonHall does expect growth in this sector approaching that of EMEA and North America.

Most nearshoring to the U.S. market has been in support of the telecoms sector, Teleperformance has invested $22m in the construction of the two centers in Colombia. These centers are providing multi-channel customer management services to a large U.S. telco.

According to NelsonHall’s recent CMS market analysis, the top three major players in the Latin American CMS BPO sector, and market share are Atento (24%) then Teleperformance (11%), distantly followed by Teletech (2%).

Atento continues to be the dominant player in Latin America with a 40% market share in Brazil. Atento currently employs ~126,000 agents across Latin America with ~84,000 of these providing domestic support to the Brazilian market. Atento is currently providing a small degree of offshore support to Brazil out of Portugal representing a clear divergence from the standard flow of services between the two nations.

Teleperformance’s continued investment in the region is indicative of what can be expected in terms of growth and level of service delivery from Latin America. Investments have focused on the development of higher-end support capabilities such as social media, multi-channel interaction as well as R&D facilities.

As the region continues to mature, nearshored support to the U.S. and domestic support in Brazil will begin to replicate that of Europe with the emphasis placed on higher end delivery models increasingly driven by the need for improved customer experience as opposed to just cost reduction. The domestic market in the region outside of Brazil will continue to be driven by more commodity based services in the near term.

With Brazil’s growing population (currently ~199m) and increasing purchasing power (GNI per capita grew by 8.7% between 2011 and 2012) the domestic Brazilian CMS BPO market should continue to grow at a faster rate than the rest of Latin America. 

Sitel has split its sales team into two distinct groups:

• A business development team: main aim to sign new logos with a specific geographic and vertical focus
• Relationship management team (farmers): these sit in on the client’s operational meetings and work in a consultative role in order to both improve service delivery and drive higher margin sales.

Primary regions targeted, specifically due to higher margin potential, are the U.S, Australia, New Zealand, the U.K and Germany. Secondary regions of focus include Brazil and LATAM with the rest of EMEA simply aimed at maintenance of current volumes. Germany is mainly being served onshore although nearshore support from Serbia and Bulgaria is growing in popularity.

Following on from the sales restructuring program, current sales priorities, in descending order of importance, include:

1.      Expansion of existing business into open capacity in centers and WAHA (U.S.)

2.      New logo business into open capacity and WAHA (U.S.)

3.      Enter into new sites only in most profitable regions and engagements

4.      Create dedicated sites for multi-year engagements.

Sitel is driving its WAHA offerings. Currently the majority of WAH agents are based in the U.S, with a few agents in Canada and the U.K. Towards the end of 2013 Sitel is increasing WAHA delivery in the U.K. and Germany. Sitel piloted its WAHA model in 2008 with 50 FTEs this then increased to 600 FTEs in 2012 and currently Sitel has 1,100 FTE equivalents providing WAH services.

Sitel’s initial WAHA model was named Secure Plus and was solely a hub and spoke delivery model. Sitel noticed unfavorable NPS levels off this model mainly due to incorrect profiling of hires and migration of previously exemplary in center agents to a WAH who then didn’t deliver in this model.

Sitel is now restructuring and renaming its WAHA model to Secure, this will be a fully virtual model. Sitel is also changing its profiling of WAHA hires to agents of 35 years plus, college educated with at least ten years of industry specific knowledge. The aim of this is to offer WAHA as a premium offering with higher NPS levels and conversion rates. According to testimonials by a current emergency services client, this new WAHA structure is proving effective at delivering better NPS levels. Sitel is changing its training of WAH agents to a live video interaction with trainers using Adobe Connect. Secure will have an agent to supervisor ratio of 15:1. By Q4 2013 Sitel aims to have:

• Fully established its Secure WAHA model
• Fully deployed a BYOD model
• Established WAHA operations in Germany.

By 2014 Sitel aims to have:

• Developed and deployed its WAH agent portal

Growing WAHA by ~40% over 2013 figures

In another recent development, in July 2013 Capita was awarded a customer contact management services contract extension by Vale of White Horse District Council, part of a shared service with South Oxfordshire District Council. In this contract, Capita is taking a different approach to customer contact management. It is deploying kiosks in the council’s offices for visitors to use with one receptionist (real/not virtual) at hand should help be needed. A traditional appointment system will be available for visitors with more complex or urgent queries.

We have had automation and self-service in customer contact management, e.g. via phone (IVR) and web channels, for some time. We have seen the odd kiosk in council front-offices too - but always as an alternative to manned reception areas. These latest developments differ in a number of respects:

• Shanice brings a virtual presence and automation into the council’s real/physical front office
• The kiosk is the main customer interaction channel within council offices, no longer a 'nice to have alternative'.   

The evolution of self-service and automation was inevitable given advances in technology. However, adoption of these alternatives by local authorities that are typically risk averse, has been speeded up by budget cuts.

The willingness of councils to accept such alternatives under cost cutting pressures, gives suppliers a green light to incorporate more automation in their CMS offerings to the sector. Capita has already taken the kiosk approach. Other alternatives include a more sophisticated version of Shanice supported by a well curated knowledge-base that would enable it to go slightly beyond the basics to provide more detailed answers within the context of the visitor’s enquiry.