Global BPO market consolidation

• Konecta’s combination with Comdata, announced last year
• Sitel’s (now Foundever) acquisition of Sykes in 2021
• Bertelsmann’s merger of its global (but not UK) Arvato CRM business with Saham (creating Majorel) in 2018
• Concentrix’s last ‘big deal’, it’s purchase of Convergys in 2018

Where does this leave customers and other operators?

Firstly, if you work for one of the big, global BPO firms you’ll know that there tends to be a lengthy gap between a deal being announced and it ‘closing’. Unless you’re one of the very senior management team who already knows whether you’ll be either spending more time in your garden or racking up your air miles, then you’re likely to have to wait and see what your role will be in the new structure. If you’re a client of one of the big BPOs, though, you are less likely to be comfortable waiting to see what happens. In the same way you won’t experience any significant changes in the short term, though it pays to prepare for what might come your way.

Most of the acquiring firms are experienced and have gone through similar transactions before. It is a truism that corporate acquisitions and mergers tend to destroy value and culture as often as they create and reinforce it, but BPO players are very conscious of the dangers of a mishandled acquisition. They operate in a relatively low margin business, commercially reliant on the retention of stable business in which relationships are still very often key. So, the BPO players recognise the important of continuity when appropriate and the maintenance of clients’ ‘share of voice’ and sense of recognition through and beyond merger processes.

Potential areas of change

People

Senior management is likely to change and as mentioned changes at the supplier C-Suite will probably be the first to take place. Middle and supervisory management changes are unlikely in the short-term, but will inevitably happen – either as a result of a conscious process of selection or through people choosing to move on voluntarily in the face of expected disruption and change.

Locations

Even in an increasingly hybrid world, contact centre locations costs and strategy remain key concerns for BPO providers. Most businesses are still grappling with the challenges of how to configure and manage their property resources for the post-Covid workforce, so a major BPO going through a business merger will have infrastructure consolidation and ‘right-sizing’ as a key priority.

Operational techniques and processes

There are no real ‘silver bullets’ in the world of outsourced customer experience delivery (though if there are and you have one, I’d continue to keep quiet about it!). Most approaches, techniques and operational models are established and largely shared between BPO providers. However, there are variations and if a particular process or workaround delivers value to you and your customers you may need to ‘defend’ it in the face of operational standardisation pressures.

Technology

Over the medium-term technology solutions are also likely to be standardised with support and maintenance for some tools ceasing as a prelude to their removal or migration to a preferred alternative. There are obvious potential benefits to clients from this process, but the business needs of a single client may be lost amongst competing needs.

Commercial

The financial logic for acquisitions is most often based on economies of scale and the reduction of shared resources. However, some may also seek to re-base pricing to a higher level or remove some of the legacy commercial idiosyncrasies that can develop over time as suppliers’ services develop. In addition, if you are a client of an acquired firm you may have benefited from a growth-over-profit strategy if had pursued one prior to sale.

What should you do next?

If you are a client of a newly merged or acquired BPO supplier here are some actions you should get started straight away:

• Seek an early meeting with your supplier, in order to reinforce your internal profile and expected ‘share of client voice’
• Review change of control clauses in current contacts. If you need to either threaten or genuinely plan for an exit from an outsourcing relationship, then you need to understand where you stand legally
• Internally identify operational processes, features and technologies which you will ‘red-line’ and defend in the event of imposed changes
• Longer term, identify products and techniques which will be made available from the newly merged entity that you would like to explore and benefit from

If you’d like further guidance on this subject, get in touch.