CMS Insight
NelsonHall's CMS Insight newsletter provides commentary and insight on key customer management services industry developments and vendor actions which impact your sourcing decisions.
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Latest Edition: January 2012
Contains commentary and insight from NelsonHall analysts on key CMS industry developments that impact your sourcing decisions
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TeleTech To Open Contact Center in Colorado
TeleTech has confirmed the development of a new contact center in Greenley, Colorado.
The new center will be fully operational for March 2012, and has a ~500 seat capacity.
TeleTech is developing the center to provide an array of onshore customer management services for a financial services client.
Analyst comments:
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Capita Acquires Salmat Speech Solutions in the U.K.
Capita's IT services division has acquired the U.K. operations of Salmat Speech Solutions, a specialist provider of telephony automation and voice recognition/ verification offerings.
The terms of the acquisition were not disclosed but under a partnership agreement Capita will get to use and market the advanced product set available from the Australian parent company.
Salmat's U.K. clients include Standard Life and Dublin Airport Authority.
Analyst comments:
This acquisition primarily is going to benefit Capita internally, enhancing its delivery capabilities for its growing portfolio of customer management services. Capita has invested heavily in this segment recently with a series of acquisitions in 2011 that include Call Centre Technology, Ventura and Vertex's private sector business.
Salmat's speech products include voice recognition for biometric and identification purposes which has applications in government and health sector as well as other verticals. The use of voice command interfaces and voice recognition is on the increase in the NHS to increase the productivity of medical personnel and for fast and secure access to patient records. Capita may well be able to take advantage of its acquired voice capabilities in these markets also.
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Convergys Hiring 400 Agents in Orlanda for Technology Client Expansion
Convergys is hiring 414 agents for its Orlando contact center in Florida for a telecoms/technology client contract expansion.
A small portion of agents sought will be bilingual English/Spanish speakers. The majority of agents will provide account management, billing and other customer services, with cross- and up-selling being prevalent across all services.
Other agents sought will be more technically orientated and provide tier 2 and 3 technical support.
Analyst comments:
Although Convergys has seen quarter-on-quarter growth in the telecoms segment throughout 2011, the technology segment has seen more fluctuating volumes.
The majority of expansion for the last 12 quarters in both the technology and communications segment has been due to expanding volumes increasingly serviced by Philippine based agents. The onshore nature of the contract indicates a high level of sales based activity.
The contract expansion will be extremely welcomed by Convergys, who had previously been operating the center considerably below capacity.
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TeleTech Awarded Customer Care Contract by U.S.Online Retailer
TeleTech has been awarded a three-year customer care services contract including a work at home component, by an unnamed U.S. retailer. The contract commences in Q1 2012.
Analyst comments:
It is likely that the work at home component will primarily consist of more basic service types such as inbound sales, or order taking, with more complex services remaining in-center. TeleTech have a a low single figure number of work at home retail contracts, with most experience in deploying basic inbound sales functions, where the company has had success in utilizing its virtual training model.
NelsonHall CMS Insight: November 2011
Contains commentary and insight from NelsonHall analysts on key CMS industry developments that impact your sourcing decisions
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Alpine Access Announces Q3 Revenues Up 75% to $28m
Alpine Access, the U.S. based pureplay work at home customer management services provider, has announced Q3 2011 revenues for the period ended September 30, 2011 of ~$28m, up 75% year-over-year.
Analyst comments:
Growth was driven by a contract with Canada's largest telecoms company and ensuing expansion into the geography, as well as volume growth with a number of U.S. telecoms, high-tech and financial service clients, which constitute 85% of the company's revenue base.
Alpine signed two new logos in the quarter; a U.S. based healthcare client, and a global financial services organization. Alpine has been able to maintain a strong yet geographically diverse workforce through the use of its cloud-based talent management platform.
More information on Alpine Access's delivery capabilities and performance are provided in a NelsonHall profile, to be published imminently.
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Hinduja Global Solutions Announces Q2 FY 2012 Revenues Up 34.5% to $71.6m
Hinduja Global Solutions (HGS) has announced fiscal Q2 2012 revenues, for the period ending September 30 2011, of Rs 2,660.7m ($71.6m), up 34.5% year-on-year.
EBITDA margin was 14.4%
The company added 10 new clients during the quarter.
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Analyst comments:
Growth has primarily been fuelled by the acquisitions in August ths year of:
- OLS, the Canadian CMS services provider, bringing in 2,000 employyes based in 10 sites in Canada
- HCCA, the Indian HR services provider, bringing in 500 personnel in India.
HGS has invested in both geographic and service diversification, entering the North American market with OLS and gaining access to major brands such as Apple. This is aimed at strengthening the competitiveness of the HGS global brand, which up to now, has seen all organic growth driven from Indian domestic telecom and high-tech demand.
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Firstsource Announces Q2 2012 Revenues Up 5.8% to Rs 5,330
Firstsource has announced fiscal Q2 2012 revenues, for the period ending September 30, 2011, of Rs. 5,330, up 5.8% year-over-year.
FY Q2 operating margin was 4.4%, a 540bps decrease from 9.8% achieved in the prior year quarter.
Estimated fiscal Q2 2012 revenue (and y-o-y revenue growth) by industry sector is:
- BFSI $31.2m (+38.7%)
- Telecom & Media $36.6m (-5.2%)
- Healthcare $34.5m (-3.6%)
- Other $1.0m (-33.3%)
Estimated fiscal Q2 2012 revenue (and revenue growth by client geography is:
- North America $53.9m (-6.7%)
- U.K. $33.4m (+18.0%)
- India $14.7m (+17.7%)
- Rest of World $2.2m (+100%)
Revenue (and growth ) by delivery location is:
- Offshore $24.5m (+4.3%)
- Domestic $15.1m (+4.1%)
- Onshore $64.5m (+4.0%)
Analyst comments:
Firstsource is still experiencing extremely high levels of attrition in its domestic delivery centers of India and Sri Lanka, averaging 74.7% for the quarter. In addition, onshore attrition of U.S. and U.K. operations has increased from 32.7% in the previous quarter, to 40.0%.
Growth is primarily being driven by domestic expansion in India, as well as growth in the U.K., with banking and telecoms being the main verticals. Growth in the telecoms vertical was offset by reductions in North American volumes. Moving forward, quarter on quarter growth in the BFSI segment is unlikely due to softness in demand for mortgages in the U.K., as well as retraction in house of some Firstsource contracts for collections.
Moving forward, Firstsource is likely to close at least one major telecoms deal for offshore delivery, either in India or the Philippines over the next quarter in a three year contract.
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Transcosmos Announces Fiscal Q2 2012 Revenues Up 9.7% to Yen 40,846m
Transcosmos has announced fiscal Q2 2012 revenues up 9.7% year-over-year for the period ending September 30 2011, to Yen 40,846m (~$530m).
Operating income was Yen 2,272m (~$29m), a margin of 5.6%, up 200 bps from the prior year quarter.
Analyst comments:
Transcosmos has emerged as one of the leading CMS vendors in the Asian market, using a strong marketing foundation in addition to well positioned expansion in Korea and China to serve growing customer bases, gaining significant multi-channel CMS contracts across voice, web and social-media.
The company is currently looking for partner companies with which to penetrate the European CMS market.
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Sykes Enterprises Announces Q3 2011 Revenues Up 2.7% to $302.5m
Sykes has announced Q3 2011 revenues, for the period ending September 30 2011, of $302.5m, up 2.7% year-over-year, but down 0.6% in constant currency.
Q3 2011 operating margin was 7.1%, up 260bps from the margin of 4.5% achieved in the prior year quarter.
Q3 2011 revenues (and revenue growth) by region were:
- Americas: $241.5m (+0.1%, -2.1% in CC)
- EMEA: $61.0 m (+14.9%, +6.5% in CC).
Estimated Q3 2011 revenue (and revenue growth) by industry sector were:
- Communications $96.8m (-0.4%)
- Financial Services $84.7m (+10.3%)
- Technology/consumer $57.5m (-2.4%)
- Transportation/leisure $21.2m (+3.0%)
- Healthcare $18.2m (+3.0%)
- Other $24.2m (+3.0%).
The Americas region (which includes South Asia and the Pacific) is down by 2.5% sequentially. This region now represents 79.8% of revenues, as opposed to 82.0% of revenues in the prior year quarter. This is due to lower demand in the healthcare and communications verticals. The region had an operating margin of 12.8%, up 230bps from a margin of 10.5% achieved in the prior year quarter.
The EMEA region's operating margin was 2.2%, up 640bps from a negative margin of 4.8% achieved in the prior year quarter, a large improvement from a year ago when overcapacity in the region was rife.
Sykes predicts revenues in the range of $1,208m to $1,213m for full year 2011.
Analyst comments:
Sykes will continue to see growth in the financial services vertical, sporadic growth in the communications vertical, and stagnation in the technology vertical with a number of current clients not renewing programs during Q4. Sykes anticipates an uptick in employee costs due to non-continuation of these programs.
Overall, management tone was upbeat, as despite the mixed picture, Sykes' top 50 clients, which represents 85% of revenues, grew by an average 5%. Sykes also gained two new brand names during the quarter.
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Convergys Announces Q3 2011 Revenues Up 3.8% to $577m
Convergys has announced Q3 2011 revenues, for the period ended September 30, 2011, of 476.9m, up 3.8% year-over-year.
Operating profit was $43.5m, giving an operating margin of 7.5%, a 130bps increase on Q3 2010.
Q3 2011 revenue (and revenue growth) by service line was
- Customer Management Services $490.9m (+6.1)
- Information Management Services $83.6m (+2.1)
- Corporate: $2.4m (-78.6).
Q3 2011 customer management revenues (and revenue growth) by industry were:
- Communications $300.3m (+12.0%)
- Technology $40.9m (+11.4%)
- Financial Services $51.9m (-10.8%)
- Other $97.8m (-2.1%).
Q3 2011 Customer Management operating income was $39.0, a margin of 7.9%, up from a margin of 6.8% in Q3 2010.
Q3 2011 Information Management revenue (and revenue growth) by activity was:
- Data Processing $11.7m (-24.5%)
- Professional & Consulting $37.5m (+27.6%)
- License & Other $34.4m (-7.0%)
Q3 2011 Information Management operating income was $9.7m, giving a margin of 11.6%, down from a margin of 13.8% in Q3 2010.
Analyst comments:
Customer Management revenue growth was again driven by a high single figure increase in call volumes from the comms and technology sectors. The company has revised upwards Customer Management full year revenue guidance from $1,875m to $1,909m. Convergys has seen consecutive volume increases in the comms and technology sectors, which have been enough to offset the non-continuation of the U.S. census work.
The Philippines was the main driver of growth, with smaller increases seen across all geographies except Canada.
Customer Management delivery breakdown in terms of the proportion of agents as at end September is:
- U.S. 40% (including 3,700 work at home agents)
- Philippines 37%
- India 15%
- Latin America 4%
- Canada 3%
- U.K. 1%
Convergys has a record number of agents in training, a consequence both of heightened attrition, primarily in Costa Rica and the Philippines, and of growth in a number of programs across several geographies.
Growth for customer management has primarily come from 6 out of the top 10 clients, and Convergys anticipate continued volume increases from these clients in the near term. The growth in the Philippines is set to continue, with U.S. companies migrating more contact center functions offshore. This is particularly true for the telecoms and technology sectors, and Convergys are well placed to capitalize on this.
IT Management saw go-live with a U.S. wireless carrier in the quarter. However overall the segment has not seen the resurgence that the Customer Management segment has, and the company reports that it will now be in the bottom quartile of prior year-end revenue guidance of $330m-$340m.
NelsonHall CMS Insight: October 2010
Contains commentary and insight from NelsonHall analysts on key CMS industry developments that impact your sourcing decisions
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West Announces Q3 2010 Revenues Up 6% to $592.4m
West Corporation has announced Q3 2010 revenues, for the period ending 30 September 2010, of $592.4m, an increase of 6.0% compared to Q3 2009.
Organic revenues for Q3 2010 increased by 8.9% to $585.6m.
Q3 2010 revenues (and revenue growth) by segment were:
- Communications services $286.5m (+1.6%)
- Unified communications $307.6m (+10.5%).
Revenues for the first nine months of 2009 increased 0.9% to $1,788.8m. First nine months revenues (and revenue growth) by segment were:
- Communications services $877.3m (-5.8%)
- Unified communications $915.8m (+8.3%).
Analyst comments:
West reported a major scaling back of customer management services activity within consumer-oriented companies during the first six months of 2010 as companies focused on maintaining volumes within their in-house centers at the expense of third-parties. In addition, West's customer management services revenue growth is being impeded by the company's desire to maintain its margins.
West is endeavoring to drive its WAHA services but although the company reports that WAHA has created new sales opportunities for West, it is finding that its customers in relatively up-market brands are relatively slow to adopt the model.
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Teleperformance Enhances Desktop Environment to Support WAHA Services
Teleperformance has launched an enhanced version of its agent desktop software, Teleperformance Desktop 3.5.
Teleperformance has enhanced its agent desktop software to provide enhanced support for the work-at-home environment. The functionality within the new desktop includes:
- Continuous video feeds of agent workstations to verify work and agent identity
- Support for quick agent to supervisor alerts and private chats
- RSS feeds.
Analyst comments:
The WAHA model continues to generate a high level of enthusiasm in terms of its ability to support increased organizational agility and flexibility of resource compared to traditional bricks-and-mortar based resourcing and to do this with high-quality resources.
However, fears around security and governance are slowing down acceptance and these measures go beyond the initial steps of desktop process adherence and data security to ensure both agent compliance and support for agent learning on the job.
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Transcom Announces Q3 2010 Revenues Up 7.6% to €144.5m
Transcom has announced Q3 2010 revenues, for the period ending 30 September 2010, of €144.5m, an increase of 7.6% (+2.5% in constant currency) compared to Q3 2009.
Q3 2010 revenues (and revenue growth) by service line were:
- Customer management services (CRM) €123.9m (+11.6%) (+6.0% in CC)
- Credit management services (CMS) €23.3m (-11.6%) (-13.8% in CC).
Q3 2010 revenues (and revenue growth) by region were:
- North (Denmark, Norway & Sweden) €37.4m (+22.6%)
- West & Central €31.5m (-3.1%)
- Iberia €23.9m (Spain, Portugal, and Chile) (-3.6%)
- South (France, Italy, and Tunisia) €18.3m (-5.7%)
- North America & Asia-Pacific €33.4m (+23.2%).
Revenues for the first nine months of 2009 decreased 6.1% to €440.3m.
Analyst comments:
While Transcom's customer management services business was impacted by a seasonal decline in transaction volumes in Q3 2010, the business appears to have had a good quarter in Scandinavia and acceptable levels in business overall with the exceptions of France and the U.S.
Transcom is continuing to focus on:
- Driving growth in volume from current accounts, with 80% of growth coming from existing customers
- Addressing underperformance and capacity problems in France and North America
- Portfolio & technology transformation.
Transcom has launched new marketing material using the logo "relationships. revenue, results" to stress the companies customer lifecycle capability from outbound customer acquisition, through customer service, retention, and cross-sell/up-sell, to collections. In addition the company has appointed new sales management in France.
Transcom, like Teleperformance before it, has severe over-capacity in France - the company estimates that it could handle five times its current volume with its current French infrastructure - and is consolidating sites accordingly. The company is also closing its facility in San Antonio in the U.S. following a 20% volume erosion in its U.S. business. It is likely that a proportion of this business has been lost as a result of vendor consolidation to larger suppliers.
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Aegis Acquires Actionline's Argentine Business to Develop Customer Management Services Delivery from Latin America
Aegis has acquired Actionline's Argentinian business to enhance its customer management services capability in Argentina and support its International service delivery.
Aegis is acquiring Actionline's customer management services business in Argentina but not its operations in Chile and Brazil. The company's Argentinian operations employ approximately 5,000 personnel within seven centers within five cities, namely:
- Bs.As
- Cordoba
- Bahia Blanca
- Mar del Plata
- Tucuman.
Actionline focuses on the telecoms, banking, insurance, and energy seectors within the domestic Argentinian market. However, Aegis is additionally looking to use Actionline's centers to serve both the U.S. market and non-English speaking markets in Europe.
Analyst comments:
Aegis has been one of the most acquisitive vendors, in an acquisitive business, during 2009 and 2010. This is the Aegis' fifth acquisition in addition to its failed bid for ICT Group.
While the company has also diversified into F&A outsourcing with the acquisition of Ismart-Timex, four of the five acquisitions have been to strengthen the company's geographic coverage in customer management services, with this acquisition in Argentina following earlier acquisitions onshore in the U.S., in South Africa, and in Australia.
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Sitel Partners with SATMAP to Match Call Center Callers with Agents
Sitel has partnered with SATMAP to offer clients optimized call center routing services based on customer and agent characteristics.
SATMAP software pairs call center agents with customers using demographic, psychographic and geographic variables, including gender, age, location and education, to connect calls with specific agents who are assessed as being most likely to succeed with a specific customer.
Analyst comments:
This is an important technology as customer management services increasingly seeks to deliver top-line benefits through customer retention, cross-selling, and up-selling. While one factor that has already been the subject of widepread optimization is the suitability of locations for specific types of customer and specific types of transaction, it is equally, or arguably even more, important to optimize the level of empathy betwen individual customers and agents. Arguably, in the long-term, this could replace optimization based on location as the primary mechanism for assigning agents to individual customer interactions.
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ACS Acquires TMS Health To Enhance CMS BPO Offerings to Pharma and Healthcare Sectors
ACS, a Xerox Company has acquired TMS Health, a healthcare teleservices vendor from private equity firm Palm Beach Capital.
TMS Health, based in Boca Raton, Florida, has >600 employees deployed on the following customer interaction services:
- Outbound calls to physicians to inform them on new pharmaceutical products and services
- Direct to Consumer: handling consumer inquiries from pharma. sponsored print, Internet and television advertising. This division also handles customer support for medical devices and pharmaceutical products
- Clinical trials: recruiting and screening patients for enrollment in clinical trials.
- Pharmacy services: contacting pharmacists in retail pharmacies to provide up-to-date drug information, collect stocking orders and manage rebate processing.
TMS brings with it 7 major pharmaceutical clients.
Analyst comments:
This acquisition considerably boosts ACS' capabilities in customer management services in the pharmaceutical, biotech and healthcare sectors.
Customer management services is arguably the most complementary BPO service line to ACS' parent company's document management capability. Nonetheless, this acquisition indicates Xerox's ongoing commitment to building a strong widely based North American BPO business around ACS with this acquisition following the funding of the acquisition of ExcellerateHRO to strengthen ACS' North American benefits administration business.
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Aditya Birla Minacs Deploys WorkFlex Manager to Enhance Intraday Staffing Management
Aditya Birla Minacs has deployed WorkFlex Manager within a number of its call centers to automate intraday staffing management.
The software is being used with the aims of improving intraday staffing effectiveness, reducing overhead, and assuring regulatory and/or contractual compliance.
Analyst comments:
Call centers are becoming increasingly sophisticated in managing their staffing arrangements to optimize both cost and agent deployment. Indeed while the units of provisioning may be somewhat restrictive in terms of bricks-and mortar based provisioning, the more widespread adoption of WAHA services will make agent provisioning increasingly granular.
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ACS Awarded 4-Year Customer Management Services BPO Contract by 3 Italia
ACS has been awarded a 4-year customer management services contract by Italian mobile operator 3 Italia.
Services to be provided include customer care services, handling inquiries on billing matters and technical questions. service delivery is from ACS' Latin American operations, headquartered in Córdoba, Argentina: operations acquired from Gruppo Multivoice in December 2008 prior to its own acquisition by Xerox.
Analyst comments:
This contract is significant:
- Both in the U.S.-centric ACS winning a front office BPO contract in Europe, possibly benefiting from being part of the Xerox corporation
- Also in the unusual nature of the global delivery from Latin America into Continental Europe, with Argentina being used for the provision of Italian language services into Italy.
(NelsonHall will be publishing shortly an updated Key Vendor Assessment on 'ACS, a Xerox Company', following a recent analyst visit in New York. For details, contact paul.connolly@nelson-hall.com)
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Firstsource Awarded 5-Year Customer Management Services Contract by Barclaycard
Firstsource has been awarded a 5-year customer management services contract by Barclaycard.
The services to be provided by Firstsource commence on November 1, 2010 and include the provision of the majority of Barclaycard's credit card customer service, currently provided by Barclaycard's Teesside center, together with payment servicing, currently located in Wavertree, Merseyside.
This contract complements a contract signed between Firstsource and Barclays U.S. credit card business in February 2008, whereby Firstsource provides customer care and collections support to Barclays U.S. cardholders from Barclays' operations center in Colorado Springs, CO.
Analyst comments:
Firstsource is continuing to strengthen its ability to offer onshore customer management services, with Barclaycard's Stockton center complementing the recent opening of a new contact center in Middlesborough. The company already provides onshore customer management services to a number of financial services and telecoms companies in the U.K.
The company has also been strenthening its collections capabilities this year achieving PPMS certification in the U.S. where Firstsource works with six major credit card companies. The acquistion of Barclaycard's payment servicing operations on Merseyside will assist Firstsource in strengthening its ability to offer similar services to credit card companies in the U.K.
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Sitel Awarded Contract for After-Sales Customer Support by John Lewis
Sitel has been awarded a contract for customer after-sales support by John Lewis in support of its U.K. electricals customers.
The services supplied by Sitel include:
- Implementation and management of a bespoke CRM system to centralize customer purchasing and after-sales information for access by John Lewis in-store personnel and Sitel contact center personnel
- Handling phone and email support technical support and administration enquiries from electrical and technology customers.
Analyst comments:
Traditional retailers such as John lewis have traditionally had a very strongly store-based culture with customer service largely dependent on interactions with store-based personnel. However, even the msot traditional retailers now need to provide more sophisticated multi-channel customer service options to their clients and this contract is an interesting example of moving product after-sales support beyond the store and into a centralized multi-channel environment with the non-traditional channel handling being taken over by a third-party, rather than handled by store personnel.
TeleTech has gained a low single figure number of new clients throughout 2011 for U.S. onshore delivery of varied customer management services. It is likely that year-on-year growth seen in Q3 2011 of 7.4% will be nearer 10% in Q4 results published next month.
The resurgence in onshore deals has primarily been due to improved market conditions, with companies expanding sales-based customer service.