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: February 2010
Contains commentary and insight from NelsonHall analysts on key CMS industry developments that impact your sourcing decisions
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Teleperformance Announces Q4 2009 Revenues Down 8.4% to €475.5m
Teleperformance has announced Q4 2009 revenues, for the period ending 31 December 2009, of €475.5m, a decrease of 8.4% (-7.5% at constant currency and business scope).
Q4 2009 revenues (and revenue growth) by region were:
- Europe €245.8m (-14.7%) (-13.7% at constant currency & scope)
- NAFTA €179.6m (-6.9%) (-6.0% cc/cs)
- Other €50.1m (+30.9%) (+30.5% cc/cs).
Full-year 2009 revenues increased 3.5% (down 1.1% in constant currency and business scope) to €1,847.7m. Full-year 2009 revenues (and revenue growth) by region were:
- Europe €923.6m (-5.5%) (-4.3% cc/cs)
- NAFTA €782.7m (+10.8%) (-3.5% cc/cs)
- Other €141.4m (+39.9%) (+48.8% cc/cs).
Analyst comments:
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Firstsource Announces Fiscal Q3 2010 Revenues Up 10.5% to Rs.4,908.5m
Firstsource has announced fiscal Q3 2010 revenues, for the period ending 31 December 2009, of Rs. 4,908.5m, an increase of 10.5% (+8,2% growth on revenue from services) compared to fiscal Q3 2009.
Fiscal Q3 2010 services revenues (and revenue growth) by geography were:
- North America Rs. 2,811.0m (-1.7%)
- U.K. Rs. 1,377.1m (+21.1%)
- India Rs. 615.9m (+36.2%)
- Rest of World Rs. 35.9m (+56.5%).
Fiscal Q3 2010 services revenues (and revenue growth) by industry were (estimated):
- Telecoms & media Rs. 1,916.6m (+32.6%)
- Healthcare Rs. 1,766.6m (-4.8%)
- Financial services Rs. 1,064.8m (+2.6%)
- Other Rs. 92.0m (-31.5%).
Estimated blended annualized revenues per head by sector were:
- Healthcare $49.8K
- Financial services $26.0K
- Telecoms & media $24.7K.
Analyst comments:
In the short-term, Firstsource is arguably most optimistic concerning its telecoms and media business with the mobile-related business in the U.K. expected to benefit from the ability of Firstsource's U.K. mobile operators to sell iPhone-based services from January 2010. In addition, Firstsource expects to benefit from its U.K. broadband clients riding on the back of the BT 40MB roll-out.
Within the financial services sector, Firstsource is expecting to benefit from the traditional seasonal strength of the collections business in Q1 2010.
In healthcare, U.S. unemployment at 10% is impacting growth in the payer sector, with major growth in this sector only expected once the Reform mandates are finalized.
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Hinduja Global Solutions Announces Fiscal Q3 2010 Revenues Up 1.7% to Rs. 2,224.1m
Hinduja Global Solutions has announced fiscal Q3 2010 revenues, for the period ending 31 December 2009, of Rs. 2,224.1m, an increase of 1.7% compared to fiscal Q3 2009.
Fiscal Q3 2010 revenues (and revenue growth) by sector were:
- Telecoms & technology Rs. 610.2m (+6.3%)
- Health Insurance Rs. 593.9m (+14.9%)
- Consumer electronics Rs. 553.4m (+0.9%)
- Financial services Rs. 124.4m (+9.0%)
- Chemicals & biotech Rs. 85.6m (-25.3%)
- Others Rs. 256.6m (-19.3%).
Fiscal Q3 2010 revenues (and revenue growth) by delivery location were:
- North America Rs. 996.5m (-3.2%)
- India Rs. 834.5m (+7.3%)
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- International Rs. 499.0m (+13.7%)
- Domestic Rs. 335.5m (-1.0%)
- Manila Rs. 388.3m (+3.3%)
- Mauritius Rs. 4.7m (+36.0%).
The number of employees year-on-year shifted in favor of the Philippines. While the number of employees decreased 2% overall with declines of 6.3% in India and 4.8% in the U.S., HGSL opened a second site in Manila and increased employment in the Philippines by 25.4%. Annual revenues per delivery employee based on averages over the quarter were:
- India $7.4K
- Manila $14.0K
- U.S. $46.6K.
Revenues for the first nine months of fiscal 2010 increased 15.5% to Rs. 6,690.1m.
Analyst comments:
HGSL increased its year-on-year margin from 17.1% to 18.8% despite coming under pricing presure in the Indian domestic market, where the company consequently saw a small fall in revenue, and the company is now opening centers in the Tier III Indian cities of Guntur and Nagercoil to serve the Indian domestic market at reduced cost.
The company's results also demonstrate the continuing shift of service delivery supporting the U.S. market from onshore to offshore, with Philippines delivery continuing to demonstrate its exceptional level of acceptance to U.S. clients.
In terms of verticals, HGSL has been experiencing high success in health insurance and has just added a client in the media sector. The company has also begun its first move into Europe with the signing of a foundation client in the U.K.
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Convergys Announces Q4 2009 Revenues Down 2.7% to $684.4m
Convergys has announced Q4 2009 revenues, for the period ending 31 December 2009, of $684.4m, a decrease of 2.7% compared to Q4 2008.
Q4 2009 revenues by business unit were:
- Customer management $483.6m (-8.2%)
- Information management $112.4m (-1.1%)
- HR management $88.4m (+39.2%).
Full year 2009 revenues increased 1.5% to $2,827.2m. Full year 2009 revenues by business unit were:
- Customer management $1,986.7m (+1.6%)
- Information management $434.3m (-24.0%)
- HR management $406.2m (+56.5%).
Margins remain low with Q4 2009 operating margin of 1.4% and a negative margin of 4.0% for 2009 overall. The Q4 margin was impacted by reduced margin in the customer management business and an operating loss in the information management business resulting from restructuring ($13m severance) and asset impairment charges of $28 million in the fourth quarter of 2009.
Analyst comments:
Convergys is anticipating a significant decline (-8%) in 2010 revenues with customer management services revenues flat, an approximately 20% decrease in information management revenues, and a 38% decrease in HR management revenues.
Convergys' customer management services business remains under margin pressure with Q4 2009 margin declining to 4.8% compared to a margin of 6.7% for 2009 overall, as organizations continue to reduce transaction volumes and move increasing proportions of delivery offshore. Nonetheless Convergys is expanding its customer management services sales force, aiming to win increased volumes with existing clients, and looking to win market share through greater differentiation of its offerings.All this will be backed by additional cost actions and the continuing expansion of offshore delivery.
The information management business is expected to continue to be impacted by carrier decision delays and North American carrier consolidation.
Convergys' HR management revenues were artificially boosted in 2009 by the release of revenues following contract renegotiations. The company has now eliminated its implementation liabilities and will be focusing on achieving increased operational efficiency.
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HCL Partners with Talisma to Offer Multi-Channel Platform-Based Customer Management Services
HCL Technologies has partnered with Talisma Corporation to offer hosted CRM services within its customer management services BPO offering.
The service will initially be hosted from an HCL data center in the U.S. with other hosting options, including India, to be subsequently added.
HCL is targeting:
- Hosted and in-premise end-to-end CRM software for enterprises with revenues above $500m
- Individual platform-based customer management services, e.g. platform-based chat BPO service, for organizations with revenues over $1bn
- Consolidated platform-based customer management services for enterprises with revenues above $1bn.
HCL's first client for the service is a car retailer operating in India, whose customers showed a preference for visiting the retrailer's web site for informatiuon and so needed to be supported with a chat channel of communication.
The service supplied by HCL consists of:
- Hosted chat using hosted Talisma software, interfaced with the client's existing CRM system for access to customer data and profiling
- Chat handling agents, supporting customer information handling, complaint handling, and prospecting.
- The pilot service went live in 3 weeks, has resulted in a 300% increase in chat volume, with 50% of prospects using chat as the means of communication.
Analyst comments:
Inbound channel integration and optimization is one of the major requirements sought by organizations from their customer management services vendors, as shown by NelsonHall's recent CMS user requirements research. Within this overall picture, support for email handling is no longer the fastest growing requirement, with the highest levels of activity currently resulting from emerging channels such as chat an outbound notification services.
Specifically, organizations are increasingly seeking to use multi-channel communication with their customers in order to reduce per customer transaction cost while maintaining or enhancing the number of customer interactions and the overall customer experience delivered.
Within this multi-channel environment, customers are increasingly using web sites, rather than the phone, for information finding with the result that the demand for chat services is rising particularly rapidly. Accordingly, HCL is finding that the initial demand for its new platform-based service is arising from organizations seeking to add chat support capability to an existing contact center capability.
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Teleperformance Acquires 50% Stake in TLScontact to Offer "Face-to-Face" Channel
Teleperformance has taken a 50% stake in TLScontact to enter the "face-to-face" contact center market.
TLScontact currently operates outsourced face-to-face visa processing application centers for public services and governments in Europe, Asia, North Africa, and the Middle East. A proprietary suite of interaction management software is utilized to provide step-by-step procedural control.
Analyst comments:
Multi-channel interaction is becoming key to success in customer management services with vendors increasingly extending their operations beyond agent-based voice services into e-channels.
However, in the government sector, the face-to-face channel remains important in areas such as welfare-to-work and visa processing. This acquisition gives Teleperformance a foothold in handling face-to-face interactions, which is likely to be an increasingly important requirement in servicing public sector clients.
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TSO Partners with Garlik to Offer Hosted RDF Platform Format to U.K. Government Departments
Williams Lea public sector division TSO has partnered with Garlik to offer a hosted RDF platform for use by U.K. Central and Local Government departments.
Analyst comments:
TSO is the major print manager serving U.K. central government departments and NDPBs and has extensive experience both in secure printing of public sector documents such as white papers and in storing and presenting information for government departments in media-independent formats.
This partnership is a natural extension to the trend to offer public sector information in multimedia format online.
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Digital River Partners with Softonic to Expand Presence in European e-Commerce Support Services Market
Digital River has partnered with Softonic to expand its presence in the European e-commerce support services market.
Digital River has acquired a stake of less than 15% in Softonic for $26m.
Digital River will become the exclusive third-party e-commerce provider for digital buy-now software titles on the Softonic site and increase Softonic's existing software catalog by adding a major portion of Digital River's collection of approximately 100,000 downloadable software titles.
Analyst comments:
The partnership potentially strengthens Digital River's ability to offer its e-commerce support services clients access to a major complementary software download site to enhance their sales potential while increasing awareness of Digital River's e-commerce support services with European software producers.
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transcosmos Expands Benxi Data Entry Center to 800 Workstations
transcosmos has expanded its Benxi China data entry center from 400 to 800 workstations.
The main flow of operations for the offshore data entry services provided by transcosmos is as follows. Original documentation (customer information) collected by transcosmos in Japan is verified, scanned and separated after corrections are made, and then this data is sent to the Benxi Center. At the Benxi Center, the image data sent from Japan is received, input operations are performed and the completed materials are delivered to transcosmos. "Security" is tackled through a process of imaging and separating the customer's information.
Analyst comments:
This expansion illustrates the continuing importance of China as a low-cost delivery location for servicing Japanese operations, particularly support activities such as data input and verification.
transcosmos continues to develop its presence in Eastern Asia and has also recently strengthened its operations in the region through a partnership for call center operations with Korean commumications company KT Corporation.
2009 has seen a major turnaround in Teleperformance's fortunes.
While in 2008 Teleperformance experienced strong revenue growth in Europe and in NAFTA, accompanied by a fall in revenues in Asia Pacific and Latin America, the situation has reversed strongly in 2009. In 2009, Teleperformance's revenues fell in both Europe and NAFTA yet showed strong growth elsewhere.
The recession arguably came at a bad time for Teleformance. While the group had developed some vibrancy in its Latin American operations, and the group now derives more than 10% of its revenues outside Europe and NAFTA, Teleperformance had apparently become distanced from its operations and customers in Europe and North America. The group is now endeavoring to turnaround this situation, internally with a greater emphasis on management "by walking around", and greater employee engagement through "Teleperformance for fun" and "Citizen of the World" programs. Externally, Teleperformance is emphasizing its PLATINUM service and positioning to offer high-quality agent-based services to protect its revenues and margins in Europe and NAFTA.
However, Telepeformance may be less advanced than some of its competitors in recognizing that its clients need to continue to reduce their customer service costs and that improved use of multi-channel service management and analytics are becoming key issues for organizations. Quality of agent-based services is no longer sufficient in isolation to meet client requirements.