We have seen a lot of merger and acquisition activity in our sector this summer.
In this our Launch Editorial, we speak with the big players and voices in the industry and gather a range of views and opinions on the effect this consolidation will have, both on the market, the technology, the clients, the people, and of course, the customers.
Here in Part 1, we look closer at the Sitel acquisition of Sykes in the Contact Centre outsourcing and BPO space. The acquisition will create a $4B business with over 150,000 employees worldwide and will see the group become the third largest BPO behind Teleperformance and Concentrix.
“As one of the largest acquisitions in the contact centre outsourcing market in recent times, the Sitel/Sykes deal is a real sign of market confidence in customer services and customer experience management solutions” says Dino Forte, CEO of Ventrica
“What’s interesting is over the past few years, most acquisitions by contact centre providers have focused on bringing in new service offerings, building digital capability and plugging in innovative technology to an existing provider. The messaging in this acquisition focuses on further international expansion
For many companies, customer service has become pivotal during the COVID 19 pandemic. Under the scrutiny of the C-suite, it has been moved from being seen as a cost base to a strategic opportunity and therefore ripe for investment. Businesses that have felt vulnerable about their customer experience have upped their investment in key areas such as digital transformation.”
“The recent acquisitions and consolidation we have seen in the outsourcing sector shows consumer activity is rising and reflects the growing need for exceptional CX solutions” says Alistair Niederer, Head of EMEA at TTEC
Alistair continues; “I believe the pandemic has really changed BPO and outsourcing forever. It has allowed the evolution of outsourcing into “orchestration” that has been extended into a set of delivery principles to allow CX as a Service (CXaaS). This draws on the experience that many executives will have had when adopting cloud-based technology systems or storage.”
“The contact centre industry has witnessed several large-scale acquisitions in the recent past, and I suspect we will see more acquisitions such as this as organisations try to incorporate additional capabilities within their toolkit. I believe the acquisition of Sykes by Sitel will help fill a hole in their offering once integrated” says Colleen McCann, Business Development Director at HGS UK
“I think at present the requirement of BPOs to expand on their capabilities in such ways is heightened by the challenges we see almost every industry facing, whether positive or negative, caused by the pandemic. The shift in consumer behaviour is driving the need to act quickly with solutions that drive customer experience. Being agile in the current CX marketplace is vital.”
Does size really matter?
“The announcement of the acquisition of Sykes by Sitel is hugely significant in the BPO industry and is one of the largest acquisitions since Concentrix acquired Convergys in 2018” says Adrian Ingham, CEO of Yourcentre and co-founder of The Listening Company.
“Without doubt the acquisition will provide enviable scale in the BPO sector and will see Sitel customer base immediately enhanced along with further diversifying the sectors supported by Sitel. I believe both businesses share some existing customers so it will be interesting to see if those shared customers look to keep their “eggs in one basket” or spread some of the risk elsewhere.”
Over the last 25 years we have seen many mergers and acquisitions in the BPO space, perhaps the first one of significance was the purchase of The Mitre Group by SITEL Corp. says Marianne Withers, CEO of The Verity Centre. “This was followed over the next two decades by many of the mid market players such as Careline, TSC, TLC, Converso to name but a few being acquired by the “big boys” such as Serco, HGS etc”.
“But why has there been so much consolidation, has it been for the benefit of the industry or the customer or has it been that size does matter in this market. If we think about the progress of technology through AI and Bots etc, then surely we should need less people not more. Even the big boys are eating each other up, there was Concentrix and Convergys and now we see SITEL acquiring Sykes. Many of the large corporations still have great pride in stating how many agents they have worldwide, it’s still a key KPI for them.
In a world where it seems that “less is more” and that it’s all about “quality and not quantity’ I fail to see the real benefit these acquisitions bring to a market that is moving more and more towards automation. Perhaps some of the CEO’s should be a little more concerned about what their customers need and a little less about their ego’s” says Marianne.
What are the key areas for an organisation to focus on with such a large scale merger?
Adrian “Keeping focus amongst staff is one of the critical elements, at every level there will be uncertainty around roles, and this can quite quickly affect focus and performance.
Also, key is ensuring clients have very clear communication around how the acquisition will affect them. The easy answer is to say they won’t be affected whereas the reality is some will be affected, and it is key to ensure all key stakeholders continue to put their clients service at the top of their to do list. It is all too easy to get caught up in numerous and ongoing integration meetings and this can become a distraction.
Culture will also be an interesting challenge when The Listening Company was acquired by SERCO in 2011 the cultures were obviously very different so I can imagine two $2B businesses will take some effort and time to align”
Colleen “Consolidating two BPOs of this scale will be a very big undertaking and require lots of focus by both organisations and comes at a time when buyer preference is for medium-sized business process services partners. According to research conducted by Ryan Strategic Advisory (2021), CX buyers prefer outsourcers with revenue under $1B (USD).”
“There are clear benefits of mergers and acquisitions for firms – creating scale, obtaining talent or skills and increasing customer base and market share to name just a few”, says Emma Dark, Chief Customer Experience Office with Sullivan and Stanley. “It’s exciting times ahead for the firms and its customers. However, the secret to successfully delivering change of this size, is to ensure ‘customer’ remains at the heart of planning, execution and behind the ‘why’.
Voice of the employee and voice of the customer insight become more important than ever.
Across the entire customer and client base, it’s essential you embark on the change with clarity on what customers love about the current experience within the respective brands.
Refocus on the CX strategy of the future and ensure the whole organisation is clear on what the intended experience for customers will be. Be open with your customers around what this change means for them. Use the change as an opportunity to resolve existing customer pain points to improve the overall experience.
The communication to employees and customers is essential during this change; hearts and minds to create a customer centric culture”, says Emma
So what will be the likely benefits?
“I would think that as time goes on there will be efficiencies gained, particularly in shared services and also no doubt there will be estate consolidation and as we discovered when undertaking this it can be a very tricky exercise”, says Adrian
“The acquisition should put Sitel in a strong position going forward and will no doubt bring new areas of expertise particularly digital capability, it will be with much interest to see how quickly a business of this size will affect change and how that will translate through to performance and profitability.
As the market continues to consolidate and the “big boys” get bigger hopefully this creates space and opportunities for smaller boutique and new entrants into the market.”
So what do you believe the future holds?
Dino “I believe we are entering a period of industry growth and opportunity and I make the following three predictions:
- An opportunity for small to medium size contact centre operators to offer a more agile and nimble service focused on digital adoption while bigger players focus on integration and delivering at scale.
- A commitment towards continuous improvement even if you’re a business that’s not seeking a merger or acquisition. Industry change will force all players to invest and innovate to stay ahead
- More companies seeking to differentiate through focusing on a industry type or focusing on niche aspects of customer service.”
Alistair “My vision of CXaaS embraces a vision of work-from-home, Gig CX, emerging technologies, and cloud computing blending into a form of CX that is dramatically different from the traditional BPO, challenging many European traditions, such as multilingual hubs. With virtual contact centre and agents based from home a multilingual team of agents can be spread across Europe and yet all be working together for the same client.
These are exciting times as we see organisations accelerate their digital transformation agendas and it is great news for customers as the focus is on providing highly bespoke customer experience and customised product offerings”.
So there we have it. An acquisition that is broadly seen as a very positive for the industry as a whole, creating benefits certainly for the organisations involved, and probably for the clients. There is also belief that for others, size is not everything, and it will create opportunities further down the scale. It remains important that clients have a range of options as to where to go, and that whatever shape or direction the merger takes, the people are looked after in the right way. KG