Contact Center Review, an initiative by Novistra Capital, is a curated newsletter to keep you updated about the Contact Center industry. In our first edition of the year, we bring you insights & trends, along with select M&A transactions for the Q1 2023.
As the Contact Center industry evolved through digital transformation following the COVID-19 pandemic, companies operating in the industry are actively seeking ways to streamline operations, reduce costs, and enhance efficiency in response to these unprecedented circumstances. Companies have expedited the implementation and integration of conversational AI tools such as Chatbots within their delivery models, as well as internal processes, to achieve cost and operational efficiency.
According to IBM, chatbots can reduce total costs by up to 30% by replacing potential chat support workers and minimizing the need for human intervention. The average cost of one chatbot interaction is $0.50-$0.70, whereas a customer support agent handles 17 interactions every day on an average and charges around $19.5 per hour.
The emergence of ChatGPT is revolutionizing the contact center industry and shaping its future. Its advanced language model-driven approach enables more accurate and contextually relevant responses, resulting in improved customer interactions.
This transformative technology is not only streamlining operations but also enhancing scalability, responsiveness, and overall customer satisfaction in the contact center industry. Several studies indicate tangible benefits and superior performance of advanced chatbot technologies like ChatGPT over traditional approaches. An Oracle survey found that 80% of businesses reported increased customer satisfaction and reduced operational costs after implementing AI-powered chatbots.
The Contact Center industry experienced strong M&A activity in Q1 2023, as both strategic and PE-backed acquirers sought targets to expand their clients, CX offerings and enter new geographies. Novistra successfully advised MattsenKumar, a full service BPO, on its sale to Bill Gosling Outsourcing.
We expect consolidation and investment in new technologies to drive deal volumes for the rest of 2023.
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About Novistra
Novistra is a boutique M&A and PE advisory group with a strong focus on the Contact Center Industry. Founded in 2010, Novistra has a team of experienced professionals, located across three offices in the US, UK and India.
Long-Term Growth and Evolution of Chatbots in the Contact Center Industry
Chatbots have emerged as an automation tool to act
as virtual agents offering real-time customer support as businesses aim to optimize costs and create efficiency. They help address customer centric FAQs and minimize call volumes, hence enabling agents to tackle complex issues that require human intervention. Moreover, by providing instantaneous responses to customer queries, the utilization of Chatbots have reduced average wait times by 88-seconds in comparison to live agent interactions. [6]
In 2022, North America emerged as the market leader with approximately 31% share, which can be attributed to its position as a prominent hub for Chatbot startups. [5] In terms of industries, healthcare, banking, retail and insurance are experiencing significant cost savings from the adoption of Chatbots. [3] In fact, Chatbots are expected to deal with up to 90% of healthcare and financial inquiries in 2023. [2]
The advent of ChatGPT, a large language model– driven artificial intelligence Chatbot, has burst into prominence in recent weeks and has made an indelible impression on the world, let alone the contact center industry. Unlike traditional chatbots that depend on pre-programmed responses, ChatGPT possesses the ability to generate real-time, dynamic responses. This distinctive capability positions it as a potent tool for businesses seeking to provide customers with a personalized experience. It can learn to adapt based on customer interactions, continuously improving the quality of the responses and overall CX. Other benefits for the contact center industry include real time multi-lingual capability,
natural language and contextual understanding and multi-platform integration capabilities.
While ChatGPT has room for improvement, particularly in fully grasping subtle customer nuances, we are confident that future iterations will significantly enhance its performance.
Sources: www.demandsage.com, www.insiderintelligence.com, www.grandviewresearch.com, www.venturebeat.com
Select M&A Deals in the Contact Center industry
| Deal Date | Target | Target Country | Target Business Description | Acquirer/ Investor | ||
|---|---|---|---|---|---|---|
| March 2023 | MattsenKumar | USA | Provider of contact center and back-office services with expertise in third-party quality, content, data analytics and technology services. Novistra Capital acted as the exclusive sell-side advisor to MattsenKumar | Bill Gosling Outsourcing (sponsor: Owner Resource Group | ||
| March 2023 | Australian Debt Recoveries | Australia | Provider of debt collection consultation and services, including front-end receivables assistance and call center assistance for follow-ups, to the government and companies in Australia | Paycepaid | ||
| March 2023 | Webhelp | France | Reputed contact center offering end-to-end services across CX, sales, marketing, and payment services to B2C and B2B customers in Europe, Latin America, and Africa | Concentrix | ||
| March 2023 | Groupe Solution Collect Solu | Canada | Debt management and services company offering, first to third-party collection, account receivable management and CRM services to enterprise clients across various industries | General Credit Services | ||
| March 2023 | Personlig Svarsservice AB | Sweden | Answering service agency offering telephone, webchat and appointment booking and customer services to both SMEs and large enterprises | Responda Group | ||
| March 2023 | WASI Call Center | USA | Call Center operator offering answering, appointment setting, live chats, emails, digital experience platforms, research, survey management, lead generation and direct sales services | MAI | ||
| February 2023 | Ardent Credit Services | UK | Debt recovery and credit management services provider to consumer and commercial businesses across the UK for both prime and secondary placements | Phillips & Cohen Associates | ||
| February 2023 | Responda Group | Sweden | Omnichannel BPO offering professional services including professional answering, customer service, support service, fax service, mail answering and chat services to SMEs | IK Partners | ||
| February 2023 | Smiles on Demand | Philippines | Offers outsourcing and offshoring consulting services with a primary focus in the hospitality, quick-delivery and medical industries across the US, Canada, UK, Australia, and New Zealand | Vervent | ||
| January 2023 | Athena BPO | India | Telesales BPO specializing in e-calling, backend systems, web, email and SMS response management for the BFSI, consumer durables and and telecom industries | Updater Services Limited | ||
Sources: www.prnewswire.com, www.businesswire.com, www.newswire.ca, www.europapress.es, www.nearshoreamericas.com
Canada’s Bill Gosling Outsourcing has acquired US-based MattsenKumar, a BPO specializing in various services across industries like technology, education, retail, and media. The acquisition was facilitated by Owner Resource Group. MattsenKumar, with 2100 employees in India, will be integrated into Bill Gosling Outsourcing, expanding its global workforce to over 5,000 employees across the Americas, Europe, and Asia.
This move enables Bill Gosling Outsourcing to enter the Indian market and diversify its service offerings. The acquisition was advised by Novistra Capital.
Concentrix, a global customer experience and tech services provider, acquired Webhelp for around $4.5 billion. Webhelp, a BPO focused on customer experience and more, has 125,000 employees across 58 countries, serving 1000+ clients, including Fortune Global 500 firms. The merger is projected to yield $9.8 billion revenue in 2023.
This strategic move strengthens Concentrix in Europe, Latin America, and Africa, expanding to 25 new countries. The united entity will have 2,000+ clients, including 155 Fortune 500 ones. Webhelp also extends Concentrix’s sales reach to 12 more countries, reinforcing its standing in the $550 billion+ CX market.
US-based logistics company MAI has acquired private call center operator WASI, situated in Omaha, Nebraska. WASI specializes in support services like appointment setting, live chats, and research. Following the acquisition, WASI becomes part of MAI’s Voice division, which now boasts over 200 employees, including agents in Costa Rica and all US states.
This addition bolsters MAI Voice’s technology offerings and expertise in contact centers, particularly in AI augmentation and omnichannel services.
California-based fintech Vervent acquired Philippines-based BPO Smiles on Demand, known for top-tier support in industries like hospitality and medical services. Vervent’s credit card and loan servicing now extends with this strategic move, expanding its geographic reach and customer service capabilities.
This addition allows enhanced customer support for its existing clientele through extended hours and expanded staffing. This purchase diversifies Vervent’s offerings, aligning with traditional customer service functions.
Sources: www.prnewswire.com, www.businesswire.com
The US Contact Center Industry underperformed in Q1 2023
*US Contact Center Industry Index is the market capitalization weighted index comprising of companies: TTEC Holdings, Conduent, Atento S.A, SYNNEX Corp, IBEX Ltd.,
StarTek Inc., Concentrix Corporation, EXL Service Holdings and Genpact Limited
Public Comparable Company Analysis – US Contact Center Industry
| (All figures in US$ millions, except per share data) | ||||||||||||
| Company Name | Ticker | Share Price (1) | Market Value of Equity | Enterprise Value (TEV) (2) | Revenue | EBITDA | EBITDA Margin (%) | TEV/ LTM | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| LTM | FY 22 | LTM | FY 22 | LTM | FY 22 | Revenue | EBITDA | |||||
| TTEC Holdings Inc | NASDAQ: TTEC | $37.23 | $1,764.7 | $2,546.5 | $2,488.3 | $2,443.7 | $318.5 | $299.8 | 12.8% | 12.3% | 1.0x | 8.0x |
| Conduent Inc. | NASDAQ: CNDT | $3.43 | $749.3 | $1,538.3 | $3,805.0 | $3,858.0 | $377.0 | $393.0 | 9.9% | 10.2% | 0.4x | 4.1x |
| Atento S.A | NYSE: ATTO | $4.04 | $60.0 | $709.3 | $1,067.2 | $1,067.2 | $377.0 | $101.9 | 9.5% | 9.5% | 0.7x | 7.0x |
| SYNNEX Corp | NYSE: SNX | $96.52 | $9,036.0 | $12,885.4 | $61,999.2 | $62,343.8 | $1,513.1 | $1,513.1 | 2.5% | 2.4% | 0.2x | 8.4x |
| IBEX Ltd | NASDAQ: IBEX | $24.40 | $445.3 | $401.7 | $522.6 | $520.1 | $60.6 | $60.6 | 16.5% | 11.6% | 0.8x | 4.6x |
| StarTek Inc. | NYSE: SRT | $4.13 | $166.4 | $272.1 | $376.1 | $385.1 | $38.5 | $38.5 | 10.1% | 10.0% | 0.7x | 7.2x |
| Concentrix Corporation | NAS: CNXC | $136.84 | $7,125.2 | $9,167.0 | $6,424.8 | $6,324.5 | $1,031.0 | $1,031.0 | 16.3% | 16.3% | 1.4x | 8.7x |
| ExlService Holdings | NAS: EXLS | $161.83 | $5,392.0 | $5,504.7 | $1,483.5 | $1,412.0 | $248.4 | $248.4 | 21.2% | 17.2% | 3.7x | 17.5x |
| Genpact Limited | NYSE: G | $46.22 | $8,490.0 | $9,416.8 | $4,392.0 | $4,371.2 | $687.2 | $687.2 | 15.7% | 15.7% | 2.1x | 13.7x |
| AVERAGE | 12.7% | 11.7% | 1.2x | 8.8x | ||||||||
| MEDIAN | 12.8% | 11.6% | 0.8x | 8.0x | ||||||||
1. *Equity Value represents closing share price as on Mar 31, 2023
2. +Market Capitalization is as on Mar 31, 2023
Disclaimer:
The information in this document is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation or for any distribution or use that would subject Novistra or its affiliates to any registration requirement within such jurisdiction or country.
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