Contact Center Review
Contact Center Review, an initiative by Novistra Capital, is a curated quarterly newsletter to keep you updated about the Contact Center industry. In our second edition of the year, we bring you a few insights & developments, along with select M&A transactions for Q2 2022.
The Contact Center & BPO industry continues to witness gradual recovery following two years of COVID-19 related disruptions and skill shortages with rapid digital transformation and hybrid work models. Pick-up in outsourcing demand from retail and travel sectors coupled with growth in start-up clients are boosting the margin profiles for contact centers. Increased adoption of data analytics across business functions and demand for intelligent automation are seen as key drivers of future growth of the industry. As automation and AI continue to improve efficiency and customer experience (CX), there is a heightened emphasis on delivering a human touch to improve customer engagement and generate feedback, which is seen as a major boost to customer loyalty.
Outsourcing in the gaming industry, both from independent and large gaming studios, is witnessing a strong surge in demand as a cost-effective alternative to inhouse game development and art production. BPO players based in Ukraine, India, China, Canada and the US are expanding their reach to cater to the demand from advertisement development and the NFT outsourcing market. BPOs continue to assist companies with moderation of user generated content to create a safe environment for the gaming community.
The contact center industry reported stable M&A activity in Q2 2022 with interest from both strategic and PE-backed acquirers across capabilities including CX and automation, and verticals including, retail, BFSI and e-commerce. Novistra closed three transactions in 2021 and remains very active in the BPO and contact center industry, currently running transactions across North America and APAC regions. We expect consolidation in the industry, together with digital transformation to drive deal volumes in 2022.
Upcoming Industry Events
Novistra Capital 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 4 offices in the US, UK and India. Please contact the following members of the Novistra team to discuss strategic options for your company.
Ripun Jai Mehta
(646) 645 1935
(917) 460 0659
Peter X. Li
(917) 250 8605
(437) 234 1151
Gaming BPO market witnessing strong growth
Gaming BPO market
The gaming industry has experienced robust growth of 23% since the onset of the pandemic and is expected to grow at an annual rate of 13.2% through 2028. There has been a surge in demand for outsourcing, both from independent and large gaming studios, in areas such as game development, art production and video ads. Part of this market growth can be attributed to companies looking for a cost-effective and a creative approach without compromising on the quality of the deliverables.
The market is led by several key players that are predominantly based in Ukraine, India, China, Canada and the US. Currently, the US and China capture the largest market share of the gaming market, and India and China are forecasted to be the outsourcing hubs in the future. There are parts of Africa demonstrating promising growth within this capability which will further promote the region’s growing reputation for outsourcing activities.
Gaming advertisements have become a key revenue driver for most corporations in this market, which is expected to grow at a CAGR of 7.2% over the next 8 years. The revenue potential from this segment continues to generate outsourcing demand for advertisement development and support. The recent evolution and the acceptance of blockchain has paved way for NFT outsourcing market, which is expected to grow to $147 billion in market size at a CAGR of 35%.
Key Serviceable Areas of Gaming BPOs
Outsourcing in the gaming market has become increasingly important over the last decade. This market services 3 key aspects of the gaming industry – customer support, technology support and billing, and game design and development. While game development and design captures the largest chunk of the outsourcing market, most companies still rely on their inhouse teams. Other functions such as player and operational support have been outsourced to service providers to meet the demands and maintain the satisfaction levels of the growing online community. These service providers leverage technology to automate and optimize operations and monitor and moderate user generated content to create a safe gaming environment.
Select M&A Transactions in Q2 2022
Select M&A Deals in the Contact Center industry
Majorel Group Luxembourg SA, a global provider of end-to-end CX solutions for vertical leading brands, announced the acquisition of Alembo NV. Alembo, founded in 2005, employs more than 300 people in Paramaribo, Suriname and offers CX and BPO services to the Dutch speaking market in the e-commerce, retail, media and culture industries.
The acquisition of Alembo is a cultural fit for Majorel, that is to focus on delivering operational excellence, together with the wellbeing and prosperity of its people. Also, the acquisition aligns with Majorel’s growth strategy of geographic expansion, especially in countries that strengthen Company’s nearshore and offshore leverage. Majorel purchased 100% of the share capital of Alembo from its founder & CEO, Frank Veldhuizen, who will continue to support Majorel with its future growth. The parties agreed non- disclosure of the specific details of the transaction.
WebHelp, a leading global CX BPO, has announced the acquisition of Grupo Services, a leading tech enabled Brazilian BPO supportinh high growth US and Brazilian customers across fintech, banking, retail, ecommerce and telecommunications industries. This acquisition will increase Webhelp’s team size to over 110,000 employees across 58 countries and help them expand further in the Brazilian market. Financial details of the transaction were not disclosed. The acquisition stems from a call for innovation from end customers, and Grupo will add to Webhelp’s capabilities through self-service technologies, CX journey design, and omnichannel orchestration. Grupo’s customer experience management solutions are a high value add-on to Webhelp’s digital marketing services that increases their service portfolio and will be beneficial for the clients.
Comdata, a leading service provider in the customer management BPO market, has strengthened its position in the financial industry via its acquisition of BPO assets of Kauri’s Financial Services, Italy’s first independent insurance firm. As per the agreement, Kauri Financial Services’ business will be transferred to Insurecom, a fully controlled Comdata entity. Financial details of the transaction were not disclosed. The deal will see Comdata increase its workforce by 400 employees across Milan, Leece, Verona and Turin that will support its new Italian customer base. This deal will also help Comdata acquire and integrate skills in front-end and back-office insurance market including both home and health insurance services and expected to add EUR 14 million to Comdata’s top line.
Bain Capital, a global value-added investor, has announced its acquisition of VXI Global Solutions from The Carlyle Group. VXI Global Solutions is a leading provider of innovative call center services, delivering omnichannel and multilingual CX and care, custom software development, sales support, and compliance & fraud protection support. VXI has over 35,000 employees across 42 locations in Europe, North America and the Caribbean region and plays a crucial role in partnering with multinational businesses around the world. Financial details of the transaction were not disclosed. This deal is not the first time these two firms have worked together; Bain Capital previously invested in VXI from 2012 to 2016 to further VXI’s penetration in the Chinese and Central American markets. The current acquisition will benefit these firms significantly, and the BPO market.
The US Contact Center Industry Outperformed in Q2 22
Public Comparable Company Analysis – US Contact Center Industry
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