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 third edition of the year, we focus on trending segments, such as data annotation and content moderation, along with select M&A transactions during Q3 2021.
As a result of COVID-19, companies in the BFSI industry increased their reliance on outsourcing, adding more agents specifically for maintenance, settlements and regulatory compliance. The pandemic ushered in a digital revolution with an increasing number of businesses offering digital solutions. Outsourcing models have evolved and adapted to new-age industries/ technologies such as e-commerce, digital communication, AI and ML, where technology and domain expertise stand out as key differentiators beyond cost arbitrage. Customer expectations and preferences have changed during this period as the contact centers continue to evolve and offer integrated omnichannel customer experience (CX) solutions for higher retention and quality assurance.
Over the last two years, the exponential rise in the number of digital users, across industries, has resulted in the creation of expansive datasets. This has led to a consequential surge in demand for data tagging and labelling, especially from sophisticated tech bent companies using AI / ML technologies to serve end users. The excessive use of the digital medium has also prompted the need to monitor the growing user generated content. Increasing number of BPOs have started adding dedicated teams and skillsets to provide data annotation and content moderation services.
The contact center industry reported stable M&A activity in Q3 2021. Private equity backed buyers led the deal count, as they pursued acquisitions to integrate service capabilities, add new technologies to diversify their customer base. Also, this quarter, Novistra is pleased to announce the acquisition of Innovative Vision by Support Services Group. Novistra acted as the exclusive sell-side advisor to Innovative Vision. We expect a renewed pick-up in retail activity, emphasis on CX and focus on digital transformation to drive transaction volumes in the last quarter of the year.
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About Novistra
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
Managing Partner
ripun.mehta@novistra.com
(646) 645 1935
Pankaj Arora
Managing Director
pankaj.arora@novistra.com
(917) 460 0659
Peter X. Li
Managing Director
peter.li@novistra.com
(917) 250 8605
Anuj Jaisinghani
Vice President
anuj.jaisinghani@novistra.com
(437) 234 1151
Data Annotation & Content Moderation
Data Annotation Services
Rapid advancements in 5G, Cloud, IoT, complemented by the rise in digital activity and e-commerce during COVID-19, has proliferated the usage of big data and AI/ ML. As marking and training of data consumes bulk of the time in majority of AI/ ML projects, many companies are outsourcing data labeling and annotation tasks to overcome their labor, cost, scale and time constraints. Numerous BPOs are adding data annotation capabilities in their current set ups to enhance their skillsets and meet the rising demand
There are four major data annotation services provided by BPOs across various domains/ industries:
1) Text Annotation – annotating written text
2) Image Annotation – annotating still images
3) Video Annotation – annotating moving images
4) Audio Annotation – annotating sound & speech
The global data annotation tools market was valued at US $695.5 million in 2019 and is projected to grow to $6.5 billion by 2027 (CAGR of 32%). Rise in investments from various industries into AI/ ML and IoT, and the surge in big data technologies, is expected to drive the demand for data annotation. The text annotation segment is expected to grow at the fastest pace, driven by e-commerce and clinical research applications, and video imaging would play a critical role given its extensive use in medical imaging. However, the demand for audio annotation is projected to be modest due to limited scope
Content Moderation Services
Heightened regulation on social media and the exponential rise in e-commerce usage has necessitated the need for content moderation to ensure flagging and control of unauthorized activity. Content moderation is used extensively by social media platforms and marketplaces such as Facebook, Weibo, YouTube, Amazon and Alibaba. However, most businesses with a strong online presence are now ensuring constant moderation to improve user engagement.
The global content moderation solutions market was valued of $5.3 billion in 2020. Led by the rise in inappropriate content and higher spending on digital video advertising, the market is projected to grow to $10.8 billion by 2026 (CAGR: 12.6%). Given cost and efficiency benefits, businesses are transferring content moderation to offshore teams. Most BPOs offering moderation services tend to offer it as a content and platform-agnostic end-to-end offering.
Strong growth in the data annotation tools market
(in $ Million)
Data Labeling and Cleansing take majority of time allocated to ML project tasks
Modest growth in the content moderation market
(in $ Billion)
Select M&A Transactions in Q3 2021
*All figures in $ millions
Select M&A Deals in the Contact Center industry
Signpost, a CRM and marketing automation solutions company, acquired Portland, Oregon, based Securus Contact Systems. Securus provides live chat and receptionist services to local enterprises and large corporations across North America, through its 100+ strong customer service, technology and sales teams. Signpost provides CRM services to businesses to enhance and expand their market reach – providing online presence and reputation management tools to capture, qualify, and follow up with inbound inquiries. The financial details of the transaction were not disclosed.
Securus provides a complementary offering that creates best-in-class solution to generate enhanced process efficiencies, that will facilitate a superior high-touch model for the end customers of Signpost. The acquisition, supported by Highbar Partners and Georgian Partners, will provide scale, positive cash flow to Signpost and creates a best-in-class solution for small and medium-sized home service businesses. Securus’ former backer, PennSpring Capital, will make an exit following the transaction.
Support Services Group (SSG), a global contact center solutions company announced the acquisition of Innovation Vision (IV), a Canada-based marketing technology BPO catering to high growth companies in technology and e-commerce sectors. The company provides BPO, process automation, customer experience and analytics solutions to enterprise and start-up clients, via an omnichannel approach.
Founded in 2002 by CEO Sajan Choksi, IV has its delivery center in Jamaica, with over 900 employees. SSG operates 27 contact center and work-from-home hubs across the US, Canada, Latin America, Europe, and Asia and has 9,500 employees. The financial details of the transaction were not disclosed. IV aligns perfectly with SSG’s strategy and values, and the acquisition was made in response to the rising demand for premium international customer experience options in the market. This will also help SSG expand its operations in Canada and Jamaica. Novistra acted as the exclusive sell-side advisor to Innovative Vision for the transaction.
CallCare, one of UK’s largest call center operators, and alldayPA announced their merger in a $420 million deal. alldayPA has 600+ employees that provide telephone answering, virtual receptionist, and other solutions. CallCare provides call center services, including customer care, incident management, receptionist services, and specialist solutions. The two call centres together employ ~2,500 people.
CallCare has seen a significant increase in revenue from its partnerships with Public Health England and the NHS, with more Covid-19 response lines and appointment booking services. AlldayPA has also seen a rise in demand for their telephone answering and virtual receptionist services, The two Manchesterbased companies have adapted to meet customer expectations around the clock, hiring more staff and expanding their contact centres. Post-merger, the new company, i-CXP will be led by alldayPA CEO, Reuben Singh, who has plans to pursue four more acquisitions after the deal closure.
Webhelp, a global provider of customer experience (CX) and business solutions, announced the acquisition of OneLink, an innovator in digitally-enabled CX, BPO, and technology services in the US, Europe, and Latin America. OneLink, owned by New York-based private equity firm, One Equity Partners, has grown at a CAGR of 30%, operating 17 centers with over 14,000 employees. The financial details of the transaction were not disclosed.
The addition of OneLink offers an expanded footprint to Webhelp across Latin America, an attractive best-shoring mix and top-level nearshore capabilities for the market, as well as next-generation in-house technology solutions. Following the acquisition, Webhelp will have revenues in excess of $2.4 billion, with 190 locations across 55 countries and more than 90,000 employees globally. Webhelp continues to expand its global footprint and service offerings through a combination of both organic growth and M&A, including 13 acquisitions in the past five years.
The US Contact Center Industry declined in Q3 2021
US Contact Center Industry Index is the market capitalization weighted index comprising of companies: TTEC Holdings, Conduent, Atento S.A, SYNNEX Corp, IBEX Ltd., and StarTek Inc.
Public Comparable Company Analysis – US Contact Center Industry
Disclaimer:
This document is intended solely for the use of the party to whom Novistra has provided it and is not to be disclosed (in whole or in part), summarized, reprinted, sold, redistributed or otherwise referred to without the prior written consent of Novistra. All references to “Novistra” refer to Novistra LLC. In the normal course of its business, Novistra seeks to perform consulting and other fee generating services for companies that may be the subject of Novistra’s research reports. Information presented in this document is for informational, educational and illustrative purposes only. While the information in this document is from sources believed to be reliable, Novistra makes no representations or warranties, express or implied, as to whether the information is accurate or complete and Novistra assumes no responsibility for independent verification of such information. Facts and views presented in this document have not been reviewed by, and may not reflect information known to, professionals of other Novistra business areas. In addition, the analyses in this document are narrowly focused and are not intended to provide a complete analysis of any matter. 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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