Arvato is gradually making more of a name for itself in the UK SITS market thanks to recent new wins in the public and private sectors (see Germany’s Arvato emerges at Chesterfield). Arvato is a global BPS player with capabilities across IT/BPO, print, customer service, supply chain and logistics services.
With numbers just in from Bertelsmann, its media giant parent, Arvato’s revenue in the year ended 31 December was up 2.5% to €5.36bn, and the EBIT margin down slightly at 6.4% vs. 6.7%, due to weakness in the US and higher energy costs. International revenues, in which the UK is a small (sub £100m revenue) but growing percentage, remained flat at €3.1bn. Although the ‘pure’ BPS figure is difficult to split out, by any reckoning, these numbers make Arvato one of the largest BPS players worldwide.
Arvato has big ambitions in the UK. In the UK public sector it is gaining traction with tier two and three local authorities. In December 2011 it won a major new ten-year deal with Slough Borough Council covering revenues and benefits, payroll, finance services, HR and logistics. We understand that Arvato is also going after major shared services opportunities in central government.
In the private sector, Arvato is also proving one to watch. It plays squarely in the communications-focused BPS space we recently highlighted as having high growth potential (see Communications-focused BPS: opportunities beyond document outsourcing), due to its broad IT/BPS and comms capabilities and experience. It rolled out a new platform for Texaco UK in March to support its Star Rewards loyalty card programme. Arvato will now use this to provide an end-to-end loyalty management service covering customer service, fulfilment, promotions, rewards management, analytics, reporting, audit and campaign management.
The next challenge for Arvato will be to turn this bespoke platform delivery into something repeatable across multiple clients. This is a serious hurdle for platform-based BPS players attempting to make new market offerings scalable and margin enhancing.