Reshaping of the global customer management BPS market is taking place at an increasing rate, with customer service giant Convergys acquiring US-based rival Stream Global Services for $820m in cash. The deal follows IBM’s sale of its global customer services BPO operation to Concentrix last September (see here).
The merger will make Convergys a top two customer management player globally with 125k employees, and >$3bn reveue, putting it a close second to French HQ’d market leader Teleperformance (>$3bn in revenue and 138k employees). Concentrix’s acquisition from IBM meanwhile shows the divide that now exists now between the two top players and the rest of the pack (see IBM exits customer service BPO (update)).
Stream is being sold by private equity owners Ares Management and Providence Equity Partners, and LiveIt, the BPO investment arm of Philippine conglomerate Ayala Corp, which holds a 29% stake. The Philippines is an important delivery location for both Convergys and Stream, where around a third of the combined staff are based serving mainly US accounts. In terms of UK presence, Stream adds significant extra capacity with six centres in Altrincham, Middleton, Stockport (2) and Belfast (2). This will add to Convergys’ existing centres in Manchester and Newcastle.
As we have pointed out in recent comments, the shift to digital channels is having a profound impact driving new forms of demand across the customer management space (see Channel shift driving customer contact BPS). This is introducing new technology disruptors around social, mobile, analytics and cloud (SMAC), which are forcing suppliers to either rethink their position in customer management altogether like IBM, or seek to consolidate and re-invest to ensure their long-term future, like Convergys and Concentrix.
Differentiating around these SMAC technologies and services is going to be critical for these customer management players. It will likely continue driving M&A as the industry reshapes to meet this need. Customer management players also face the threat of new automation technologies eating into rules-based administrative support areas. How they respond to these challenges will largely determine the winners from the losers over the next few years (see our BusinessProcessViews research stream and Predictions 2013: Business Process Services).