New demands to change BPO industry landscape – Convergys CEO

The business process outsourcing (BPO) industry will see more consolidation taking place as demand from clients continues to grow and higher technological investments are needed to support that growth, a top BPO official said Tuesday.

 

"The BPO industry in general is still fragmented. I do see industry consolidation taking place at a more rapid rate than I have seen in the past 10 years," Convergys Corp. president and CEO Andrea Ayers told reporters at a briefing in Makati City.

 

According to the Convergys official, two main reasons are driving industry consolidation: client demand and investment capital.

 

Most clients are large global organizations in search of partners who can support them in a one-stop shop kind of way, Ayers said.

 

"Clients drive some of that consolidation where it's making it harder for the smaller competitors that do not have the robust service offerings to compete in the space. They are not simply able to do everything the clients want to do at the size and scale that they want," she added.

Investing in technology

 

Apart from location and structural investments, Ayers said BPO firms have to make some heavy investments in technology.

 

"Clients, because of increased concerns on data, privacy and security, are making investments... to protect their customers, a requirement of dealing with outsourcing provider. And that simply requires a robust investment capital strategy. Some of the small players can't keep up with that," she noted.

 

At the same briefing, Ayers announced Convergys completed the acquisition of  Stream Global Services Inc. for $850 million with a view to expanding its geographic footprint and capabilities.

Convergys bought Stream from Ares Management and Providence Equity Partners and LiveIt, the business process outsourcing investment arm of Ayala Corp.

 

Convergys now has 125,000 employees in more than 150 locations in 31 countries.

 

Stream’s portfolio will help Convergys diversify its client base by adding leading technology, entertainment, and communications clients.

 

The Philippines, in particular, will be Convergys largest geography across its businesses, Ayers said, noting the company has 55,000 employees in the Southeast Asian nation.

 

There will be no layoffs taking place as "there's actually very little overlap in terms of site location, work type and people," she added. – VS, GMA News