No one can doubt that the BPO sector is in a period of consolidation.  Some may argue that this has been the case since the early part of the decade and that the momentum around M&A activity has not abated. Even so, the last 18 months seem to have been especially frenetic with outsourcing operators gobbling up competitors like a famished Super Pac-Man.

Among the more notable CX BPO acquisitions in recent memory are mega-deals that include Teleperformance’s purchase of Majorel and Concentrix buying Webhelp.  And, while these have arguably been the most high-profile due to the global nature of these behemoths, there have also been several notable M&A plays between mid-sized or emerging outsourcers. In recent months, InTouchCX purchased the Mexican BPO Beliveo and Results CX acquired South Africa’s Huntswood.  And no should exclude the forward-looking acquisition of Indian up-and-comer VCosmos by Transcom.

While the rationale for each deal is unique, any MBA student could cite the broad reasons for one outsourcer to buy up another: A defensive play to secure market share; the chance to acquire a new technology set or domain expertise; expansion into a new delivery geography. These all sound like great messages to secure support from shareholders of the acquirer and of the company being bought.

But, what about the client?

From the perspective of the enterprise CX buyer, there is ample reason to believe that many will not view the current spate of M&A activity as a good thing. This is especially true among those that are already engaged with an outsourcer that has either bought a competitor, or one that has been bought.  The reasons for such worries are obvious, and again go back to first-year economics.  With fewer players in the market, there is a greater chance for prices to increase and service levels to tank. There is a feeling that oligopolistic competition generates mediocrity. Moreover, access that clients may have previously had to an outsourcing partner’s senior management might melt away faster than the Wicked Witch of the West.

This is why the BPO community needs to be especially careful in how it presents any type of buying activity to its existing and prospective enterprise partners.  Any corporate or political spin doctor knows that defining a story before anyone else is essential to winning the hearts and minds of a desired audience.  Thus, it is so important for both the buyer and acquisition target to not only participate in the perfunctory photo opportunities that go along with any M&A announcement, but for the benefits of such a deal to be presented positively and aggressively. Doing so can demonstrate an increased ability for the combined entity to better service the client’s end-user via access to new technologies, processes, languages and delivery points, among other benefits.

But these potential gains must be presented in a real-world manner, one that the client will realize in the near-medium term. Also, it should not over-complicate an existing relationship.  Granted, any outsourcing merger will entail some degree of re-balancing, but in the current competitive landscape integrations and their associated headaches cannot come at the expense of strong customer interactions.

Anecdotally, many discussions in the enterprise CX community about the recent spate of mergers involve a degree of doubt about the impact of BPO consolidation. Others though see potential from this trend.  This was quantified in the soon-to-be-released 2024 Front Office CX Omnibus Survey by Ryan Strategic Advisory, in which several hundred captive contact center decision-makers indicate that they believe merger and acquisition activity in CX services will drive innovation and is a positive development for the BPO space.  To maintain this level of goodwill, newly-merged BPO players must ensure strong service levels and innovation are delivered to their clients, as stress-free as possible.

Image sourced from Ilona Gaynor under Creative Commons Licence