Industry Commentary

Consolidating Outsourcers Need to Manage Client Risk

By May 14, 2019January 10th, 2024No Comments

Consolidation within contact center services industry has been clear for some time, and it appears set to continue. And, while this broader trend should surprise no one given the need for players to cement their competitive positioning, none can lose sight of their clients in this dynamic.  While many providers are aiming to buy or to be bought, the worries of clients need to be taken to heart within the scope of M&A activities.  It is normal for enterprises currently or potentially using services in a consolidating market to be conscious of what fewer players may mean to their end-user relationships.  Outsourcers involved in any type of acquisition activity cannot lose sight of this factor. If handled poorly, it could result in lost loyalty among enterprise partners.

The move toward fewer players in the contact center outsourcing sector has been well-documented over the past two years.  With the industry facing tighter margins, many firms are desperately looking for a way to drive new revenues with expanded skills sets that their clients can leverage.  This is driving acquisitions that may be vertically-oriented, focused around technology or centered on value-added services. In some cases, growing overall scale or entering new geographies may be key considerations. Regardless of motivation though, what is also clear is that consolidation brings uncertainty on the part of clients.  This should come as no surprise. But it is a risk that many players involved in the acquisition process need to consider.

Often consolidation creates uncertainty among consumers.  This was highlighted recently around speculation at what financial service mergers in the US could do to the accessibility and quality of banking products to the general public.  The same argument pervades other sectors, including travel / transport and utilities.  Regardless of the industry in question, the worries are the same – the end-user will end up being adversely impacted through less choice.  So, it is logical that similar stresses would apply to enterprise executives in relation to third-party contact center services.

Among the chief concerns that many clients of consolidating outsourcers will likely bring to the table is how the new entity will impact end-user delivery. Operational and cultural shifts are bound to occur with a new, larger outsourcing company, regardless of whether it previously worked with the BPO that has been bought or if it was the one doing the buying.  New people and new processes require acclimatization, which enterprise executives might find disruptive in larger partnering providers. And in this case, size can be an issue in the client relationship. Today more enterprise contact center managers prefer smaller outsourcing partners, in order to cement a more intimate relationship. So, for many of them, the idea of being taken over by a much larger organization may not be a welcome development.

However, by planning accordingly, consolidating outsourcers can mitigate potential client concern.  One of the best means of doing so is to ensure that as the integration process plays through, there is a constant level of communication with enterprises in terms of timelines and their specific plans to ensure minimal disruption to their campaigns.  Equally, planning strategically to make sure that consistent client management is at the heart of any integration is a must among consolidating outsourcers.  To be clear, there is no room for making up this playbook as a buyout process goes along. Enterprises prefer not to churn through providers, but they will do so if their executives feel that they are of secondary importance in an acquisition scenario.