As more outsourcers seek entry into the US CX space, there is growing uncertainty about how to do so. With consumer activity picking back up, enterprises across the vertical spectrum are desperate for partners to help drive end-user loyalty. However, players coming into the US from abroad are finding that an increasingly attractive way to plant their stake is by setting up their own operations from scratch. While this defies conventional wisdom, the option of a greenfield site has never been more relevant in the context of American BPO.
The US consumer space represents the motherlode for customer experience service providers. Its status as the largest single Western demand market means ample opportunity to work with enterprises that require assistance supporting customers. And, while consumer confidence took a dip recently, owing largely to fears about ongoing inflation, evidence from The Conference Board suggests that this trend may be shifting in the near term. Equally, after some uncertainty, the US economy appears poised for a comeback. Thus, with the run-up to the holiday season appearing to be commercially positive, BPOs looking to break into the US have timing on their side.
The question for these outside players is how to best enter the American CX market swiftly to take advantage of what looks to be an upswing. In the past, the most obvious solution would be a quick acquisition of an existing provider with a strong US client list. But, this is not as feasible as it once was.
One reason is lack of choice. The ongoing spate of M&A activity since 2019 has reduced the number of outsourcers available for purchase, which has driven up prices. Based on EBITA multiples, today’s options are much more expensive than they would have been even a few years ago. Equally, those shopping in the US BPO market today are immediately struck by the fact that what is currently available to buy may not meet the same levels of quality that would have been the case 18 – 24 months ago.
So, what can an overseas outsourcer do to enter the US market in a cost-effective, expeditious fashion? For many BPOs, the solution is to go greenfield. In the past, this strategy was seen as time-consuming and expensive. But, things have changed. For one thing, real estate professionals have identified more available commercial property supply, including both buildings that could be retrofitted into an attractive contact center and plug-and-play CX facilities that were abandoned at the outset of the pandemic. Thus, in many communities across the United States, prospective investors are spoiled for choice in terms of options.
Then, there is affordability. More cities and states are eager to reinvigorate communities post-pandemic, and a targeted number are making it financially attractive with incentives for contact centers. Working with site selectors that can help identify locations that provide the most generous grants, tax breaks and subsidies can help alleviate some, if not most, of the set-up costs for new entrants to the US CX space. This is in addition to the savings realised on the back of lower price-points due to excess commercial real estate currently on the American market.
Reputation is also a greenfield driver. No amount of due diligence will uncover an acquired firm’s issues in terms of how it is seen by the local contact center agent community or by regional suppliers with which there may have been problems in the past. And, while establishing positive name recognition may take some investment and time for a new player, setting up fresh enables the new investor to write their own story, not inherit a bad one.
This is not to say that aspiring entrants to the US CX market should outright dismiss acquisition. There remain solid local and regional players that would make great buys. But, there is also a reality that this can be more time-consuming and expensive than they may have anticipated. At the very least, working with a seasoned site selection firm to determine if entering the American customer management market with a greenfield strategy is the right approach.