Acquisition activity remains robust at the end of 2019, with outsourcers more focused than ever on driving presence in this competitive marketplace. This was evidenced most recently by way of TELUS International announcing plans to acquire Competence Call Center, subject to regulatory approvals. With this transaction, expected to close in early 2020, TELUS International will not only grow its presence in some of the hottest delivery points in Europe, it will also expand its scale to become one of the largest providers of customer services in the world. This move should also be a wake-up call to other outsourcers, who cannot sit on their hands when it comes to consolidating their own position in the marketplace.
TELUS International has steadily been making its presence felt in the outsourcing sector for some time. A truly global organization, it has made some solid acquisitions over the past three years, notably buying Voxpro in Ireland, and has added to its digital capabilities with the acquisition of IT-specialist Xavient. Clearly this is a company that is not afraid to be aggressive in order to solidify its market position. This is what makes the Competence Call Center initiative so compelling.
Competence Call Center has long been one of the more well-reputed European outsourcing providers. Founded in Austria over 20 years ago, it has grown to nearly 9,000 employees in 11 countries across Europe. When it closes in Q1, this deal spells multiple benefits for TELUS International. First, it will implant TELUS International more firmly in key West European demand markets that include Austria, Switzerland, France and Germany, thereby adding to its base of revenues outside of clients in the UK and Ireland (via the Voxpro acquisition). From a broader geographic perspective, it will also afford TELUS International with more revenue diversification beyond its traditional client base in North America.
Post-close, this move will also provide TELUS International with access to some of the most important up-and-coming delivery points within Central and Eastern Europe, most notably Poland, Romania and Turkey. In the most recent Ryan Strategic Advisory Front Office BPO Omnibus Survey of enterprise contact center buyers, French and German respondents registered significant goodwill for many of the delivery points from which Competence Call Center provides services. This will have a net positive impact on sourcing new contracts in these demand markets.
A final element worth emphasizing in this move relates to TELUS International’s new market position. On a pro-forma basis, TELUS International’s combined annualized revenue will surpass US$1.3 billion in 2019. The company will achieve an estimated enterprise value of approximately US$3.8 billion once the transaction is completed, providing the necessary results and momentum for the combined entity to become the newest member of the top-tier of global pureplay front office outsourcers. This point should not be underestimated when considering the desire of enterprise buyers to work with providers that have financial stability and scale, alongside a diversified delivery platform and progressive series of offerings.
Acquisition has been fast and furious over the past 24 months, and the pending buy of Competence Call Center by TELUS International is a great example of this trend. It would be remiss not to also highlight recent consolidation moves in the customer experience space by TTEC and Infosys, each of which have been active in this regard. But if there is one thing that no BPO should ignore, it is that the stock of available buys is quickly diminishing. Those that wait will likely find that by this time in 2020, the selection of choices will be considerably smaller and more expensive.