TELUS International surpassed expectations in its last three months of business, the latest in a string of metrics that highlight the company’s growing clout in the global CX industry. With earnings of 35 cents a share, TELUS International eclipsed Wall Street’s estimate of 32 cents. Looking ahead, TELUS International is aiming for roughly $3 billion in revenue in 2023, a heady 20% rise over last year.
Behind this impressive growth lies, in part, a buying spree that has made the company one of the most-watched CX firms in recent years. Indeed, fully half of the 2023 forecast revenue growth will come by way of WillowTree, a digital product design firm that TELUS International acquired for $1.225 billion in January.
In 2018, TELUS International acquired India-based Xavient Digital, an AI and digital consulting firm. That deal followed on the heels of the acquisition of Voxpro, an Irish outsourcer. More recently, the company enhanced its content moderation capabilities and European presence with the acquisition of Competence Call Center in 2020, followed shortly thereafter by Lionbridge AI and Playment.
As a result of this buying activity and organic growth, TELUS International has evolved from a relatively staid outsourcer with most of its employees located in the Philippines into a tech-driven CX services provider with over 73,000 employees in 30 countries.
Accordingly, work volumes have begun skewing toward higher-value verticals. Today, TELUS International continues supporting clients in the communications and media sectors, e-commerce, financial services and insurance, travel and hospitality, and healthcare. But its vertical mix is increasingly being supplemented by fintech and videogames, two sectors that are among the greatest embracers of third-party CX service provision.
That heft in terms of headcount and high-tech CX capabilities now gird the firm as it and other industry players navigate deeper into an uncertain landscape in 2023.
On the surface, a slowing world economy presents outsourcers with a welcome paradox. Historically, companies cope with slowdowns in consumer activity by moving fixed costs, such as full-time employees at captive operations, into variable costs by allocating workflows to an outsourcer. It is a win-win: consumer brands get to trim expenses; third-party outsourcers get new business.
When enterprises cut costs “they also look to rationalize their supplier base,” said TELUS International President and CEO, Jeff Puritt, during an interview with Sean Goforth, Syndicated Research Director at Ryan Strategic Advisory. “Often they look to suppliers who can do more than just one thing and provide a partner with more functions,” he explains. So, even if the net volume of work slows for consumer-facing businesses, Puritt is confident that TELUS International can grow by taking a greater share as total volumes are consolidated between fewer vendors.
While these conditions promise widespread growth for TELUS International, regional challenges remain. Russia’s war in Ukraine continues to complicate CX service delivery in Europe. Last year the rapid deterioration of the Euro’s foreign exchange value was a drag on TELUS International’s revenue. Meanwhile, in Germany a series of laws meant to offset inflation with wage hikes have pushed up labor costs to the point where “delivery in that country is prohibitively expensive,” Puritt acknowledged.
By contrast, the firm remains bullish on the Asia-Pacific region, despite the lingering effects of the pandemic. TELUS International counts over 24,000 employees in the Philippines alone. And in early 2019 it opened a center in Chengdu. It marked the firm’s first site in China and a hard-won victory as it opened with the coveted WFOE (Wholly Foreign Owned Enterprise) designation, affording TELUS International greater control over the site.
Tensions between the US and China have yet to hamper service delivery—and TELUS International’s CEO does not think they will. “There are so many benefits to humanity from globalization,” Puritt says, tacking off the benefits to people as consumers, producers, friends, and family members. “It’s hard to go back to orange juice when you’ve tasted champagne,” he says.
Regardless of the country, BPO has undergone a paradigm shift. The ‘arbitrage above all’ mentality that once lured outsourcers to launch delivery from the cheapest location no longer works. Instead, advanced technologies are needed for effective CX management. For those with doubts, TELUS International provides a blueprint that shows how timely acquisitions and a commitment to emerging verticals can bolster growth in a competitive and uncertain world.