In BPO, Bigger Isn’t Always Better

Why Bigger Isn't Always Better in BPO

The wave of recent Mergers & Acquisitions (M&A) in the Business Process Outsourcing (BPO) and customer experience (CX) arena has stirred the belief that growth in size is tantamount to increased value. Notable events include the acquisition of SYKES by Sitel in September 2021, leading to the formation of a unified group named Foundever in March 2023. Additionally, Concentrix merged with Webhelp in the same month, with Concentrix owning a larger stake of 78%. More recently, in April 2023, Teleperformance bought Majorel.

However, I want to challenge this notion and highlight key factors I’ve seen drive superior results, such as technology, culture, and employee empowerment. Just to give you a few examples from Alorica’s perspective:

Quality Over Quantity

While larger BPO providers often consider size a leg-up in the competition, superior service should not be overshadowed. Success is achieved by harnessing digital tools (AI, automation) and cultivating a customer-centric approach. Businesses that emphasise enriching every interaction and customer journey, instead of merely increasing headcount to manage the influx, can truly set themselves apart and provide stellar experiences.

Big doesn’t always mean better - especially in the outsourcing sector. For example, over 20% of our revenue now comes from more agile, new economy companies. In this way, we help a diverse portfolio of clients, including many emerging companies and large-scale brands. It’s not just large organisations that are profitable and exciting to work with.

Striking the Right Balance

Maintaining the ideal blend of scope and nimbleness is pivotal to thriving in the BPO sphere. By being “big enough, but not too oversized to be unmanageable”, Alorica’s CX teams are well equipped and experienced to deliver the best possible service to our clients regardless of their size and without the inevitable barriers that come from being a mega or small CX provider. Our employees are empowered, elevated, and valued, creating an award-winning culture of inclusion that has set Alorica apart since we were founded nearly 25 years ago.??

Alorica is well positioned in this regard because we are not a niche or boutique outfit; we are a global organisation with over 250 clients across various industries and an average client tenure of ten years. However, our scope is complemented by the versatility and agility to accommodate smaller and mid-sized clients, parallel to competing for extensive contracts.

Differentiating Strategic M&A from Mere Revenue Growth

M&A activities are commonplace in the industry, but it is crucial to distinguish between strategic acquisitions that introduce new capabilities and those aimed solely at revenue growth. There is nothing wrong with M&A deals. Most of the time, it is a sign of a healthy and growing marketplace - leaders would not invest if they did not expect an ROI. But merely measuring achievements based solely on headcount is outdated and fails to encapsulate genuine merit. The recent lacklustre response from financial media speaks volumes. The Financial Times summarized RBC Capital Markets' comments on the Teleperformance deal as 'WTF!'

The Path to Long-Term Success

Looking ahead, the triumph of the BPO firms will be defined not by its largest players, but by those who embrace change, strategy, and a commitment to adding value to every customer journey. By adopting a client-focused approach and prioritising innovation, companies can outperform competitors regardless of their size. Enterprises in this sector need to be talking about how smart their customer service transformation approach is, and how they can advise on AI/automation and turn a traditional cost sector into a revenue-generating process.

Let me know what you think about the industry consolidation by leaving a comment here or get in touch directly via my LinkedIn.

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