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April 2, 2009

Teleperformance: contact center acquisition suggests outsourcing can thrive during recession

Teleperformance's recent purchase of a Dell in-house contact center in the Philippines highlights the fact that many companies are looking to contact center outsourcers as a means of reducing costs through the recession. Dell's decision to maintain service from the Philippines is good news for offshoring as a business model, and foreshadows a number of possible trends in the contact center space.

By CBR Staff Writer

The recent announcement of Teleperformance’s purchase of a Dell in-house contact center in Pasay City, the Philippines confirms Datamonitor’s view that many firms will look to work with outsourcers in order to manage costs and/or increase customer satisfaction through the recessionary period and beyond, and hints at a number of trends that may emerge within the contact center sector.

Firstly, the decision on the part of Dell to sell some of its contact center facilities to Teleperformance could signal the beginning of a trend among in-house contact center operators to eliminate as many fixed costs as possible through the sale of assets to third-party vendors. Such transactions provide the vendor with an immediate influx of revenue, and also result in long-term cost savings in the form of reduced depreciation of facilities, as well as the costs associated with running a contact center (which can vary tremendously, based on maturity of location and seasonality among others).

Datamonitor also suggests that this deal may help to reaffirm the importance of offshore delivery. The fact that Dell has chosen to retain delivery from the Philippines for clients in the US, Australia and New Zealand is important for this business model, especially in the current political climate in which offshoring is often portrayed negatively. However, the fact is that offshore contact center delivery has proven to be an effective way for contact center outsourcers to reduce costs, while tapping significant pools of talent. Therefore, Datamonitor maintains that there is excellent scope for offshore delivery from many countries, including the Philippines. Dell’s decision to continue delivery from Pasay City through Teleperformance is testament to that fact.

Finally, the deal also emphasizes the ongoing role of outsourcing in the technology sector. For many years, contact center outsourcing has proven to be an important facet of managing costs for technology providers, due to the very low margins associated with this vertical market. By providing Teleperformance the opportunity to handle more technical support interactions, Dell is reaffirming that end-users can be serviced to a high standard by a third-party, at a cost effective level.

There can be little doubt that many companies running in-house contact centers will look to imitate the Dell/Teleperformance deal. The issue going forward for many contact center outsourcers looking to benefit from such future transactions will be to identify particular vertical sweet-spots that could exist, and capitalize on them with the right cost and quality messages.


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