There’s no FTE hell with Chris Caldwell

The good old customer BPO business has taken quite a battering in recent years, where the same old usual suspects have embarked on selling predominantly the same old voice services, with most choosing to compete with ever-cheaper global locations to prop up their fragile profit margins. While many of the services majors have chosen to steer clear (or quietly exit the market), the importance of creating an amazing customer experience has never been so critical to customer-facing businesses.  Something has gone sorely wrong here…

In an era where every firm aims to be “digital” (and has a Chief Digital Officer to boot), the focus on engaging customers with both digital and voice communications has taken center stage… yet, these legacy call center practices continue to hound the services industry as most of the call center firms continue to fight it out to the lowest common denominator: who can delivery average customer service as cheaply as possible?  But you can’t just blame the service providers alone for this behaviour:  many of the FORTUNE 500 propagate this behaviour by playing everyone off to squeeze every last drop of cost (and subsequently value) out of their delivery capability… preferring to talk a big digital customer experience game than truly investing in one.  

One leader in the space who has taken it upon himself to declare war on these legacy practices is Concentrix President Chris Caldwell, who has masterminded the impressive growth of the firm over the last 12 years, which has included some major acquisitions, notably, the IBM contact center business, BPO firm Minacs and the Australian digital outfit, Tigerspike.  The company today boasts annual revenues greater than $2bn with over 100,000 employees globally.  Having observed this rapid rise, I thought it high time to invite Chris on here to share a bit more about his story and his views on why this industry needn’t be an FTE hell any longer…

Phil Fersht, CEO and Chief Analyst, HfS Research: Good morning Chris. It’s great to finally get you here on HfS. I would love to hear about your journey on how you wound up running the Concentrix business.

Chris Caldwell, President, Concentrix Corporation: Of course, Phil, It’s bit of an interesting story. I’m not sure if anyone starts out saying that they are going into a career to beat your business, or a call center business. But I worked for a parent company, SYNNEX where I was looking after M&A and the diversification of their business model from the core distribution business. One of the businesses that we bought, very small at the time, was a BPO business, about 30 people which was barely doing over $1m a year and had begun to lose money after some time. And my boss who was the CEO of the other company, said to me, ‘you bought it, you fix it.’ That was the start of the BPO business and that’s when I took over Concentrix at the time. I then had to learn the call center business very quickly; figure out how to grow it and do something with it, which happened in approximately 2005.

Phil: Chris, you then went through this much, much larger acquisition of the IBM call center business in 2013. Can you talk a bit about how Concentrix got to that point, the relationship with SYNNEX, and how things have really progressed since you made that major acquisition?

Chris: Sure, It’s interesting. When we originally invested in Concentrix it was to provide additional services to SYNNEX vendors. SYNNEX is an IT distributor and I can still remember our first services for lead generation for some of the IT vendors, which were very basic offerings.

What became clear very quickly was that the vendors of SYNNEX alone weren’t going to be able to grow us. And so, we had to develop a service offering for new clients and discover something that was compelling for the marketplace.

At the time we looked at doing renewals for vendors, technical support and various other things. We developed this philosophy around how to drive lifecycle management for our end customers and our clients, which was successful. This enabled us to expand in the Philippines and in Latin America. We bought some software technology that covered renewals to drive our value and we grew the business up to about $200 million over several years. Just before the acquisition, we reviewed the marketplace, where we felt that ‘we are too small to be big, and too big to be small. And we either need to double down in this business, or we frankly need to get out.”

We therefore looked at a lot of different companies, and one of the businesses that was coming in the market was the IBM CRM and BPO business. It was a massive undertaking. But when we looked at, it was clear that it would allow us to get into verticals that we would have a very hard time to break into just by ourselves. It had a lot of capabilities that we thought we could exploit. It had a blue-chip client base that would have taken us years to develop. So, we decided that this was the way to go and really grow the business and we went ahead with the IBM acquisition.

It was a huge task. We went from having a business of approx. 12,000 people to bringing on board an extra 35,000 overnight. The business changed from covering 10-11 countries up to 24 countries at the same time. Suddenly we went from primarily servicing smaller banking, consumer electronics and IT types of clients to significant banks and insurance companies around the world This really changed the dynamic of our business, which gave us a launching pad to grow from approx. $1bn dollars 4 years ago, to $2bn this year.

The acquisition clearly allowed us not only to grow our existing client base but also expand into new verticals. It really was a big change for us, but it was a part of this strategy of ‘how do we become a significant player in the BPO business’. Where we see the market going, it was certainly something we had to do to stay relevant in the market. 

Phil:  That’s a good background, Chris and it’s great to see the effort, and the impact that has gone into this. When we look at where the industry is going, there’s been a lot of sort of noise in the market, in the last couple of years. Firstly, we had the ‘Digital’ bandwagon. Now it’s evolving more around Automation, and AI. How would you say this is impacting the contact center business, in terms of the way the clients are behaving, the way that you are behaving? 

Chris: So, I think that there are few things here. For example, we were primarily voice 5-6 years ago. We now are almost 50-50 between voice and non-voice. And our belief is that, and we talk about this a lot in one-office, the reality is that you no longer can segregate voice and non-voice. It requires them to come together, and I see that happening increasingly, where our clients are asking us to take over an entire process or solution, which requires you to pull bits and pieces together to make that happen.

While that’s happening, the reality is that, you’ve got these change elements saying, okay, now that you are doing both voice and non-voice, how can we digitize some of this; now let’s figure out how to put RPA on that.  When you look at AI, it has got a lot of sex appeal to it, I am not sure if it has got a lot of meat to it yet. But driving a better process, better efficiencies, and really taking the cost out of the equation for our clients, I just see that continuing. I see the development of tools and technology continuing to try and work out the process to enhance the customer experience – that’s clearly key. I think the brands that will survive will create a much more engaged and personalized customer experience regardless of what they do. And that’s really where we want to see our market growing, where we want to be present.

Phil: Chris, we are seeing a convergence of the traditional and the emerging businesses, in terms of business models and technologies. And I’ve noticed you’ve made acquisitions that seem to approach both markets. You bought Minacs a couple of years ago, and then Tigerspike more recently. Can you sort of expand a little bit on where you are doubling down?

Chris: We will never be an Information Technology Outsourcing player. However, our belief is that we need to have technology integrated into our solutions, some of which will be proprietary technology that we will develop ourselves by our large development team. Then a part of that will be an ‘off-the-shelf’ customization that we will add to finish off the solution. I think just going to the market with a labour solution or a cost solution is irrelevant now. There’s still some business for it, but over the coming months and years, it is likely to diminish.

So, the investments we’ve made in Minacs were about Internet of Things (IoT), Connected Car and Automotive. Our investments in Tigerspike are about driving a superior UX and UI design, as well executional mobile enterprise and mobile applications. We see the needs from our client base and then we also see where the market is going and needing more of these types of services. We really want to be a leader around how to deliver this and frankly disrupt our competitor’s businesses by going to their client’s and saying, ‘not only can we take up this work, we can develop a much better customer experience. We can measure that customer experience differently. We are going to create a very flexible workforce model that allows you to really manage your peaks and valleys at a much more variable cost solution versus a conventional FTE type of solution,  which historically has been sort of where a lot of our competitors continue to focus.

Phil:  Right, and do you see more opportunity going after tired competitive deals and trying to offer something more disruptive, or by targeting green-field clients which might be in the emerging markets and needing a contact center solution? Where do you see the bigger growth opportunity in the short to medium term?

Chris: So, it’s interesting. We have two very focused directions for these types of clients. One is the larger clients that are in our vertical industry that we are focussed on, where we are coming together with a complete solution. We also invest in the ‘unicorns’, the ‘up and comers’ where we know that out of five or six, a few will perish, but one or two might become the ‘next best thing’. That’s been a very successful model for us for several years. We don’t basically go to market via the contact center. In fact, we are almost 50-50 in terms of voice / non-voice. It’s more about what type of solution that the client is trying to drive; what customer engagement are they trying to achieve? And then building a solution around that wholesome technology, as well as services, and a global footprint, and then everything else that goes along with it. That’s a more compelling thing.

We stay away from industries that are just body shop industries. We tend to stay away from clients who are “most common denominator” procurers and really focus on the people who are trying to differentiate their brand in the marketplace.

Phil: Okay. You mentioned at our Chicago conference a few months ago that you are very tired of these buying practices where many clients are still trying to buy in the old-fashioned procurement way, where the focus remains purely on cost and labor. You made it very clear you wanted to see a shift in how these services are positioned, delivered and managed, where the onus switches to value metrics and business outcomes. I don’t think it’s just the fault of the buyers, as most of the contact center service providers propagate that model… simply because they are comfortable with it as well. What do you think really needs to happen to change this attitude and approach and get some real shifts in a different direction?

Chris: That’s an interesting question, Phil. I see the shift coming when consumers procure services in a different manner. And that tends to kind of permeate all the way through the organization or the company providing those services. ‘We can’t do it in the same old way. We need new innovations. We need to change that up.’ They go back to their vendor partners, and the vendor partners go, ‘we are not going to work with you to procure or deliver these services in the old methodology.’ And we are seeing a bit of that.

I think it’s also particular in our industry, where we see new arrivals taking share from the incumbents by being a very disruptive force in the marketplace. And then they come back to us, and say, ‘we need something different.’ And we say, ‘well, you are not going to be able to procure it the way we normally procured it.’

I think that’s what’s really going to be a driver for change. There’ll still be some companies who want to do everything through procurement, and that’s fine. But I see it as a very big competitive disadvantage to what more nimble companies are doing. And we are seeing very large companies who are incredibly successful in the States now totally change how they are procuring services. Because you are having an end-to end business conversation where you are talking about the solution, the end-customer goal, different types of deliverables and then you are talking about the total cost of delivery execution around these solutions by ending with focusing on how is that better than what their current cost structure is. That’s a different conversation.

Then what tends to happen is procurement comes in, and handles the contract administration, and compliance, which are very important things. However, the difference is that they do not get into how much you are going to charge for this transaction, or how much your FTE rate is etc. and that’s where we see real changes happening in the industry.

Phil:  Okay. So, if I could anoint you as the Emperor of Contact Centers for the next year and you could have one wish to change this industry, what would that wish be?

Chris: Ah! Umm. People stop making claims about AI that are completely wrong, irrelevant, and lies! 

In all seriousness, I think from my standpoint it’s about having real business discussions around the solutions they need versus trying to procure these types of services through a lowest cost RFP discussion. That I think would up-the-game and would make a healthier business because you find some providers couldn’t compete anymore, and would just fall off the radar, which would then enable the others to drive more innovative solutions. So, a lot of things that people talk about would then start to get baked into these solutions rather than just talked about, which seems to happen a lot in our industry.

Phil: Yes, the blurring lines between hype and what’s actually possible, right? And I agree with you on the AI stuff, we need to have a more realistic conversation about the business. And I like some of the things you’ve been saying around this shift towards an outcome type conversation and less of the administration stuff. This has been really refreshing. Hopefully, we’ll get to see you soon in one of our summits and engage again. It’s been great catching up. 

Chris: Yes, for sure. It’s funny, I’m used to saying it a few times over the last week. I love your line about ‘AI is like your first teenage experience where there is a lot of excitement; It happens very quickly, and then a lot of disappointment, and missed expectations’. And I’ve used that a lot to describe the hype in this business. I keep attributing it to you, so you might get a few emails about it. I thought it was brilliant.

Phil:  Yes. I seem to have got away with that one! I really enjoyed this and thanks again for your time today.

Posted in : Business Process Outsourcing (BPO), CRM and Marketing, Digital Transformation