14 May Transcom. Johan Eriksson, President & CEO. Outstanding Customer Experience

Transcription

1 14 May 2013 Transcom Johan Eriksson, President & CEO Outstanding Customer Experience

2 Transcom at a glance, current situation and focus areas 1

3 What is Transcom? A global customer experience specialist......providing outsourced customer care, sales, technical support, and credit management......through an extensive network of contact centers and work-at-home agents Transcom s business is to help make sure that our clients customers form positive perceptions of their interactions with them. 3

4 Transcom in numbers 30,000 people 70 contact centers, onshore, off-shore and near shore 27 countries Delivering services in 33 languages......to over 400 clients in various industry verticals million revenue in 2012 Market cap: SEK million as at March 28, Listed on NASDAQ OMX Stockholm (TWW SDB B and TWW SDB A) 4

5 We have an extensive global footprint Home markets Austria Netherlands Slovakia UK Belgium Germany Norway Spain Australia Czech Republic USA Canada Italy Poland Sweden Denmark Portugal Switzerland Croatia Near Shore Locations Canada Croatia Estonia Latvia Czech Republic Hungary Lithuania Offshore Locations Chile* Peru* Philippines* Tunisia * Developing into home/near shore markets 5

6 Transcom s organization Corporate management - CEO, CFO, CIO, Head of Operations, Head of Global Sales & Accounts Regional management - North region (25% of revenue) - Iberia (19% of revenue) - North America & Asia Pacific (19% of revenue) - South (16% of revenue) - Central Europe (10% of revenue) - Credit Management Services (CMS) in eight European countries (10% of revenue) 6

7 Transcom s service portfolio Customer service Customer experience specialists trained to support best-in-class product, service and brand experiences for our clients customers Technical support Tiered support models, from the simplest questions to more complex support scenarios Customer retention Preventing defection and maximizing the lifetime of a customer Customer acquisition Acquiring new customers cost-efficiently, and building strong customer relationships as a basis for future interactions Cross- and upselling Building relationships and identifying customer needs during any type of interaction, and taking appropriate action to satisfy the customer s need Credit management services (CMS) Early collections, Contingent collections and Legal collections 7

8 Recap of our situation and focus areas Situation today and short-term focus Transcom s profitability has decreased in recent years, but is now improving We see positive effects as a result of restructuring actions Continuous focus on underperforming areas Growth in selected areas and efficiency improvements Broadening client base Market trends Growth driven by domestic Asia Pacific and Latin America markets Diversification (geography and business models) Going forward - Strategic direction Creation of outstanding customer experiences, while helping clients to reduce cost and drive growth Flexibility is critical 8

9 Market trends Understanding our business 2

10 Communications & Media and Financial Services account for almost two-thirds of global industry capacity Distribution of outsourced agent positions* by industry vertical, % = 1.58 million Professional services Professional services Travel & Hospitality Healthcare 3% Government & Education 3% 4% Other 4% Energy & Utilities 4% Manufacturing 4% Retail & Wholesale 8% 2% 1% 26% 39% Communications & Media Financial Services 10 * Agent positions in principal markets (reflecting approximately percent of total global capacity) Source: Ovum

11 Increasing demands for quality: an opportunity for Transcom Historically Our task: Respond to voice calls from customers as efficiently as possible, at the lowest possible cost Today Our task has expanded: Deliver excellent customer experience New channels and technology platforms Offer more knowledge due to diversity of products and greater customer demands Generating a much higher degree of revenue and brand loyalty to clients Feed back customer intelligence to clients - 11

12 Market trend: Increased diversification in terms of market presence Stagnant growth in mature, Western outsourcing markets Significantly higher levels of growth in selected developing markets, and rising interaction volumes with an increasingly sophisticated customer base Expansion in new markets Outsourcers will seek to capitalize on domestic opportunities in developing markets, to drive growth and diversify revenue Traditional offshore locations also developing into domestic delivery centers

13 Industry growth in the coming years will primarily be driven by domestic expansion in Asia Pacific and Latin America Outsourced agent positions* by region, 2011 and 2016e Thousands CAGR Middle East & Africa Central & East Europe Western Europe ,5 234,5 85,9 96,5 264,8 466,3 7.8% 9.8% 2.5% 7.1% 83% of expected growth in Latin America is domestic, i.e. non-offshore Latin America 330,8 481,3 2.7% North America 420,6 Asia Pacific 478,5 683,8 7.4% 64% of expected growth in Asia Pacific is domestic, i.e. non-offshore * Agent positions in principal markets (reflecting approximately percent of total global capacity) Source: Ovum, Transcom analysis

14 Market trend: Diversification in service channels changes business models Social networks are emerging as important customer service channels o Although still small in relation to voice, and chat A growing number of people are more comfortable with nonvoice channels, and expect interaction on their terms... As a result, companies are getting serious about social media in customer service and marketing Increasingly sophisticated non-voice offerings Outsourcers need to further develop analytics platforms and KPIs specific to customer service via social media Agents are not only customer service representatives; they become PR agents and brand ambassadors. Implications for training and recruiting Channel integration will become more important 14

15 Growth will be driven by opportunities beyond the traditional voice business Customer management BPO market, 2011 and 2016e USD billion ,5 17,5 Multichannel, automated and analytics services The market today comprises mainly voice-based services but the situation is expected to change dramatically in the next few years with the emergence of multichannel, automated and analytics services ,4 Traditional voice business e 15 Source: Gartner (October 2012)

16 The number of work-at-home agents is expected to grow significantly faster than contact center-based agents Global outsourced home-based agent growth*, * CAGR = 18% Key drivers Higher quality of customer service Lower overall cost Scheduling flexibility Empowers employees Resilience in face of external disruption Lower absenteeism and better staff retention Ability to recruit high-quality employees * Total agents working exclusively from home for 20 or more hours per week 16 Source: Ovum

17 Our performance in Q

18 Revenue in Q increased 15.9% compared to Q Net revenue, Q113 vs. Q112 m CMS Central Europe South Iberia North America & Asia Pacific , ,6 30,6 25, , ,6 Growth +23.3% +19.3% +13.9% +8.3% +24.5% All units contributed positively to the topline growth Main driver is increasing volumes with our installed base clients Several new clients added during the year also contributed Revenue benefited from 3.8m in compensation received for transferring the right to collect on a Swedish debt portfolio France deconsolidated from March 1 (effect in Q113: - 0.9m) North 38,1 43, % 18 Q Q1 2013

19 EBIT increased by 5m in Q compared to Q Expansion investments Other 1.1 EBIT Q112 Restructuring net effects Volume & efficiencydriven gains EBIT Q million positive impact in Q113 as a result of compensation that Transcom has received in exchange for transferring our right to collect on a Swedish debt portfolio 6.0 million positive impact in Q113 due to a capital gain following the deconsolidation of our former French subsidiary, offset by 6.0 million in restructuring and other non-recurring costs EBIT in Q112 included a non-recurring cost of 1.3 million related to site closures in North America 19

20 EBIT margin improvements in North America & APAC, Central Europe, South and CMS, counterbalanced by North and Iberia EBIT margin North Central Europe South Iberia North America & AP CMS TOTAL 2013 Jan-Mar 0.2% 3.4% 4.7% 2.0% -2.0% 23.4% 3.6% 2012 Jan-Mar 3.4% -1.9% -4.9% 5.5% -4.8% 6.0% 0.7% Volume and efficiency-driven performance improvements in North America & Asia Pacific, Central Europe and South Deconsolidation of France as well as higher volumes and efficiency in Italy benefited South North: Volume fluctuations against forecast, leading to overstaffing, and salary increases Iberia: Impact of early Easter CMS: Compensation received for transferring our right to collect on Swedish debt portfolio 20

21 Short-term focus areas to improve profitability 4

22 What will it take for Transcom to return to historical margins? Continue improving key performance indicators Seat utilization Efficiency Offshore/onshore split Attrition Improvements on four KPIs vs. previous year Key performance driver Average Seat Utilization ratio Share of revenue generated offshore Average Efficiency ratio (billable over worked hours) Monthly attrition Trend vs. Q Q vs. Q (89% vs. 83%) (21% vs. 16%) n/a (positive development) n/a (unchanged) 22

23 We need to successfully address a number of shortand medium-term operational and financial challenges Stop the losses in France ( 1m/month in 2012). Transcom plans to stop financing the French subsidiary s loss-making operations beyond March 1, Increase onshore seat utilization in North America Successfully resolve tax claims Successfully implement action plan to improve operational performance in the North region Germany renegotiate labor agreements Return UK CMS to profitability 23

24 Revenue in the North region is typically driven by the time that our agents spend in contact with our clients customers Illustrative Extraordinary circumstances (~>120% of forecast) Actual call volume Volume forecast Guaranteed volume (~80-90% of forecast) In the North region, Transcom typically commits to delivering against agreed service levels for volumes in the range of percent of the forecast (non-compliance being subject to penalties) Volumes in Q in the North region fell significantly short of forecast call volumes, leading to a situation of overstaffing 24

25 Accuracy of volume forecast is key to planning and profitability Example Staffing need based on actual volume Scheduled staffing level based on forecast Invoice sent out two days later than forecast Delayed campaign Time 25

26 Key business/pricing models used by Transcom Business/pricing model Price per transaction (e.g. call or data entry) Price per minute Price per activity Price per hour Key characteristics Transcom gets paid for each transaction, e.g. each call taken Time spent per transaction is capped critical to balance quality and time spent on each transaction Accuracy of volume forecast is key to planning and profitability Transcom gets paid based on the time the agent spends with each customer (usually no cap) Accuracy of volume forecast is key to planning and profitability, but less risk than in price per call models Typically used for back-office tasks/processes Time spent per activity is capped important to balance quality and time spent on each task Transcom uses client systems and pre-defined processes Back-office tasks usually take longer to complete than the typical call Provides a greater degree of financial predictability and stability Currently the most commonly used model in the North region Alternative models used by Transcom 26

27 Key business models used by Transcom, by region Pricing model North region Average for other regions Price per transaction (e.g. call) Price per minute Price per activity Price per hour 0% 1-25% 26-50% 51-80% Business model mix currently used in the North region is more exposed to accuracy of volume forecasts, compared to other regions We are currently working to improve the balance of pricing models used in all regions 27

28 Going forward Transcom s strategic direction 5

29 Transcom s brand promise Outstanding Customer Experience, driving revenue and brand loyalty 29

30 Short- and medium-term growth opportunities North America and Asia Pacific Continue expanding in local markets in Asia Pacific Latin America Serving domestic markets and the US, in addition to Spanish clients North Europe Central Europe Near shore

31 Summary: key priorities going forward Short-term focus Continuous focus on executing turnaround in underperforming areas Continued focus on revenue expansion and efficiency improvements Increased focus on quality and service delivery to support significant ramp-up of new volumes Medium-to long-term priorities Grow revenue in line with overall market growth in the markets where we choose to compete Improve profitability and decrease earnings volatility - Continuously strengthen operational efficiency - Optimizing our geographic delivery mix - Focus on broadening our client base 31

32 Thank you! Questions?

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