April 6, 2023
The combination of Concentrix and Webhelp will create a global customer experience management (CXM) titan that can significantly shape the industry’s future. Let’s explore the benefits and other implications of this mega deal.
The recent announcement of Concentrix’s planned acquisition of Webhelp in a US$4.8 billion deal is a major milestone in the growing trend of mergers and acquisitions in the CXM industry over recent years.
With an estimated pro forma 2023 annual revenue of US$9.8 billion across multiple businesses, including CXM, trust and safety, and legal services, the combined entity will emerge as a global service powerhouse with the potential to significantly shape the CXM industry.
Key drivers of the acquisition
The strategic benefits of this acquisition include:
- Stronger operational presence beyond North America: Webhelp has a strong presence in sales, marketing, and payment services across Europe, Latin America, and Africa. With this acquisition, Concentrix will be able to strengthen its operations beyond North America in these geographies. Concentrix is further set to bolster its extensive operations in the Asia-Pacific region by leveraging Webhelp’s existing operational presence and partnerships with regional CXM providers in China and Japan through joint ventures with Kingwisoft and Telenet, respectively. This will result in the combined entity having a diversified revenue contribution across the Americas, Europe, and Asia Pacific
- Enhanced delivery capabilities in Europe, Latin America, and Africa: Webhelp adds more than 25 new countries to Concentrix delivery locations, including Denmark, Greece, Estonia, Finland, Norway, Madagascar, Peru, and South Africa, thus, strengthening Concentrix’s delivery presence in Europe and Latin America, as well as helping it establish an African footprint. This collaboration will establish a robust and well-balanced global footprint, which can attract global enterprises looking to partner with service providers who can offer the right shoring mix to their end customers across geographies
- Varied customers: Webhelp’s customer base is primarily situated outside of North America leading to limited client overlap with Concentrix. With this acquisition, Concentrix is set to gain around 1,000 new clients from Webhelp, consisting of over 25 Fortune Global 500 clients, and more than 200 clients from emerging economies. This will significantly increase the combined entity’s client base to approximately 2,000 clients, of which 155 are Fortune Global 500 clients and 320 are from the new economy sector. By expanding and diversifying its client base, Concentrix can increase revenues, broaden service offerings, and gain economies of scale, while its clients also will benefit from access to a wider range of resources and expertise
- Operational synergies: Combining Concentrix and Webhelp will enable the sharing and cross-selling of digital capabilities, including Concentrix’s Catalyst platform and ServiceSource’s expertise in the fast growth-technology (FGT) segment, as well as Webhelp’s Lead Factory and consulting firm Gobeyond Partners. This will allow the combined entity to offer clients high-value services, addressing their needs more comprehensively and efficiently. Moreover, the partnership is expected to broaden the global reach of Concentrix Catalyst and accelerate its expansion by leveraging Webhelp’s engineering know-how in Europe and Latin America. Sharing resources also can lead to operational efficiencies, enabling the merged entity to enhance profitability and market competitiveness. Expected cost synergy benefits will be US$75 million in the first year after the closing of the transaction and will reach a minimum of US$120 million (after accounting for investments) by the third year
- Expansion of other service lines: Concentrix can expand its trust and safety service lines by utilizing Webhelp’s delivery footprint and in-house solutions, such as Contentus.AI for more efficient moderation, Navigatus for enhancing work quality, and Moderatus for detecting and removing false news and hate speech. In addition, Concentrix can leverage Webhelp’s expertise in legal services, including legal claims management and Know Your Customer (KYC) services, to further expand its Business Process Services (BPS) portfolio
Key considerations
- Integration challenges: Varying technology systems and processes, as well as the difficulty of integrating and managing data, can potentially hinder the Webhelp and Concentrix union. Bringing the respective customer service models and training programs into alignment also can pose challenges. Furthermore, integrating human resources and payroll systems, benefits, and compensation programs can be complex and will require careful planning and execution. However, contrary to other recent CXM acquisitions, we do not foresee a significant culture clash challenge between Concentrix and Webhelp
- The emergence of a new category of global CXM Titans: In recent years, the CXM market has witnessed a significant trend towards consolidation, with several high-profile mergers such as Sitel Group’s merger with SYKES to form what is now known as Foundever and Comdata Group’s merger with Grupo Konecta. The upcoming collaboration between Concentrix and Webhelp is poised to contribute to this consolidation trend, with the combined entity expected to control a considerable market share of roughly 6-8%. Similar to the super-major formation era of the late 1990s and early 2000s in the oil and gas industry, Concentrix, Foundever, and Teleperformance are poised to form a new category of global CXM Titans that have the potential to dominate the market due to their extensive resources, expertise, and global reach. Their emergence validates the growing appetite for comprehensive CXM solutions and the need for providers who can meet these demands on a large scale
- Competition and opportunities for other providers and specialized players: The consolidation of these two forces may create challenges for other CXM players who might struggle to compete with the resources and scale of the merged entity. However, this also could create opportunities for providers to thrive with tailored offerings targeted at specific customer service areas or industry sectors, such as IGT Solutions and ResultsCX with their focused offerings for travel and healthcare, respectively
The announcement of Concentrix’s acquisition of Webhelp has generated a significant buzz in the CXM industry. Certainly, we expect this pending acquisition to fuel more CXM market consolidation, which may potentially limit buyers’ choices for transformation-oriented strategic partnerships.
Despite these concerns, the Concentrix and Webhelp combination creates a formidable CXM force that will likely shape the industry’s trajectory for years to come. Monitoring the impact of this collaboration on the CXM landscape as well as watching other market players respond to the ongoing consolidation trend will be fascinating. Who will be the next global CXM titan to join their ranks?
To discuss global customer experience management topics, contact Shirley Hung [email protected], Sharang Sharma [email protected], or Divya Baweja, [email protected].
And watch our LinkedIn Live event, Delivering CXM Services from Africa: Who, Where, Why, and How, to learn why Africa has become an ideal option for global customer experience management.
