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BPO 2.0 is alive at TELUS International in Bulgaria

On a recent trip to my native Bulgaria, my colleague Elitsa Bakalova and I visited one of TELUS International’s local sites. Country Managing Director Kristina Ivanova and Director of Operations Gergana Ralchovska hosted us in the recently opened TELUS Tower in downtown Sofia. With over 3,000 staff members in Bulgaria split between three offices, TELUS International has grown roots in the community not only to expand its recruitment reach but also to build local trust one event at a time, which is reflected in its extensive corporate social responsibility program.

During the tour of the facility, featuring staff who speak a total of 40 languages to serve many global, regional and local clients, the common themes of innovation, inclusion and collaboration were well displayed. As a vendor that faces the ever-evolving dynamics of the BPO industry, mainly impacted by the advent of chatbots and automation, TELUS International is well prepared for potential headwinds. From offering non-traditional BPO services, including content moderation and content management, to reskilling staff and employee engagement programs, TELUS International in Bulgaria is able to maintain an attrition rate in the teens, well below the industry average of approximately 30%.

In a rapidly evolving market such as Bulgaria, where the IT services sector presents the vast majority of career opportunities for young people, TELUS International’s approach to developing soft skills – a key attribute for working in the BPO industry – differentiates it from its direct and indirect competition. For example, TELUS International offers pre-recruitment assessments, on-site psychologists and ongoing empathy training for employees. Both Ivanova and Ralchovska indicated that the profile of current recruits has changed significantly from five years ago, when speaking one or more foreign languages was enough to get a job offer. Today, both TELUS International’s and recruits’ expectations have evolved to reflect a preference to work for a purpose-driven and customer-focused organization.

Automation means new KPIs

As culture evolves, so do KPIs. With the advent of automation, adopting new KPIs that reflect the shift from human-supported tasks to human-chatbot higher-value services is one way for many organizations including TELUS International to measure utilization and performance. TELUS International’s examples of digitization of client accounts include one client for which 1 million requests were automatically handled by a bot, saving 20,500 productive hours over 90 days, which were later billed to the client for other add-on work.

In TBR’s special report In an emerging world managed by bots, TELUS International’s culture tells us why humans still matter published in March, we wrote, “Moving forward, we expect TELUS International to continue executing on its standardized approach to customers’ digital enablement and to carefully select and manage its client base, including pursuing opportunities with enterprises that are also involved with approving TELUS International employee recruitment and training. As the BPO market evolves, the emergence of new pricing models, including outcome-, subscription- and license-based pricing, will compel the company to take on additional risk and re-tune stakeholders’ expectations around its P&L profile. As a result, TELUS International will need to continue its transformation into an increasingly automation-enabled organization with agent capabilities.”

As TELUS International in Bulgaria serves as one center of the company’s evolving framework, moving from BPO to application services exclusively is highly unlikely, but striking the right balance by blending elements of SaaS and BPaaS will certainly be at the forefront of Ivanova’s, Ralchovska’s and the global leadership team’s agenda in the next three to five years, especially as there is a heightened customer expectations for services vendors to deliver human-centric brand promises.

TBR Weekly Preview: March 11-15

We’re going all over the technology space this week, with reports spanning U.S. federal government IT services to long-established hardware and data center providers, plus a couple of European-centric companies.

Wednesday:

  • Talent continues to be the constraining factor on ManTech’s bright revenue growth outlook. Focus in defense and intelligence segments of the U.S. federal market on innovation creates healthy demand for ManTech’s labor-based technical services offerings, such as R&D, testing and evaluation of emerging technology. As a smaller competitor compared to many of its large prime peers in the federal sector, ManTech acutely feels the resource impacts of the security clearance backlog and overall tight labor market. TBR’s 4Q18 ManTech report, written by Senior Analyst Joey Cresta, will explore how ManTech uses adaptive learning, continuous monitoring software and new leadership hires to address the human capital challenges associated with scaling up its labor base to meet robust client demand.

Thursday:

  • As detailed in our initial response, Lenovo achieved its sixth consecutive quarter of year-to-year revenue gains, reporting $14 billion in revenue in 4Q18, up 8.5% from the year-ago compare, even as consolidation opportunities cool in the PC market. Despite these high notes for Lenovo exiting 2018, the company will still face hurdles over the next two years. Its PC and Smart Devices businesses will have to deal with challenging and shifting PC environments. Data Center Group continues to deliver on its promises, but it remains in the red despite improvements to its bottom line. Lenovo’s Mobile business is still teetering in profitability. Read our full report by Analyst Dan Callahan to find how Lenovo will navigate these challenges and tee up for a seventh consecutive quarter of revenue growth in 1Q19. 
  • Our detailed assessment of Atos will note that the company’s Digital Transformation Factory portfolio accounted for 30% of revenue in 2018, up from 23% of revenue in 2017, positively affected by increased activities with clients in areas such as orchestrated hybrid cloud, Digital Workplace and cybersecurity. As Senior Analyst Elitsa Bakalova will report, Atos’ efforts to position as a trusted partner for clients’ digital journeys are starting to pay off, and the new digital services strategy will shape the company’s activities over the next three years.
  • As reported in our initial response, Hewlett Packard Enterprise’s (HPE) revenue fell 1.6% year-to-year to $7.6 billion. While revenue growth is always a goal, TBR believes HPE is more focused on improving profitability in the near term before it shifts to boosting revenue growth. In our full report Analyst Stephanie Long will dive into the long-term strategy of CEO Antonio Neri and how it will impact 2019. Key cost-cutting initiatives and strategic investments, such as in high-performance computing and the edge, will be likely highlights in 2019.
  • Analyst Kelly Lesiczka will be reporting that T-Systems’ portfolio and organizational investments continue to improve its ability to gain wallet share in newer areas and stabilize revenue growth in 2018. Building out its emerging technology portfolio offerings, such as for IoT using DT’s product offerings, enables T-Systems to provide more comprehensive and personalized solutions to clients and generate larger-scale engagements to accelerate growth.

As promised, we published a new report last week by Senior Analyst Boz Hristov on Accenture Technology, and today published a report on TELUS International from Boz as well as a report on Mobile World Congress Barcelona 2019 by Principal Analyst Chris Antlitz.

While we do not have a webinar scheduled for this Wednesday, the next one will be on March 20 featuring Senior Analyst John Caucis talking about healthcare IT services.

In an emerging world managed by bots, TELUS International’s culture tells us why humans still matter

TBR perspective

Since the dawn of outsourcing, BPO has allowed enterprise buyers to trust third-party providers with the support of many internal and external processes. While in the past, the risk associated with managing IT and business assets was heavily weighted toward the buyer, in today’s age, where social media is leveraged as a sounding board for both positive and negative customer experiences, there is a heightened expectation for services vendors to deliver brand promises. During its 14-year tenure as an active participant in the CX support services market, TELUS International has successfully navigated the ever-changing dynamics of the BPO space by investing heavily in its employees. The company has an average annual attrition rate of approximately 25%, which is about 50% below the BPO industry average, as its employees and executives trade on trust and share a common goal of servicing customers. Deploying and managing learning and collaboration platforms globally as well as adopting many of the same technologies used to support clients, TELUS International’s approach to people, processes and technology shapes the company’s culture in the era of the machines. While the CX support space has been augmented by the increased use of AI-based technologies and one might consider the BPO industry to be highly commoditized from a labor arbitrage perspective, TELUS International continues to build a human-centric culture that empowers staff (most of whom are millennials) to take charge of their careers while also being brand ambassadors in their local communities. Touring TELUS International’s Las Vegas delivery site, which is one of the company’s 27 global hubs, during the event helped bring TELUS International’s strategy and vision around its employees and investments in innovation to life, further supporting the “from slides to code” trend TBR has observed in the industry over the past 18 to 24 months.

Moving forward, we expect TELUS International to continue executing on its standardized approach to customers’ digital enablement and to carefully select and manage its client base, including pursuing opportunities with enterprises that are also involved with approving TELUS International employee recruitment and training. As the BPO market evolves, the emergence of new pricing models, including outcome-, subscription- and license-based pricing, will compel the company to take on additional risk and retune stakeholders’ expectations around its P&L profile. As a result, TELUS International will need to continue its transformation into an increasingly automation-enabled organization with agent capabilities. 

At its inaugural Analyst Summit, TELUS International brought together industry analysts, company executives and clients. The company used the two-day event to prove why, according to President and CEO Jeff Puritt, TELUS International is the “best kept secret” when it comes to company culture, employee engagement and customer satisfaction in the highly competitive customer experience (CX)-enabled BPO market, especially in the area of talent.  

TBR Weekly Preview: March 4-8

As we start winding down beginning-of-the-year earnings calls, here’s what you can expect from the TBR team this week:

Tuesday:

  • In 3Q18 TBR noted Salesforce built on its industry-specific strategies by releasing Financial Services Cloud for retail banking and by expanding its target audience for Education Cloud. Salesforce’s ongoing innovation to address vertical use cases and ability to understand customers’ business needs enabled the vendor to execute multiproduct deals in 4Q18. TBR expects Salesforce will close 4Q18 with $12.2 billion in annual revenue, keeping the vendor on track to attain its $21 billion to $23 billion annual revenue goal in 2021. (See Jack McElwee for more analysis.)
  • Google Cloud’s hiring of Thomas Kurian as CEO (replacing Diane Greene) is meant to attract enterprise customers and facilitate stronger competition at scale with Amazon Web Services and Microsoft; Kurian, former Oracle president of Product Development, brings deep understanding and detailed messaging on the technical and business impacts of cloud. TBR’s 4Q18 report will detail Google Cloud’s continued innovation among its core AI and ML portfolios while partnering and leveraging Kurian’s clout to gain enterprise mindshare, which will be increasingly critical to long-term success. (For everything Google and cloud, see Cassandra Mooshian.)

Thursday:

  • Cisco continues to grow revenue as it transforms itself through acquisitions, divestments and new product releases that enable the company to reduce its reliance on hardware — a commoditizing market — and embrace software. TBR’s 4Q18 Cisco report will include deep dives on Cisco’s most recent acquisitions, including Luxtera, which will help Cisco attract more webscale spend and improve the performance of its proprietary-based solutions, as well as Ensoft and Singularity Networks, which will broaden Cisco’s software capabilities in the service provider space. (Mike Soper leads TBR’s analysis on Cisco.)
  • TBR will also report on Cisco Services and the company’s expansion around software and next-generation solutions, which has created advisory and implementation opportunities that enabled Cisco Services to accelerate growth in 2018. An increase in software-related services as well as adoption of next-generation secure and intelligent platforms and products that support clients’ digital business will create attached services opportunities for Cisco Services, driving revenue expansion throughout 2019. (For more on Cisco Services, see Kelly Lesiczka.)
  • TBR’s latest report on Perspecta will provide an update on how the fledgling company is managing the task of integrating three legacy organizations into a unified whole. In past reports, we have talked about how the company’s innovation incubator, Perspecta Labs, underpins its long-term position in the federal services landscape. Our 4Q18 Perspecta report will dive more deeply into how the company introduces Perspecta Labs to its biggest client, the U.S. Navy, in advance of the recompete of Perspecta’s largest contract, which entails managing the Navy Next Generation Enterprise Network. (Joey Cresta heads up TBR’s Public Sector practice.)
  • As reported in our initial response, NetApp earned $1.6 billion in revenue in 4Q18, representing a 1.6% year-to-year increase. Strong 1H18 revenue momentum enabled the vendor to achieve solid year-to-year revenue growth for 2018, demonstrating the success of some of NetApp’s strategic moves during the year. Our full report will dive into the 2018 establishment of a cloud infrastructure business unit that will enable NetApp to pivot its portfolio further in 2019, as the company, one of the few major pure play storage vendors left in the market, transforms itself to establish its brand as one that enables customers’ digital transformations. (See Stephanie Long for more analysis.)

Friday:

  • Utilizing its technology expertise and ability to address clients’ business challenges, Capgemini reached its 2018 revenue growth and profitability goals and is confidently moving into 2019. Capgemini’s bookings reached their highest level since 1Q17 in 4Q18. In the latest full report, TBR will note how the increase in bookings, combined with Capgemini’s unified go-to-market approach; enhanced offerings around digital, cloud and industry-specific solutions; and reinforced expertise via training and reskilling, will enable the company to sustain revenue growth. (Elitsa Bakalova covers Capgemini for TBR.)

Be on the lookout for additional analysis from TBR, including assessments of Accenture Technology and TELUS International. TBR’s next webinar will be held March 20 and feature Senior Analyst John Caucis talking about healthcare IT services.