Convergys Corporation is a global leader in the provision of outsourced customer
management, employee care and integrated billing software services. The Company
was spun off from its former parent company, Cincinnati Bell Inc. (CBI), in 1998.
Convergys focuses on developing long-term strategic relationships with clients
in employee and customer intensive industries including communications, technology
and financial services as well as governmental agencies.
Convergys Corporation (the Company or Convergys) is a global leader in the
provision of outsourced customer management, employee care and integrated billing
software services. The Company was spun off from its former parent company,
Cincinnati Bell Inc. (CBI), in 1998. Convergys focuses on developing long-term
strategic relationships with clients in employee and customer intensive industries
including communications, technology and financial services as well as governmental
agencies. The Company has two reporting segments: (I) the Customer Management
Group (CMG), which provides outsourced marketing, customer support services
and employee care services; and (II) the Information Management Group (IMG),
which provides outsourced billing and information services and software. The
Company has developed a base of recurring revenues by providing value-added
billing and customer management and employee care solutions for its clients,
generally under multiple year contracts.
The emergence of the Internet and other technologies has created additional
channels for customer support and employee care. Where companies once provided
customer support and employee care through paper or telephone-based care centers,
these emerging technologies and shifts in consumer preferences now require support
to be offered through multi-channel contact centers. These rapid changes in
technology, as well as growing competition and financial pressures, are making
it increasingly difficult for companies, particularly in the communications,
technology and financial services industries, as well as governmental agencies,
to maintain in-house support functions to handle all of their customer management
and employee care needs cost-effectively. Companies in these industries as well
as many others are increasingly turning to outsourcing providers for cost-effective,
high quality customer support and employee care services. In CMG’s multi-channel
contact centers, CMG service agents are able to provide customer support and
employee care through a full range of services ranging from self-care to chat
to click-to-live-agent in addition to telephone-based agent services.
The Company expects that growth of outsourced customer management and employee
care services will be driven by the trend of large companies and governmental
agencies turning to outsourcers to provide cost-effective, high quality customer
support and employee care solutions. Outsourcing of customer management and
employee care functions allows companies to focus their internal resources on
core competencies. Additionally, outsourcing can provide companies with the
following advantages: (I) technologically advanced, scalable systems and software,
which enable rapid competitive response; (II) cost savings resulting from economies
of scale achieved by leveraging investments in technology and customer service
centers; (III) improved time-to-market for new products/services, whether for
existing companies or new entrants; and (IV) expertise to target, acquire and
retain customers more effectively. The Company also believes that the expansion
of offshore capacity, which provides customer management clients with significantly
lower costs and a highly educated labor force, will drive growth in the industry.
The Convergys strategy is to leverage its leadership position in the industry
to capture the growing demand for outsourced customer support services. Additionally,
Convergys will continue to offer its clients the option of offshore services.
As evidenced by the recent expansion of its customer contact centers in India
and the Philippines, the Company will continue to be at the forefront in identifying
new labor markets and operating contact centers in locations around the globe
based on client demand.
The communications industry continues to drastically change as a result of
deregulation and advancements in technology. Product and service offerings provided
by the communications industry have been broadened through recent advances in
communication technologies, including Internet telephony, digital subscriber
line connections (DSL), wireless application protocol (WAP), wireless fidelity
(WiFi) and universal mobile telecommunications systems (UMTS). Deregulation
in the United States led to increased competition between communications providers,
who now offer multiple or convergent services, including local, long distance,
wireless, cable, cable telephony, broadband and Internet. Outside of the United
States, especially in Europe, Asia Pacific and Latin America, new communications
providers have emerged as markets have opened to competition. Established carriers,
who once dominated national markets, now face increased competition from these
new entrants.
Clients
CMG
CMG principally focuses on developing long-term strategic outsourcing relationships
with large clients in the communications, technology and financial services
industries for customer management services and large employers in any industry
or government agency for employee care services. CMG focuses on these types
of clients because of the complexity of services required, the anticipated growth
of their market segments and their increasing need for more cost-effective customer
management and employee care services. In terms of Convergys’ revenues, CMG’s
largest customer management clients during 2003 were AT&T, AT&T Wireless,
Comcast, DirecTV, Microsoft and Sprint PCS. CMG’s largest employee care clients
were AT&T, General Electric, Lucent, Pfizer and the State of Florida.
IMG
IMG generally has multiple year contracts with its clients. In many cases,
IMG is the client’s exclusive provider of billing services, or the contract
requires the client to fulfill minimum annual commitments. IMG’s billing software
platforms process billing information for monthly customer statements for approximately
33% of U.S. wireless subscribers. In terms of Convergys’ revenues, IMG’s largest
wireless clients are ALLTEL, AT&T Wireless and Sprint PCS.
IMG provides cable and direct broadcast satellite billing services both domestically
and internationally. IMG’s cable billing systems also support bundled telephone
and entertainment services provided by cable television system operators in
the U.S. and Europe. In terms of Convergys’ revenues, IMG’s largest cable clients
are Comcast, Cox Communications, Insight Communications, Telewest and Time Warner.
Both of the Company’s segments derive significant revenues from AT&T Wireless.
Competition
The industries in which the Company operates are extremely competitive. The
Company’s competitors include: (I) existing clients and potential clients with
substantial resources and the ability to provide billing and customer management
and employee care capabilities internally; (II) other customer management companies,
such as Accenture, APAC Customer Services, Daksh, EDS, SITEL, Sykes, TeleTech
Holdings, West Teleservices and Wipro Spectramind; (III) other employee care
providers such as Accenture, ADP, EDS, Exult, Fidelity, Hewitt Associates, IBM,
Mellon Financial Corporation and Towers Perrin; and (IV) other billing software
and/or services companies such as ADC, Amdocs, CSG Systems, DST Systems, Portal
Software and SchlumbergerSema (a unit of Schlumberger Limited). In addition,
niche providers or new entrants could capture a segment of the market by developing
new systems or services that could impact the Company’s market potential.
Tweet
%
55.61 %