In the midst of world financial crisis, what surprises people are no longer stories of company losses, layoffs, bankruptcies, and government bailout requests but stories of success. This month there has been more than enough layoffs and revenue losses talk even in the seemingly untouched outsourcing sector.
Two days ago, print service provider R.R. Donnelley & Sons Company (NYSE:RRD) reported a $686.8 million loss which is higher than last year’s $293.3 million due to global demand volatility with 22% decline in international sales and 5% in U.S.
Another BPO big player Convergys Corporation (NYSE:CVG) is also facing major losses posting a total of $92.9 million loss for 2008. Revenue fell to $2.79 billion last year from $2.84 billion in 2007.
ICT Group, Inc. (NASDAQ:ICTG) also announced net loss of $23.3 million for 2008. Total revenue of $428.2 million for last year is lower than analysts’ $432.19 million estimate.
On the other side of the spectrum we have real stories of real companies surpassing the waves of crisis. Last February 24th, an article from Trading Markets reported that TeleTech Holdings, Inc. (TTEC), the largest business process outsourcing (BPO) provider’s 2008 fiscal revenue increased 2.2% over 2007 to a record $1.4 billion. Earnings per share this year increased 15% to $1.21 from $1.05 non-GAAP EPS in 2007 despite having a lower fourth quarter revenue for 2008 in comparison to 2007. TeleTech CEO Kenneth Tuchman said that 45% of this year’s revenue came from offshore operations.
Another success story is Accenture Ltd. (NYSE:ACN) which beat market expectation reporting a higher than Street EPS expectation of $0.74. Its worldwide operations continue to enjoy revenue growth. Asia Pacific with the highest growth at 22% followed by the Americas at 11% and EMEA at 4%.
What is interesting to note is that both struggling and succeeding companies intends to implement similar strategies to outperform the global crisis by obtaining liquidity and operational excellence.
Attaining liquidity comes in the form of cost cutting by laying off workers and closing non-core businesses or simply focusing resources to core business. Accenture, last month said that it is laying off 500 workers due to redundancy. ICT GROUP CEO John J. Brennan said, “Core business revenues reflect the realignment of our services. This involved ceasing our market research service offerings, limiting our North American financial telesales business to accommodate demand from large strategic clients and extending our right-shore service delivery strategy to our international markets”. CEO of TeleTech Tuchman emphasized the important role of the company’s $99 million free cash flow in sustaining growth. The company intends to invest in both technology and people to achieve operational excellence using its free cash it plans to expand its global sales force to win new client relationships. The company is opening two delivery centers this year and is hiring 4,000 call center agents in the Philippines and is planning to add 600 temporary workers at its Fairfield call center to help consumers with the broadcast digital television transition.
Author: Chris V.