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Swedbank Mid-Quarter Update Seminar

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Swedbank Mid-Quarter Update Seminar

  1. 1. 29 August 2013 Transcom Swedbank Mid-Quarter Update Seminar Johan Eriksson, President & CEO Outstanding Customer Experience
  2. 2. Transcom at a glance 1
  3. 3. Transcom in numbers 3 • 29,000 people • 62 contact centers, onshore, off-shore and near shore • 26 countries • Delivering services in 33 languages... • ...to over 400 clients in various industry verticals • €605.6 million revenue in 2012 • Market cap: SEK 921.7 million as at August 26, 2013. Listed on NASDAQ OMX Stockholm (TWW SDB B and TWW SDB A)
  4. 4. 4 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 EBIT margin has declined since 2007, but the negative trend reversed in 2012 Recap of Transcom’s situation and focus areas
  5. 5. Our performance in Q2 2013 2
  6. 6. Revenue in Q2 2013 increased 13.0% compared to Q2 2012 38.0 43.9 27.0 31.6 28.9 34.6 25.7 27.514.0 15.8 13.8 13.1 Q2 2012 Q2 2013 6 Central Europe South Iberia North America & Asia Pacific North Growth +15.5% CMS Net revenue, Q213 vs. Q212 €m +17.0% +19.7% +7.0% +12.9% -5.1% 166.5 147.4 • Stable growth in our CRM operations • Main driver is increasing volumes with our installed client base • Several new clients added during the year also contributed significantly
  7. 7. Transcom’s win rate* increased by 22 percent in H1 2013 compared to H1 2012 7 • Qualification process strengthened • Leverage existing client relationships to grow with them in new geographies • Targeted sales efforts - Focus on business proposition - Optimize seat capacity utilization in all locations - Grow with domestic clients in selected geographies, especially Latin America (focus in 2014) and Asia Pacific (business started for several new local clients in 2013) * % win of qualified opportunities
  8. 8. We successfully doubled our capacity in the Philippines in one year 8 2011 2012 4000 8000+ Number of agents in the Philippines 2012 vs. 2011 • Leverage relationships with existing clients, as well as winning new clients • Strengthened the Transcom brand to facilitate revenue growth and recruitment • Recruiting processes key to success
  9. 9. The value we deliver to our clients is also recognized by industry observers 9 • Transcom was presented with the 2013 Frost & Sullivan Philippines Contact Center Outsourcing Customer Value Enhancement Award “Increasingly, Transcom is seen by its clients as a reliable partner whom they can rely on to drive sales and growth. The company’s organic revenue growth is testimony enough of its client engagement and value it delivers for them.” Krishna Baidya, Research Manager for ICT, Frost & Sullivan Asia Pacific
  10. 10. EBIT Q212 Cost savings programs Volume & efficiency Expansion investments Corporate costs EBIT Q213 1.4 +2.5 +1.0 -1.0 -1.0 2.9 EBIT Q212 Cost savings programs Volume & efficiency Expansion investments Corporate costs EBIT Q213 0.5 +2.5 +1.8 -1.0 -0.9 2.9 EBIT increased by €2.4m in our core CRM business in Q2 2013 compared to Q2 2012 10 Transcom Group Core CRM business* * Excludes Credit Management Services (CMS), which will be demerged from Transcom
  11. 11. Short-term focus areas to improve profitability 3
  12. 12. We need to successfully address a number of short- and medium-term operational and financial challenges 12 Stop the losses in France (€1m/month in 2012). Increase onshore seat utilization in North America Successfully resolve tax claims Lower corporate costs Improve operational performance in Latin America Successfully implement action plan to improve operational performance in the North region
  13. 13. Key business/pricing models used by Transcom 13 Business/pricing model Key characteristics Price per transaction (e.g. call or data entry) • 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 Price per minute • 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 Price per activity • 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 Price per hour • Provides a greater degree of financial predictability and stability Currently the most commonly used model in the North region Alternative models used by Transcom
  14. 14. Our target is to improve the balance of pricing models used in all regions… 14 Pricing model North region Average for other regions (benchmark) Price per transaction (e.g. call) Price per minute Price per activity Price per hour 1-25% 26-50% 51-80% 0% • Business model mix currently used in the North region is more exposed to accuracy of volume forecasts, compared to other regions Key business models used by Transcom, by region
  15. 15. ...in order to avoid excessive risk due to poor forecast accuracy 15 Scheduled staffing level based on forecast Staffing need based on actual volume Invoice sent out two days later than forecast Delayed campaign Time Example
  16. 16. Going forward – Transcom’s strategic direction 4
  17. 17. 17 Transcom’s brand promise Outstanding Customer Experience, driving revenue and brand loyalty ”
  18. 18. Industry growth in the coming years will primarily be driven by domestic expansion in Asia Pacific and Latin America 478.5 683.8 420.6 481.3 330.8 466.3234.5 264.8 60.5 96.5 59 85.9 2011 2016 18 Central & East Europe Western Europe Latin America North America Asia Pacific 1584 2079 2011-16 CAGR 7.8% 9.8% 7.1% 2.7% 7.4% * Agent positions in principal markets (reflecting approximately 75-80 percent of total global capacity) Source: Ovum, Transcom analysis Middle East & Africa 2.5% 83% of expected growth in Latin America is domestic, i.e. non-offshore 64% of expected growth in Asia Pacific is domestic, i.e. non-offshore Outsourced agent positions* by region, 2011 and 2016e Thousands
  19. 19. 19 Short-term focus • Executing turnaround in underperforming areas • Revenue expansion and efficiency improvements • Quality and service delivery Medium-to long-term priorities • Grow revenue at least 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 Growth opportunities and key priorities going forward 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 • Enter new countries to improve competitiveness North Europe • Leverage strong position in home market Central Europe • Primarily near shore opportunities • Strong capability in expanding Eastern European markets Growth opportunities Key priorities
  20. 20. Thank you! Questions?

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