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News » BPO mergers challenge client confidence and service quality, expert warns

BPO mergers challenge client confidence and service quality, expert warns

QUEBEC, CANADA — Mergers and acquisitions (M&A) have become increasingly common in the business process outsourcing (BPO) industry. However, these consolidations often raise concerns among clients about potential service disruptions and cultural shifts. 

In an interview with the BPO Bullhorn newsletter, industry expert Peter Ryan, President & Principal Analyst at Ryan Strategic Advisory, offered insights on how BPOs can effectively manage these challenges.

Client concerns during BPO consolidation

Ryan emphasized the critical importance of reassuring clients during a merger. 

“The most important thing is to ensure the clients of the BPO doing the buying and the ones of the BPO being bought that there will be limited to minimum disruption to their service delivery,” he stated. 

He pointed out that in any sector, people are generally skeptical of consolidation. 

“No matter what the sector, people are overwhelmingly skeptical of consolidation—they fear that service quality will go down, confusion will ensue and that there will be an overall degradation in value,” Ryan noted. 

To counter these concerns, Ryan advised BPOs to actively reassure clients that service delivery will remain consistent, even as changes occur. 

Ryan added that BPOs should highlight the potential benefits of the merger, such as enhanced services, technologies, and processes. This approach could help transform client skepticism into enthusiasm for the new opportunities that consolidation may bring.

Cultural integration challenges

One of the most significant challenges in BPO mergers is the integration of different corporate cultures. Ryan acknowledged this concern, stating, “This is a worry that cannot be understated—in fact, it has cast a shadow over many outsourcing M&A deals in the past few years.”

To address this issue, Ryan advised against operating the merged entities independently for too long, as this can hinder the development of a cohesive corporate structure.

“Having a plan to make the transition toward one single corporate structure that takes into account a positive, unified employee culture should be at the heart of any integration program.”

Talent retention and innovation

BPOs must work to retain their executive talent to reassure clients that they are still receiving top-tier service post-merger. 

Ryan emphasized that “business moves too quickly, and there is no time for score-settling or making people from an acquired entity feel unwelcome or uncomfortable.” 

Mergers are not only about combining services but also about enhancing leadership to improve overall service delivery. He suggested that BPOs should carefully select acquisition targets that can fill service gaps and expand offerings. 

“Leaders within BPOs that are making these M&A deals have to have a vision in place about what they want to achieve for their clients within a deal, alongside the obvious net benefits for shareholders of expanding revenue and scale,” Ryan explained.

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