CONVERGYS in France
Best in France Case Study
January 2004 – May 2004
Alexandre Phung
Fabrizio Signorin
Laure Sureau
Nitin Govila
Xueyi Hu
Purpose
The Best in France case study aims at :
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Identifying what adaptations firms must make when opening
business units in France,
Assisting students, companies and government ministries by
identifying and benchmarking managerial strategies that add
value to the French economy and to firms operating in France,
Creating a database of the detailed studies, available to the
participating firms.
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Executive Overview
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What is Convergys?
Company Products and Clients
Why did Convergys come to France?
Company Values
Constraints in France
Adaptation to France
Key Constraint Costs
Key Benefits
Takeaways
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What is Convergys?
Convergys Corporation provides (NYSE: CVG) provides integrated
billing, customer care, employee care and transaction management
software and services to create valuable customer and employee
relationships for its clients (government entities and top companies
in telecommunications, Internet, cable and broadband services,
technology, financial services, etc.).
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Key Figures/Data
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More than 45,000 employees in 49 customer contact centers, two
state-of-the-art data centers and other offices in the United States,
Canada, Latin America, Europe, India, Israel and Asia.
Market standing
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Recognition
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40% of the wireless billing market in the U.S.
1.5 million individual invoices daily for 120 million subscribers worldwide
S&P 500, Forbes’ Platinum 400, Fortune’s Most Admired Companies
Best Overall Product at TeleStrategies’ Billing World 2002
Financial highlights
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Double-digit growth in annual revenue, operating income, earnings per
share and free cash flow from 1998-2002
$2.3 billion in revenues for 2003, Net Result / Sales = 7.5%
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Worldwide Presence
5O countries on 5 continents
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Worldwide Presence
North America
World Headquarters in Cincinnati
United States
Arizona
Tucson
California
San Francisco
San Ramon
Colorado
Denver
Pueblo
Connecticut
Woodbury
Florida
Ft. Lauderdale
Ft. Pierce
Jacksonville
Orlando
Tallahassee
Georgia
Atlanta
Valdosta
Idaho
Pocatello
Canada
Illinois
Chicago
Kansas
Kansas City
Louisiana
Baton Rouge
Mississippi
Hattiesburg
Missouri
St. Louis
Nebraska
Lincoln
Omaha
New Jersey
Morristown
North Carolina
Greenville
Ohio
Cincinnati
Toledo
Oklahoma
Oklahoma City
Pennsylvania
Media
Philadelphia
Tennessee
Chattanooga
Clarksville
Texas
Brownsville
Dallas
Houston
Killeen
Lubbock
Pharr
Utah
Cedar City
Logan
Ogden
Orem
Salt Lake City
Virginia
McLean
Reston
Vienna
Washington
Seattle
Wisconsin
Appleton
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Alberta
Edmonton
Lethbridge
Red Deer
British Columbia
Kamloops
Manitoba
Winnipeg
Nova Scotia
Halifax
New Glasgow
Truro
Newfoundland
St. Johns
Ontario
Ottawa
Welland
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Worldwide Presence
Asia Pacific
Regional Office in Singapore
Australia
Melbourne
Sydney
China
Beijing
Hong Kong
India
Bangalore
Chennai
Hyderabad
New Delhi
Japan
Tokyo
Philippines
Manila
Singapore
South Korea
Seoul
Taiwan
Taipei
Thailand
Bangkok
Reston
Germany
Frankfurt
Israel
Herzlia
Tel Aviv
Italy
Milano
The Netherlands
Utrecht
Portugal
Lisbon
Russia
Moscow
Europe, Middle East, Africa
Regional Office in Cambridge, UK
Belgium
Evere
England
Bristol
Cambridge
Fareham
Guildford
London
Newcastle upon Tyne
France
Paris
Scotland
Edinburgh
Spain
Madrid
Switzerland
Geneva
Latin America
Regional Office in São Paulo, Brazil
Brazil
Brasilia
Rio de Janeiro
São Paulo
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History
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1990: Matrix, company owned by
centers
Acquisition of two French companies:
- Phone Market Systems (outbound calls)
- Syscall (inbound calls)
=> 1 structure in France, 2 activities
, specialized in call
1998: Spin off from Cincinnati Bell
=> Convergys
Strategy of European expansion:
- France (first choice)
- United Kingdom (starting)
- Sweden (acquisition)
2001: Sale of call center activities in Europe (France, Sweden)
Big contract with Orange France in billing
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Products/Services
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Customer Management (CMG)
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Customer service
Customer acquisition
Technical support
Sales support
Marketing research
Employee Care
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Payroll administration and processing
Health and welfare administration
Benefit plan administration
Job posting and applicant support
Learning management
HR data management
Information Management (IMG)
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Service activation and provisioning
Mediation
Rating and Billing
Customer Care
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2/3 of turnover from IMG
1/3 of turnover from CMG/Employee
Care
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Clients
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Who are the company’s clients?
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What are their expectations?
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Big multinational groups
- 7 of the top diversified financial firms, 6 of the top 10 credit card
issuers, 3 of the top 5 commercial banks
- 8 of the top 10 cable operators in the U.S.
- 3 of the top 5 mobile operators in the U.S. as well as the largest
mobile operators in South America and Europe
Innovative solutions that optimize their customer relationships for a
competitive advantage
Delivery of superior service, technology and productivity
How does a French presence help the company’s ability to
satisfy client demands?
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High level of education, competencies and services to clients
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Some Clients
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Why it came to France
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Expansion of Convergys international operations = a means to grow
faster and to capture more of the international billing, customer care
and employee care markets
Strategy of European expansion:
Target countries = 7 big countries in Europe: France, Germany, UK,
Spain, Italy, Netherlands, Benelux
France represented an important market.
Proximity to clients (Orange France = biggest contract in the EMEA
zone)
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Corporate Values
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Seven core values within Convergys:
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Unparalleled client satisfaction
Integrity
Shareowner’s trust
Teamwork
Respect for the individual
Diversity
Corporate citizenship
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Good fit between the first 5 core values and the French culture
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Cultural shock about diversity because
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Diversity is not a major issue in France whereas it is prevalent in the U.S.
Few discrimination cases in Europe and France
A considerable number of languages and cultures in Europe
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Corporate Values
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Cultural shock about the role of the company
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Clear distinction between corporate life and private life in France =>
employees are not inclined to community citizenship within their companies
Some experiences have been tried (e.g. food drives, charitable works) but
unsuccessfully in France, and were not repeated.
France was the most reluctant country (contrary to U.K., Spain, Germany).
Some measures taken to fill cultural gaps
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A French general manager was sent to the U.S. for 5 years.
Two American finance directors were sent to France as well for a period of
4 years in total.
An American IT director was sent to France for 1,5 years.
40 US expatriates for knowledge transfer during the Orange France project.
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Constraints in France
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Two main constraints in France:
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Labor costs
Lack of flexibility due to the social infrastructure
Labor costs
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Wage costs: tax rate of 35% in France (vs. 12% in UK for example)
50% of overheads in France
=> a lot of groups settle their headquarters in UK despite the
currency exchange rate (and benefit from the language, more social
flexibility and free-market economies)
35 hours/week
217 workdays/year in France vs. 240 in most of European countries
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Constraints in France
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Lack of flexibility due to labor legislation and social environment
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Rigidity of working hours, salaries
Layoffs
Daily management of relationships with unions and works councils
Application of the labor legislation to the letter
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Convergys faced strikes with call center activities
However, the expansion of Europe and the will of EC to standardize
labor legislations should soften these differences in the long run.
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Other constraints
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Poor foreign language skills of French employees at the beginning
=> need for internal trainings and evolution of recruitment criteria
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Adaptation to France
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Recruitment/Selection
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Compensation
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Adjustment to wage scales in France
Stock Purchase Plan not implemented in France (too expensive)
Workforce planning
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Requirement of English-speaking stated
Use of the global corporate system of competencies
Same hierarchical structure worldwide
Performed at the Business Unit level
Performance Appraisal
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Use of the global corporate performance appraisal system
Problem at the beginning with the language …
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Adaptation to France
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Motivation
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Training
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Each employee is required to define his/her personal development
through the “Personal Development Center” for training.
Some U.S. motivation methods were not adapted to France (seniority
anniversary cards, thank-you motivational cards).
Worldwide compensation scheme
Training sessions, CBTs, e-learning, etc.
The annual budget represents 2% of the wage bill and 10% of the
working time.
Job Design, Job Assignment
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Everyone has a visibility to all jobs available.
Performing corporate tool to match competencies with jobs
But equivalence defaults between some U.S. job titles and French job
titles (e.g. secretary  trilingual “assistante de direction”)
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Adaptation to France
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International Transfers, Use of Expatriates
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About 40 expatriates from Cincinnati & Orlando brought their expertise to
the Orange France project for a limited duration of 2 years.
The Paris IMG BU is now in consulting mode: numerous French
employees sent abroad on international projects (UK, Belgium, Slovakia,
Sri Lanka).
Matrix reporting to the U.S. and to Europe for support functions
Delegation from the U.S. headquarters at the HR level
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Flexibility and high level of confidence from the U.S.
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Data privacy/safe harbor legislation
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Communication Policies
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External: Public Relations agency
Internal: most internal communications are in English
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Key Constraint Costs
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HR type costs
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Structure costs
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Hiring
Paying
Training
Dismissing
Real estate
Travel
Taxes
Communication constraints
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Poor foreign language skills (employees and clients)
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Key Benefits
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Product/Service quality
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Location benefits
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High concentration of clients in Paris
Quality of life
Employee satisfaction with France
Government assistance
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Very high productivity (high level of education, professionalism)
Assistance from the government for call center activities
Market potential
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Cultural adaptation of products and services
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Future in France
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Today, only one project in France: Bouygues Télécom (IMG)
No production in France for CMG and Employee Care
Employee Care is the best potential market in France for the future.
But there is no intention to develop production activities in France at
the moment.
The corporate strategy is to centralize EMEA activities in one country
with low production costs.
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Serving French clients from outside vs. from France
Eventuality to centralize EMEA activities in the UK
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Takeaways
4 major lessons learned from the French experience:
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Difficult to instill some typical U.S. values in France
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Rigidity of the French social legislation
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High labor costs
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Language/cultural issues
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We thank
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Isabelle BRISARD, Vice President Implementation EMEA
ASPAC, Convergys Employee Care
isabelle.brisard@convergys.com
Gérard FARMER, Finance Director, Convergys France SAS
gerard.farmer@convergys.com
Convergys France
1, quai de Grenelle
75015 Paris
Tel: +33 (0)1 56 77 36 00
http://www.convergys.com
http://www.convergys.fr
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Bibliography
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References:
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Convergys Web Site
http://www.convergys.com
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Convergys Annual Report 2003
http://www.convergys.com/pdf/investor/annual_report_2003.pdf
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Convergys Enterprise Profile
http://www.convergys.com/pdf/brochures/cvg_enterprise_profile.pdf
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Appendix
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Questionnaire
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Our Team
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Alexandre PHUNG, alexandre.phung@mailhec.net
Fabrizio SIGNORIN, fabrizio.signorin@mailhec.net
Laure SUREAU, laure.sureau@mailhec.net
Nitin GOVILA, nitin.govila@mailhec.net
Xueyi HU, xueyi.hu@mailhec.net
HEC School of Management
1, rue de la Libération
78351 – Jouy en Josas Cédex
Tel: +33 (0)1 39 67 70 00
http://www.mba.hec.fr
http://www.hec.fr
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Questions
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