CONVERGYS in France Alexandre Phung Fabrizio Signorin Laure Sureau Nitin Govila Xueyi Hu Best in France Case Study January 2004 – May 2004

CONVERGYS in France

Alexandre PhungFabrizio SignorinLaure SureauNitin GovilaXueyi Hu

Best in France Case StudyJanuary 2004 – May 2004

Best in France case study 2

Purpose

The Best in France case study aims at :

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.


Executive Overview

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


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.).

What is Convergys?


Key Figures/Data 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 40% of the wireless billing market in the U.S. 1.5 million individual invoices daily for 120 million subscribers

worldwide

Recognition S&P 500, Forbes’ Platinum 400, Fortune’s Most Admired

Companies Best Overall Product at TeleStrategies’ Billing World 2002

Financial highlights 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%


Worldwide Presence

5O countries on 5 continents


Worldwide Presence

North AmericaWorld Headquarters in Cincinnati

United States Canada

Arizona Illinois Oklahoma Virginia AlbertaTucson Chicago Oklahoma City McLean EdmontonCalifornia Kansas Pennsylvania Reston LethbridgeSan Francisco Kansas City Media Vienna Red DeerSan Ramon Louisiana Philadelphia Washington British ColumbiaColorado Baton Rouge Tennessee Seattle KamloopsDenver Mississippi Chattanooga Wisconsin ManitobaPueblo Hattiesburg Clarksville Appleton WinnipegConnecticut Missouri Texas Nova ScotiaWoodbury St. Louis Brownsville HalifaxFlorida Nebraska Dallas New GlasgowFt. Lauderdale Lincoln Houston TruroFt. Pierce Omaha Killeen NewfoundlandJacksonville New Jersey Lubbock St. JohnsOrlando Morristown Pharr OntarioTallahassee North Carolina Utah OttawaGeorgia Greenville Cedar City WellandAtlanta Ohio LoganValdosta Cincinnati OgdenIdaho Toledo OremPocatello Salt Lake City


Worldwide PresenceAsia PacificRegional Office in Singapore

Australia India Philippines ThailandMelbourne Bangalore Manila BangkokSydney Chennai Singapore RestonChina Hyderabad South KoreaBeijing New Delhi SeoulHong Kong Japan Taiwan

Tokyo Taipei

Europe, Middle East, AfricaRegional Office in Cambridge, UK

Belgium Fareham Germany The Netherlands ScotlandEvere Guildford Frankfurt Utrecht EdinburghEngland London Israel Portugal SpainBristol Newcastle upon Tyne Herzlia Lisbon MadridCambridge France Tel Aviv Russia Switzerland

Paris Italy Moscow GenevaMilano

Latin AmericaRegional Office in São Paulo, Brazil

Brazil Rio de JaneiroBrasilia São Paulo


History

1990: Matrix, company owned by , specialized in call centersAcquisition of two French companies:- Phone Market Systems (outbound calls)- Syscall (inbound calls)=> 1 structure in France, 2 activities

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


Products/Services

Customer Management (CMG) Customer service Customer acquisition Technical support Sales support Marketing research

Information Management (IMG) Service activation and

provisioning Mediation Rating and Billing Customer Care

Employee Care Payroll administration and processing Health and welfare administration Benefit plan administration Job posting and applicant support Learning management HR data management

2/3 of turnover from IMG1/3 of turnover from CMG/Employee

Care


Clients Who are the company’s clients?

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

What are their expectations? 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?

High level of education, competencies and services to clients


Some Clients


Why it came to France

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)


Corporate Values

Seven core values within Convergys: Unparalleled client satisfaction Integrity Shareowner’s trust Teamwork Respect for the individual Diversity Corporate citizenship

Good fit between the first 5 core values and the French culture

Cultural shock about diversity because 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


Corporate Values

Cultural shock about the role of the company 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 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.


Constraints in France

Two main constraints in France: Labor costs Lack of flexibility due to the social infrastructure

Labor costs 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


Constraints in France

Lack of flexibility due to labor legislation and social environment Rigidity of working hours, salaries Layoffs Daily management of relationships with unions and works councils Application of the labor legislation to the letter

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.

Other constraints Poor foreign language skills of French employees at the beginning

=> need for internal trainings and evolution of recruitment criteria


Adaptation to France

Recruitment/Selection Requirement of English-speaking stated Use of the global corporate system of competencies Same hierarchical structure worldwide

Compensation Adjustment to wage scales in France Stock Purchase Plan not implemented in France (too expensive)

Workforce planning Performed at the Business Unit level

Performance Appraisal Use of the global corporate performance appraisal system Problem at the beginning with the language …



Motivation 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 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 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”)



International Transfers, Use of Expatriates 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 Flexibility and high level of confidence from the U.S.

Data privacy/safe harbor legislation

Communication Policies External: Public Relations agency Internal: most internal communications are in English


Key Constraint Costs

HR type costs Hiring Paying Training Dismissing

Structure costs Real estate Travel Taxes

Communication constraints Poor foreign language skills (employees and clients)


Key Benefits

Product/Service quality Very high productivity (high level of education, professionalism)

Location benefits High concentration of clients in Paris Quality of life Employee satisfaction with France

Government assistance Assistance from the government for call center activities

Market potential Cultural adaptation of products and services


Future in France

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.

Serving French clients from outside vs. from France Eventuality to centralize EMEA activities in the UK


Takeaways

4 major lessons learned from the French experience:

Difficult to instill some typical U.S. values in France

Rigidity of the French social legislation

High labor costs

Language/cultural issues


We thank

Isabelle BRISARD, Vice President Implementation EMEA ASPAC, Convergys Employee Care [email protected]

Gérard FARMER, Finance Director, Convergys France SAS [email protected]

Convergys France1, quai de Grenelle75015 ParisTel: +33 (0)1 56 77 36 00http://www.convergys.comhttp://www.convergys.fr


Bibliography

References: Convergys Web Sitehttp://www.convergys.com

Convergys Annual Report 2003http://www.convergys.com/pdf/investor/annual_report_2003.pdf

Convergys Enterprise Profilehttp://www.convergys.com/pdf/brochures/

cvg_enterprise_profile.pdf

Appendix Questionnaire


Our Team

Alexandre PHUNG, [email protected]

Fabrizio SIGNORIN, [email protected]

Laure SUREAU, [email protected] Nitin GOVILA, [email protected] Xueyi HU, [email protected]

HEC School of Management1, rue de la Libération78351 – Jouy en Josas CédexTel: +33 (0)1 39 67 70 00http://www.mba.hec.frhttp://www.hec.fr


Questions

Documents

CONVERGYS in France Alexandre Phung Fabrizio Signorin Laure Sureau Nitin Govila Xueyi Hu Best in France Case Study January 2004 – May 2004