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 :  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. Best in France case study 2

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

Best in France case study 3

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.).

Best in France case study 4

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% Best in France case study 5

Worldwide Presence

5O countries on 5 continents Best in France case study 6

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

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 Best in France case study

Virginia

McLean Reston Vienna

Washington

Seattle

Wisconsin

Appleton

Canada Alberta

Edmonton Lethbridge Red Deer

British Columbia

Kamloops

Manitoba

Winnipeg

Nova Scotia

Halifax New Glasgow Truro

Newfoundland

St. Johns

Ontario

Ottawa Welland 7

Worldwide Presence

Asia Pacific

Regional Office in Singapore

Australia

Melbourne Sydney

China

Beijing Hong Kong

India

Bangalore Chennai Hyderabad New Delhi

Japan

Tokyo

Europe, Middle East, Africa

Regional Office in Cambridge, UK

Belgium

Evere

England

Bristol Cambridge Fareham Guildford London Newcastle upon Tyne

France

Paris

Latin America

Regional Office in São Paulo, Brazil

Brazil

Brasilia Rio de Janeiro São Paulo

Philippines

Manila

Singapore South Korea

Seoul

Taiwan

Taipei

Germany

Frankfurt

Israel

Herzlia Tel Aviv

Italy

Milano Best in France case study

Thailand

Bangkok Reston

The Netherlands

Utrecht

Portugal

Lisbon

Russia

Moscow

Scotland

Edinburgh

Spain

Madrid

Switzerland

Geneva 8

History

 1990: Matrix, company owned by , specialized in call centers Acquisition 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 Best in France case study 9

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 IMG 1/3 of turnover from CMG/Employee Care Best in France case study 10



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 Best in France case study 11

Some Clients

Best in France case study 12

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) Best in France case study 13

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 Best in France case study 14

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.

Best in France case study 15

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 Best in France case study 16

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 Best in France case study 17

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 … Best in France case study 18

Adaptation to France

 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”) Best in France case study 19

Adaptation to France

 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 Best in France case study 20

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) Best in France case study 21

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 Best in France case study 22

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 Best in France case study 23

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 Best in France case study 24

We thank

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

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

Convergys France 1, quai de Grenelle 75015 Paris Tel: +33 (0)1 56 77 36 00 http://www.convergys.com

http://www.convergys.fr

Best in France case study 25

Bibliography



References:

 Convergys Web Site http://www.convergys.com

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

 Convergys Enterprise Profile http://www.convergys.com/pdf/brochures/cvg_enterprise_profile.pdf



Appendix

 Questionnaire Best in France case study 26

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 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

Best in France case study 27

Questions

Best in France case study 28