French call center Webhelp successfully built its outsourcing business to the brink of an IPO, and now it's bringing it back home
Offshore call centers seem pretty old hat these days. But back in 2000, when Olivier Duha and Fr?d?ric Jousset launched Paris-based startup Webhelp, their scheme was downright radical. Scores of other French call center companies already existed at the time??ome dating back to the late 1970s??ut they maintained their staffs and operations in France. Why not, the two young entrepreneurs reasoned, set up shop instead in cheaper, French-speaking locales such as North Africa?
Thus Webhelp was born, which saw its revenues triple over the last three years, to nearly ??29 million in 2005, and figures to triple sales again by the end of 2007. Ranked No. 8 on this year's Europe's 500 Hot Growth Companies, the company now employs more than 2,500 people in service centers from Bucharest, Romania to Fez, Morocco and counts among its clients insurance giant AXA (AXA), cosmetics maker L'Or??al, the Alice broadband unit of Telecom Italia (TI), and FedEx (FDX).
It all seems inevitable now, but Webhelp had a tough time getting off the ground. The co-founders, colleagues at consultancy Bain & Co. and both about 30 at the time, encountered surprising resistance to the idea of sending customer service abroad. "People asked, 'Do you think we're crazy?' " says Jousset, who now shares the CEO job with Duha. "Like the Bible, it took some time to explain it and get people to join."
The initial business plan also had another twist: Rather than providing support via phone, Duha and Jousset aimed to use e-mail, chat, and other nonvoice communication. (Hence, the name Webhelp.) That, they figured, would blunt potential concerns among clients over the accents or fluency of the hired help. But providing customer support solely via the Web also turned out to be an uncomfortable novelty for many potential clients. Revenues in the first year amounted to only ??80,000.
Still, Webhelp made some clever moves. Rather than going it alone, the founders set up their first operation in Romania in partnership with local software and services firm Softwin. They pursued a similar approach when they expanded into Morocco in May, 2002, retaining just 20% of the operation and bringing in the wealthy Belahsen family to finance and control the remaining 80%.
IPO On the Far Horizon?
Webhelp also managed to raise significant venture capital. It scored an initial round of $4 million from Bernard Arnault's Europe@Web and two-dozen business angels in June, 2000, and then garnered another $3 million six months later from the same group. In June, 2001, two new investment firms joined a $7 million round.
Then, early this year, the founders and senior management mounted an ??87 million leveraged buyout along with Barclay's Private Equity (BCS) to buy out most of the earlier investors and regain 50% ownership of the firm. Still private, Webhelp hopes to stage an initial public offering within two years.
In the meantime, the business has grown to six sites in Morocco and two in Romania, and Webhelp now offers both voice and online customer support. Lower wages for "nearshore" staff let the company sell services for up to 35% less than they would cost if delivered from France.
Even so, some clients such as France Telecom (FTE) require call centers to be located in-country for legal or political reasons. To serve such customers, Webhelp opened its first French operation, in Caen, a year ago. Jousset says that native speakers??ith their deeper cultural context and better command of slang??erform better anyway at outbound tasks such as telemarketing. "What you spend on higher salaries you more than make up in higher productivity," he notes.
What's next? Jousset has toured locales in Senegal and Madagascar for possible expansion. He's keen on the emerging idea of "homeshoring," or hiring people such as stay-at-home moms and those with disabilities to provide phone support out of their houses.
He's also trying to move more into business-process outsourcing??ervices such as accounting and human-resources administration??hich now account for just 5% of revenues. And he would also consider possible acquisitions to accelerate growth. What once seemed radical is now normal??nd Webhelp helped make it happen.