Q1 2023 CRM/BPO Insights

Quarterly Insights

The AI Revolution: How Chat GPT4 Could Change the Game in Outsourcing and CXM Verticals 

The use of Artificial General Intelligence (AGI) and Large Language Models (LLMs) like Chat GPT4 is still in its early stages, but the potential implications for the outsourcing and customer experience management vertical are monumental. While there will undoubtedly be practical applications, two questions remain:  

  1. Is it worth the risk? 
  1. Could it impact the outsourcing/customer experience management vertical? 


First, let’s look more closely at how it works. The model is trained using structured data and user inputs, making it challenging to use it in business-critical functions where personal information or unique identifiers are disclosed. This could put companies in breach of contractual obligations and/or confidentiality, leaving them vulnerable to legal or financial repercussions. 

Be that as it may, for those with short time horizons, the allure of margin enhancement by reducing headcount or replacing human agents with AGI may be too tempting to resist. However, those with a longer duration perspective may be giving up their competitive edge, which, in this instance, is data. 

The adoption of Chat GPT is not without its challenges. Italy has even banned the use of Chat GPT until it complies with GDPR and their stringent data privacy/security standards. Nonetheless, the potential to revolutionize mergers and acquisitions cannot be ignored.  

One possible solution is to use AI to assist with due diligence and deal sourcing, allowing companies to identify potential acquisition targets faster and with greater accuracy. This would enable them to make more informed decisions, ultimately leading to better business outcomes. 

As the commercialization of these tools progresses, we will continue to follow how dynamics like the ones described above are solved. One thing is for sure: AI will undoubtedly play a significant role in the future of mergers and acquisitions. 

But let’s move on from AI to other CRM/BPO topics. 

One positive out of all of the fluctuations the outsourcing verticals have felt in the last couple of years is that the labor shortage seems to have ended. Anecdotes from business owners and hiring managers show a more favorable market for hiring agents/representatives over the last few months, with the trend expected to continue.  

As the BPO/CXM vertical is especially sensitive to employee turnover and attrition, these market dynamics shifting back in favor of the company should help stabilize some performance—or at least give more confidence to owners—meaning one less headache than they had before.  

Plus, there are exciting M&A developments taking place in the outsourcing vertical, with companies eager to unload non-core cost centers. In the first quarter of 2023, MCI BPO made a bold move by acquiring OceanX LLC, a contact center technology and service center previously owned by Guthy-Renker. Meanwhile, private equity firm Prospect Partners snapped up Customer Contact Services, a top provider of inbound communications customer service solutions.  

Notwithstanding the fact that overall deal volume has dropped from previous years, there are still opportunities for savvy investors to transact with the right assets. And in a surprising twist, two massive transactions—the merger of Concentrix and Webhelp, and Boyne Capital’s investment in Flatworld Solutions—drove up deal value in Q1.  

Keep your eyes peeled for more exciting developments in this ever-evolving landscape! 

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