European Based Transcom WorldWide Contact Centers Pulling Out Of Colombia; Chile & Peru May Be Next
Sweeden based Transcom WorldWide AB, trading on the Stockholm NASDAQ exchange (STO:TWW) today announced that it will close its loss-making contact center in Cali, Colombia, and that the board of directors is evaluating strategic alternatives for the company’s remaining Latin American business in Chile and Peru. Since 2013, Transcom has generated losses in Latin America totaling €15.1 million (Euros). Out of this amount, the company attributes €4.2 million ($4.56 million USD, $15 billion COP) to Colombia. In the first nine months of 2015, the company has stated losses in Latin America totaled €3.2 million, €1.6 million of which refers to Colombia. Stopping these losses is a key priority in 2016. A non-recurring €2.2 million restructuring cost related to the closure of the Cali site in Colombia will be recorded in Q4 2015. Out of this amount, €1.4 million is a non-cash charge (write-down of assets), and €0.8 million is a cash cost.
“The fact that we are exiting Colombia and that we are evaluating strategic alternatives for Transcom’s business in Chile and Peru reflects a major shift in market conditions. Macroeconomic changes in the last couple of years have negatively affected the viability of Latin American contact centers as an offshore delivery solution for clients in Spain,” saud Transcom CEO Johan Eriksson. “In response, we have focused on repositioning our Latin American business towards serving domestic clients. While we have won a number of new clients, results are still unsatisfactory. Transcom is a marginal player in Latin America, and we have chosen to focus on other markets, where our potential for generating profitable growth is greater.”
Transcom’s losses in Latin America (EBIT)
| € EUR million | 2013 | 2014 | 9 months of 2015 | Total | |||||
| Chile | -2.9 | -3.2 | -0.8 | -6.9 | |||||
| Colombia | -0.8 | -1.8 | -1.6 | -4.2 | |||||
| Peru | -1.5 | -1.7 | -0.8 | -4.0 | |||||
| Total Latin America | -5.2 | -6.8 | -3.2 | -15.1 |
“In connection with the changes announced today, Isabel Sánchez-Lozano, General Manager for the former Iberia & Latam region, will leave Transcom. I would like to thank her for her contributions to developing Transcom since joining the company in 2011,” said Eriksson, in a statement.
Transcom also announced a number of changes to its regional and management structure The company hopes that this realignment will improve efficiency and further streamline Transcom’s global business operations, as well as focus the organization’s resources on prioritized growth areas. Annual cost savings to be realized as a result of these actions are estimated at €2.9 million, and are expected to take full effect in the fourth quarter of 2016. Transcom has said that further efficiency gains in addition to these direct cost savings should hopefully be realized in the coming years, supporting Transcom’s mid-term financial objectives. A non-recurring restructuring cost amounting to approximately €2.7 million, related to the organizational changes described below, will be recorded in the first quarter of 2016.
A new region, Continental Europe, will combine Transcom’s operations in Spain and Portugal with the former Central & South Europe region (excluding the United Kingdom). Roberto Boggio has been appointed General Manager of this new region. · A new region, English-speaking markets and APAC, will integrate the UK organization with the company’s operations in North America & Asia Pacific. Siva Subramaniam has been appointed General Manager of this new region. Region North Europe will remain unchanged, led by Christian Hultén.
Transcom’s assets in Chile and Peru, currently under strategic review, will be managed separately, reporting directly to the President & CEO, Johan Eriksson. Starting in the Q1 2016 interim report, Transcom’s segment reporting will reflect this change. Pro forma comparable figures for Transcom’s new segment reporting structure will be released before the publication of Q1 2016 results.
Continued Eriksson: “We are also making a number of organizational changes in order to simplify our regional structure. This will yield cost advantages as well as enhance the opportunity to drive standardization and efficiency across our global business, placing us in a good position to reach our mid-term financial targets. Important focus areas in the coming years are to ensure that we have efficient and effective regional and corporate functions, that our sites deliver superior performance through operational excellence, that we excel in contract and account management, and that we win long-term profitable business in line with Transcom’s commercial and operational set-up.”
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