At No. 1 on this year's Europe's 500 Hot Growth list, this service company has made outsourcing its own, and has no plans to stop innovating
Note: This is a revised and updated version of an article that originally appeared Oct. 19, 2006.
Offshore call centers seem pretty old hat these days. But back in 2000, when Olivier Duha and Frédéric Jousset started Paris-based Webhelp, their scheme was downright radical. Scores of French call center companies already existed at the time—some dating back to the late 1970s—but 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 was born Webhelp, which saw its revenues increase more than tenfold over the last three years, to €61 million ($88 million) in 2006, and expects 56% growth this year, to €95 million ($137 million). Ranked No. 8 on last year's Europe's 500 Hot Growth report, it grabbed the top spot this time thanks to its surging staff count. Webhelp now employs more than 5,000 people in service centers from Bucharest, Romania, to Rabat, Morocco, and counts among its clients insurance giant AXA (AXA), cosmetics maker L'Oréal (OREP.PA), FedEx (FDX), and Virgin Mobile (VMED).
It all seems like fate now, but Webhelp had a tough time getting off the ground. The company began as the French licensee of a Canadian firm also called Webhelp, which devised the original business plan to provide customer support using the Internet. Duha and Jousset, colleagues at consultancy Bain & Co. and both about 30 at the time, were tapped to lead the French franchise, but by 2001, a schism developed with the Canadian parent and the companies went their separate ways. Webhelp France purchased the rights to its name and retained its focus on call centers, while the Canadian firm shifted more into technology and merged with two other companies to become TWS Holdings.
Non-voice a Nonstarter
Duha and Jousset also encountered surprising resistance among French companies to the idea of sending customer service abroad. "People asked, 'Do you think we're crazy?'" says Jousset, who shares the chief executive job with Duha. "Like the Bible, it took some time to explain it and get people to join."
The initial business plan also had a twist: Rather than providing support via phone, the Canadian company's idea was to use e-mail, chat, and other non-voice communication. (Hence, the name Webhelp.) That, it figured, would blunt potential concerns among clients over the accents or fluency of the employees. 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 for Webhelp France amounted to only €80,000.
Still, the company made some clever moves. Rather than going it alone, Duha and Jousset 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%.
Buying It Back
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.
In early 2006, 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. They did another refinancing for €250 million in June, 2007, in partnership with Paris investment firm Astorg Partners.
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.
Homeshoring and Other Ideas
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 the city of Caen, in 2005. Jousset says that native speakers—with their deeper cultural context and better command of slang—perform 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 from their houses.
He's also trying to move more into business-process outsourcing—services such as accounting and human resources administration—which now account for a small share of revenues. And he would also consider possible acquisitions to accelerate growth. What once seemed radical is now normal—and Webhelp helped make it happen.