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In a quest to bolster their artificial intelligence (AI) initiatives, business process outsourcing (BPO) firms are going private — a move that seems too conservative and could lead to challenges in attracting talent.
TaskUs has announced a definitive agreement to be taken private by its co-founders and Blackstone in a $1.62 billion all-cash deal, citing its newfound focus on leveraging AI to enhance its services.
Top BPO firms Teleperformance and Concentrix have seen a 40% to 70% decline in their stock value over the last five years. Are tough times ahead for the industry? Or is there an opportunity that they’re not seeing? Note that TTEC also considered going private, but has since withdrawn its plans.
Removing a company from the stock market inevitably leads to less capital to work with. Newly privatized companies usually reduce their headcount or even impose a hiring freeze. This approach worked before, but in today’s rapidly evolving AI landscape, it’s almost foolish to stop searching for talent.
In the technology sphere, firms like Meta, Microsoft, Google, and others are investing millions of dollars to attract the next AI genius. They are actively seeking the tech savant who can give them a competitive edge in the AI race. These firms recognize the importance of investing in human capital, particularly as the world undergoes another revolution.
Embracing risk
Going private will reduce a company’s brand visibility and even lower its prestige — something that top talent values highly. The general view among publicly listed companies is that they are financially well-off, have excellent reputations, and are managed by the world’s best leaders.
Professionals, especially the cream of the crop, would prefer to work for well-known and publicly traded companies, not just for their reputation, but also for the chance to acquire stock options.
Lesser capital also prompts newly privatized firms to leave little or no room for risk. Mistakes are costly, yes, and the last thing companies want is to waste resources. But risk is also necessary to push the envelope of innovation.
Being open to more risks expands the business’s horizons and can even lead to untapped markets. We’re still pretty much in the Wild Wild West phase of AI. There is still so much out there to be discovered. The time to be carefree is now, as market dominance is still up for grabs.
Tech firms are investing in offshore talent to train their AI engines, correct their mistakes, and operate them. Although tapping offshore staff is relatively inexpensive, ample resources are still required to construct an AI engine. Scrimping on innovation is simply a counterproductive measure. This is not to say firms should put everything in one basket. Embracing risk involves managing it conscientiously.
Wild West
Delisting from the stock exchange by larger BPO firms is understandable, as the segment involves numerous routine tasks that are under threat from AI. Some BPO stocks have plummeted upon news of a new and improved AI engine. However, some have recovered amid AI malfunctions and inconsistencies.
Nothing is carved in stone at this point. Creating an AI platform could immediately propel a struggling company into business superstar status. This super software will not make itself, but by a tech genius waiting to be discovered.
The question for your business
How has AI affected your operations and decision-making?
