That’s the important thing query surrounding Teleperformance ($TEP.PA), the French firm specializing in outsourced customer support. With a subsequent twelve-month valuation of 5x P/E, market sentiment means that AI is poised to switch human customer support representatives. From chatbots offering instantaneous responses to AI-driven analytics predicting buyer wants, AI has change into an integral a part of fashionable customer support operations. However what if AI and human brokers may combine to create a extra environment friendly and highly effective service mannequin? That’s what we’re evaluating right here.
Supply: TP built-in report 2024.
Key Highlights
Contract Loss Affect: The non-renewal of a visa software administration contract considerably affected Teleperformance’s inventory worth.
Current Acquisitions & Development Technique: The acquisitions of Majorel and ZP underscore the corporate’s dedication to diversification and enlargement in digital companies.
Valuation: Buying and selling at 5x Ahead P/E, Teleperformance stays attractively valued relative to its sector, and on an absolute foundation.
📌 “By no means underestimate the worth of being there.” – Teleperformance
Enterprise Overview
Based in 1978 by Daniel Julien in Paris, Teleperformance began as a small name heart and has grown into a world chief in buyer expertise administration, working in 100 nations throughout Europe, Asia, Africa, and the Americas. The corporate’s present technique focuses on integrating AI with human experience to ship complete customer support options.
Core Enterprise Segments
1. Core Companies & D.I.B.S. (Digital Built-in Enterprise Companies)
Buyer care & technical help (voice and non-voice)
Content material moderation & Belief & Security companies
Buyer acquisition & loyalty administration
Digital advertising options
Built-in again/center/front-office companies
Operations consulting, digital experience, and cloud integration
2. Specialised Companies
On-line decoding (LanguageLine Options)
Visa processing (TLScontact)
Accounts receivable administration (AllianceOne)
On-line healthcare navigation & help (Well being Advocate)
Recruitment course of outsourcing (PSG International Options)
Teleperformance has aggressively expanded via acquisitions, notably Majorel (November 2023), strengthening its digital options in cloud-based transformation and advertising platforms. The brand new acquisition of ZP for an quantity of $490m, a frontrunner in communication companies for the deaf and exhausting of listening to (English & Spanish), demonstrates the corporate’s dedication to diversification and inclusion, additional increasing its service community.
ESG Challenges and Restoration
After a collection of controversies relating to poor working situations within the Americas, Teleperformance’s inventory worth fell by 38% in November 2022. Many funds divested attributable to ESG considerations. This occasion considerably impacted the corporate’s repute.
In response, TP has labored to regain belief by reaching agreements with main labor unions and enhancing working situations. As of 2024, it’s ranked seventh within the “World’s Finest Locations to Work” by Bestplacetowork.com and extremely rated on Comparably, Certainly, and Glassdoor.
Aggressive Benefit
Teleperformance’s capacity to serve multinational companies and governments highlights the significance of scale in outsourced customer support, a single supplier with world attain is usually most popular over a number of regional suppliers.
Within the chart under, we are able to see the purchasers diversification within the core companies, and specialised companies.
Supply: TP presentation 2025.
Opponents
Teleperformance is the #1 firm in Enterprise Course of Outsourcing (BPO). Resulting from its wide selection of companies, direct comparisons with different companies are tough. Nonetheless, this evaluation focuses on Concentrix as a key competitor.
Supply: Finchat
Publish-2022, following the pandemic-driven surge in customer support demand, the trade has seen a decline in margins attributable to excessive outsourcing setup prices. Nonetheless, TP maintained a 5% web revenue margin in 2024, whereas Concentrix’s margins declined to 2%. Analysts at JP Morgan and White Falcon venture progress within the BPO & customer support trade in 2025 and 2026.
Supply: TP presentation January 2025.
Funding Thesis
The most important query surrounding TP is: Can it survive in the long term? This query just isn’t solely related for tech corporations but in addition for numerous industries adapting to AI-driven transformation. AI innovation is evolving quickly, however it’s not a brand new expertise, it has existed for over 5 years. The important thing distinction now’s its accessibility to companies and customers.
Nonetheless, TP is not only a name heart; it supplies a variety of specialised companies that may be enhanced however not absolutely changed by AI. Whereas AI can automate primary queries, advanced buyer points nonetheless require human intervention for crucial considering, empathy, and problem-solving.
Supply: TP built-in report 2024.
With double-digit returns on capital employed over the past decade, working margins between 8% and 12.5%, and web margins starting from 5% to 7%, we’ve modeled three potential situations for TP’s future.
Supply: Finchat.
Listed here are the numbers we should contemplate:
In our pessimistic state of affairs, I took under consideration that the market considers the corporate goes to lower their income in 3 years a 30%, as a result of their blue-chip prospects long run contracts are till 2028. However the margins of the corporate will nonetheless be the identical, 5% as a result of their enterprise mannequin, the place prices are generated principally by hourly charges of the workers, within the case of don’t having contracts, they don’t have these value.
That’s why in our estimations, within the worst-case state of affairs the place they loses 30% of their income, they stored the online margin in 5%. So, if the longer term is any higher than dropping 30% of its income, the corporate ought to ship a optimistic return.
Within the base state of affairs, we thought of a small progress, lower than the steerage of the corporate, and we stored margins according to their historic margins, of 6%. Which present us a Compound Annual Development Price of twenty-two%
Within the optimistic state of affairs, we keep the margins in line and the expansion of the income according to the steerage of the corporate, and we obtained a CAGR of the 30% and a +123% on our investments.
Monetary Power
TP has robust entry to liquidity, demonstrated by the issuance of €500M in bonds at a 4% coupon price, with an investment-grade score (BBB) from S&P—the very best credit standing within the buyer expertise administration trade (Monetary Occasions).
For comparability, U.S. Treasury bonds presently yield ~4.5%, indicating that the debt market has confidence in TP’s capacity to satisfy its obligations. Nonetheless, the inventory market stays skeptical of its long-term potential.
Supply: finchat.
Threat Components
AI Disruption Considerations: A HubSpot survey discovered that 72% of trade leaders consider AI can outperform human brokers by delivering quicker, extra constant responses whereas working 24/7. This might strain TP to decrease costs, impacting margins and/or revenues.
Foreign money Fluctuations: TP operates in inflationary economies equivalent to Brazil, Argentina, Egypt, and Turkey, exposing it to forex dangers. Nonetheless, some dangers are offset by favorable change charges in different markets.
Monetary Debt: Internet debt stands at €3.89B, with a Debt-to-Fairness ratio of 1.1 comparatively low in comparison with trade friends. Sturdy free money move (FCF) technology helps the corporate’s capacity to satisfy its obligations.
Closing Ideas
What could possibly be higher than asking AI if AI goes to switch buyer companies companies.
Supply: Openai.chatgpt.
Teleperformance sits at a vital intersection of AI innovation and human-driven service, however the firm provides all kinds of companies, and the extra the World modifications to a extra digital period, the extra the companies given by TP shall be wanted. AI is reliable and environment friendly, however buyer companies, on-line moderation, AI coaching, visa outsourcing, and the remainder of the companies TP provides, are simply going to be fusionated with AI to enhance effectivity, prices, and time. The present scale of TP creates a barrier to entry to new gamers, and switching prices, and the insourcing of those companies implies excessive investments.
🚀 AI is poised to vary the panorama of customer support. Do you suppose it should improve or fully exchange human involvement? Share your ideas!
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