Ahmed Imam And Rymssad - HS
It isn’t everyday that a homegrown company not only goes global, but also becomes the number one player in its field internationally. With over 48,700 workstations in nine centers located in Cairo, Hurghada, Dubai and Warsaw; and 6,000 employees servicing 95 clients in 25 languages, Raya Contact Center (RCC) is a success story to say the least.
The company has reported an average of 8 million transactions per month in 2016, compared to 6.5 million in 2015, and LE 463.1 million in revenues in November 2016, with a profit margin of 21.3%. Revenues are expected to increase in 2017 by 33% and profits by 40%.
Founded in 2001, RCC’s wide range of services include customer support, inbound sales, technical support, service recovery, debt collection and social media support, data management, finance and accounting, supply chain management and HR outsourcing. Since then, RCC has become number one in providing contact center services in Arabic and a multitude of other languages on an international scale. In Egypt, RCC is the market leader with a 20% market share.
RCC’s story, however, is far from over; the company is undergoing an Initial Public Offering (IPO) with 49% of its outstanding share capital, currently owned by Raya Holding for Investments, listed on the Egyptian Exchange (EGX) in the hopes to expand operations in new sectors and markets.
The offering, aimed to raise LE 808.5 million, includes an international offering, an Egyptian retail offering and a closed subscription. Raya Holding for Financial Investments subscribes to LE 100 million worth of shares in the closed offering, 44 million shares to international institutional investors and 4.9 million to Egyptian retail investors. Managed by EFG-Hermes, the IPO’s first phase, conducted in the second half of April, was covered 10.36 times, with total purchases reaching 50.7 million shares.
Valued at LE 16.5 a share for international investors, the IPO will give RCC a LE 1.65 billion market cap before the execution of the closed subscription. Shares have started being traded in the bourse on April 27.
“Raya Holding is an investment company that divests in old things to reinvest in new ventures. This is the nature of our work and we’ve always been doing that. We did that with Fawry, for instance, last year,” RCC CEO Ahmed Imam tells bt. “RCC was the most mature and readiest line of business that could be offered on the market.”
Deputy CEO Rym Asaad adds that the company has been working on this IPO for two years and the expansion plans for it needed financing. Despite a successful year for RCC — with sales volume increasing by 16% from November 2015 to November 2016 in the offshore business, and 30% in the local business — the currency devaluation meant that this 16% increase in sale jumped to 96% given that 80% of RCC’s operations are abroad and their revenues are generated in dollars while their costs in Egyptian pound. “This was the cherry on top, but regardless of this, there was volume growth year over year over the past five years,” Asaad tells bit.
“IPOs give you more coverage and access to cash and provide an opportunity for managers to see their vision and strategy being materialized on the ground and see it expanding,” Imam adds.
The international player
In terms of markets, RCC’s primarily offers Business Process Outsourcing (BPO) in Europe, the Middle East and Africa. Most of their clients are from the GCC, namely KSA, UAE, Bahrain and Qatar. “The GCC represents a little over 45% [of our operations] and Egypt represents 25%; the rest is in Europe,” Imam says. A contact center normally services 70% onshore and 30% offshore, according to Imam, and RCC is focused on their primary market where they have an edge.
While the Egypt site services most of the Arabic needs in the region, their Polish site, opened in 2016, aims at servicing Europe from within Europe, and looks at offering several languages that are easily found in the country. This means that if a client wants to service his clients in Arabic, English and German, RCC will be their one-stop-shop through the Egypt and the Polish centers – providing Arabic services from Egypt and German from Warsaw. The Dubai center, on the other hand, serves the GCC, which has strict requirements on data sovereignty and privacy, for clients who wish to be serviced onshore.
RCC services various sectors, but the biggest sectors they cater to are the automotive, telecommunication and media sectors, representing 48% of their revenues. Banking, finance and insurance follow, representing 9% of RCC’s revenues. Finally, fast food represents 1.5% of their revenues.
The company, however, believes the market in Egypt and the region is far from being saturated and RCC aims to delve into other sectors and markets. “The market is underserved and there is room for more penetration. For instance, the medical services and healthcare, travel and banking sectors are underserved and underpenetrated,” says Asaad. “The more these sectors improve and grow, the more our BPO services will grow. Egypt and the region […] have so much potential.”
Asaad added that the company is also looking to start targeting more French-speaking markets through a site they’re planning to open this year in Morocco. “Morocco has the numbers, better cost, more graduates and stability, which makes it a better destination or French than countries like Tunisia and Algeria,” says Asaad.
Egypt possess a talent pool that can match many market leaders in contact centers – with clear Arabic and English accents – and thus it comes as no surprise that RCC was able to quickly become a market leader.
“Egypt’s population is comparable to that of the Philippines, yet they outsource around 700,000 and we outsource only 100,000 or 120,000,” says Imam. “So we have an opportunity to grow seven-fold to cover the region in certain languages and expertise.”
But sheer numbers aren’t Egypt’s only strength; the fact that you can find 400,000 graduates annually, many of them fluent in Arabic, French and English, gives the country an edge over, not only smaller countries, but also other countries with thicker accents, he adds.
RCC is also starting to look beyond Cairo to target other cities, with a plan to add two centers in 2017 in Assiut and Borg El Arab. Choosing cities where cost is less than the capital, the talent pool is big, the infrastructure is solid and people don’t want to relocate, the company is trying to copy the Hurghada center model and operate in a city where unemployment is high and talent is abundant. “Our core competence is talent; so you go where the talent is and where you can get it for reasonable cost,” explains Asaad.
In the search for new locations, in Egypt and elsewhere, RCC looks for cost, infrastructure, talent pool, and good universities. “Alexandria sees 70,000 new graduates annually and Assiut 40,000,” says Imam, adding that when looking at infrastructure, they need to ensure fiber optics, transportation and technology are available.
Outsourcing non-core business not only provides cost savings, access to a talent pool, technology and expertise, but it also means you get the best practices of a company that has been in the market for 16 years and gained solid expertise in various sectors.
“Because of the economies of scale […] people come to us, not just to save costs, but because we have knowledge of the sector that adds value to the clients,” explains Asaad.
Their three main success ingredients are people, customer service and technology. Raya offers all its employees career development training, including language courses, soft skills, technical skills and others. All of this is provided free of charge to contribute to employee satisfaction and development. “You need to invest in your employee, just like he invests time with you,” explains Asaad. “You create the right work environment, a fair pay scale and invest in people. This is the only way to retain your people,” he says, adding, “We are built around people. This is the first and most important thing.
So selecting the employee, developing them and building their career path as well as the management [are key].”
Asaad explains that since they’re in the service industry, “your eye is always on the client and everything is built around them. You become the customer but also service the end user, so you need to understand their needs and the business process and eventually you become one with the client.” Imam agrees, “We have no over-the-shelf products that the client can take or leave; we offer flexibility and customize everything to their needs.”
Finally, in selecting their location, Imam explains the company is very careful to ensure good transportation, fiber connectivity, at least two sources of electricity, generators, a large space for people to work and a good environment. This ensures that the employee is happy, and that the contact center is always online.