TELEPERFORMANCE: Trouble or No Trouble?

Let’s look at Teleperformance, a french company providing companies and administrations with expert solutions in customer care (requests for information, subscriptions and signing-up,…), technical support (repair, optimisation, …), customer acquisition (sales and marketing actions), social media and business process outsourcing. It has been getting a lot of attention because of the controversy in Colombia, which has had disastrous consequences on its share price and potentially being rejected from ESG investing. 

Teleperformance stock performance

Teleperformance is highly dependent on its workforce and has more than 40,000 employees in Colombia which are around 10% of its workforce. 

The Controversy

The Colombian authorities claim that moderators are paid US$10 a day who may be exposed to “traumatic content” such as murders, child abuse or sexual violence in their work. The local unions have already confirmed their intention to support the claims against Teleperformance as “an employer with poor working conditions”.  These claims may well reach other regions of the world (understand developing countries) which would make the issue even more worrying for the group.

This news is indeed very embarrassing for Teleperformance. It also faces potentially being rejected by investors on ESG grounds. The group held a conference call on 10th November after a terrible day for the share price which lost up to 34% of its value. The group confirmed that it has not yet been officially notified by the Colombian government of any investigation and finds it strange to have learned about this proceeding via a tweet.  The management claimed that the average wage for a moderator is 45% higher than elsewhere in the sector and broadly in line with the average salary in Colombia; there thus does not seem to be a real issue here. Moreover, the group is recruiting 4,000 workers a month, who seem to be happy to work for this level of wage.

On the working conditions, the group asserts that the occurrence of traumatic events during moderation is “one in a million” and most of the egregious content is taken care of by the algorithm.

The Consequence

In response to all this, Teleperformance announced it would exit the “highly egregious content” moderation business. 

This move is surprising insofar as the group had seemed determined to keep it, arguing that this was “necessary for society”. It is also surprising since the group was arguing moderators were in fact very rarely exposed to egregious content. All in all, we reiterate that the exit will partly solve the “ESG issue” regarding moderation, but we are still a bit puzzled. That said, all the audits announced will be maintained and are already engaged. Also, it is very difficult too to assess when the exit will take place, but management states it will not renew existing contracts and, of course, is no longer selling this service.

How do you think the market will react to this?

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