AI Hammers TP and Concentrix Stock as FOBO Becomes Very Real 

The hype and fears surrounding AI have caught-up with Teleperformance and Concentrix, the two largest call center operators in the world.

Teleperformance and Concentrix shares are in free fall as spooked investors dump their stocks amid growing fears of AI’s capabilities to render traditional voice-based call center and BPO services obsolete.

Teleperformance’s stock price plummeted over 60% in just two months. The company’s shares, which were trading at €225 per unit in March 2023, have dropped to a price €85 per unit.

The slump intensified on Tuesday, with the stock briefly dipping to €80. This represents a stark contrast to December 2021, when Teleperformance’s shares reached a peak of €400.

While not as hard hit as Teleperformance, Concentrix is also feeling the heat. Its share price has fallen nearly 40% from a peak reached in late January of this year.

Fear of the machine

Such a dramatic market response was prompted by news of Swedish fintech firm Klarna replacing 700 CX agents with a chatbot built with OpenAI technology.

Klarna’s announcement amplified long-standing fears that AI could potentially displace human agents, who represent the core asset of BPO providers like Teleperformance and Concentrix.

Investors are increasingly apprehensive about companies opting to deploy AI chatbots built in-house, bypassing the need for outsourced customer service solutions.

In an attempt to give investors some peace of mind, Teleperformance CEO Daniel Julien recently told CNBC that AI presents an opportunity to enhance customer service agents, not replace them entirely. Chatbots lack the emotional intelligence and ability to build trust that are crucial for effective customer service, he argued.

“AI will never fully replace the value of human interaction,” Julien emphasized. “Human interaction will always be a vital part of the equation.”

“They [virtual agents] are there to provide a solution that is going to augment the productivity, augment the quality of the information that can be given to the customer,” he added. “But at the end of the day, the customer is a human being. The day the customer is going to be a robot, maybe AI will replace the humans.”

Teleperformance had already tried to quell investor fears in late February, when its share price dropped 7% in a single day, following the Klarna announcement. The company issued a press release downplaying the impact of technological advancements.

This reassurance proved insufficient, however. Teleperformance’s stock continued its downward spiral, hitting a seven-year low in the days that followed.

In a recent call with the press, Teleperformance’s CFO Olivier Rigaudy downplayed the impact of Klarna’s chatbot, describing it as “a basic robot” akin to what the company has been deploying for several years now. Teleperformance has its own AI-based CX solution, which it estimates could automate 20%-30% of its service volumes in the next three years.

Rigaudy also argued that the rise of AI itself will require humans to handle other tasks, such as content moderation.

In spite of Teleperformance’s optimism about AI, investors remain concerned about the long-term viability of the voice-based BPO business model itself. They worry that clients might soon bypass traditional outsourcing and directly leverage AI technology for their CX needs.

Klarna leadership assures that, in just its first month of deployment, its AI chatbot has handled two-thirds of its customer service chats, with a higher accuracy rate in task management and a 25% reduction in repeat questions from customers. In addition, its bot can provide service in 35 languages.

Klarna has been experimenting with generative AI and chatbot technology for a while. In August of last year, the company announced that it was among the early adopters of OpenAI’s ChatGPT Enterprise.

According to First Pacific Advisors, an investment management firm, shares of all CX companies are facing the wrath of AI.

“The market is currently concerned about the potential of artificial intelligence to disrupt Concentrix’s core call center business, which has resulted in the underperformance of shares of all CX companies,” the firm recently told investors in a note.