Why High Technology Companies Can Benefit From Call Center Outsourcing

Smith Ashville

Basic PLUS Author | 19 Articles
Joined: August 4, 2009 United States
Why

Outsourced call center services for high technology companies can be extremely beneficial. Sales professionals in the high tech sector are generally highly compensated relative to other industries. It makes sense to outsource some if not all of the business development functions to only it that specialize in the high tech sector. This enables your sales representatives to focus on closing business as opposed to prospecting. You should consider using a business to business service provider that focuses on the technology industry, especially if you are pursuing C-Level executives for enterprise solutions.

In the interest of discovering new opportunities, your business development people need a combined skill set. A knowledge of your product or service offerings along with an advanced skill set of using the phone effectively to penetrate an organization. Business development professionals at technology companies typically don’t have the years of experience in handling telesales and telemarketing programs by phone compared to agents that specialize in the tech company sector. Many have never had any formal telephone skills training for sales professionals. They are challenged with working around obstacles such as gatekeepers, meetings and voice mails to reach the decision maker and share their value proposition. Call center teleprofessionals know how to overcome these obstacles. They know how to secure appointments, pre-qualify potential clients for your services or handle a complete telesales program. By using it outsourcing for your technology company your sales representatives are able to move onto the next step in the sales cycle.

Another advantage of call center outsourcing for high tech companies is the avoidance of considerable expenditures by setting up and maintaining your own internal operation. The top-tier it have already made a solid investment in world-class technology infrastructure and customer relationship management systems. You can avoid the costs and gain the efficiencies by outsourcing.

In conclusion an important differentiator in the call center selection process is the qualifications and capabilities that you require of your outsourced vendor. You may need it that has years of experience in telesales and telemarketing to Fortune 500 companies promoting software, hardware or consulting services to senior level executives. You need to engage a highly specialized it with the appropriate experience to ensure that you’ll increase leads, increase appointments, increase sales, increase profits, increase market share and decrease overhead expenses. The ultimate benefit of it outsourcing is to increase your return on investment by selecting the right call center partner.

Telesales Services specializes in call center outsourcing for high tech companies. We represent over 100 of the best call centers in the USA. We match you with the right call center services for high technology companies. Our mission is to help you source and hire the most qualified call center with high-tech experience for your initiative. We are committed to providing you with best in class service providers that will make every effort to reach your return on investment objective.

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Rising Trend in the Auto Industry – Reaching Out to NFC Technology Companies

Rising Trend in the adoption of NFC technology by Auto Industry

The technology of near field communications (NFC) has been growing by leaps and bounds in the last couple of years and many technology providers who have been providing mobile software application services have jumped in to NFC bandwagon. NFC Technology business application developers have been continuously establishing relationships with the Auto majors to come out with such innovative NFC applications. If the trend seen in the recent CES 2013 show is anything to go by, NFC technology is going to continue on its strong growth trajectory in the coming years. One industry vertical on which the NFC technology companies are betting big is the Automobile industry. NFC companies are trying to come out with a series of NFC applications used in streaming content and transferring data in the automobiles.

NFC in Auto Industry

Most of the cars in different utility segments come with state of the art entertainment, infotainment and navigation features built in to it. NFC technology providers have been doing significant research on the usage of wireless connectivity inside the cars. Wireless connectivity inside the cars has become critical in transferring content from various personal tablets and smart phone devices to the entertainment and navigation systems used in the car. These wireless systems would eventually replace the existing expensive cabling system for communication and data transfer inside the car.

NFC Chips for Vehicles

NFC Technology developers such as Texas Instruments have come out with a NFC chip that helps in achieving wireless connectivity in side cars. The new system called the WiLink 8Q system-on-chip family integrates technologies such as NFC, WI-Fi, Blue tooth and GNSS to achieve wireless communication between the device used by the driver and devices owned by the different passengers sitting in side the car. NFC enabled tablets and smart phones require a NFC tag to engage in NFC enabled data communication. One can buy NFC tags in e-Commerce portals such as Amazon. Texas instrument is planning to come out with a prototype of the equipment model in the 2nd quarter of 2013. They are planning to start production in early 2014. This solution has been developed for auto manufacturers that manufacture cars in high volumes.

NFC Car Keys for opening Hotel Rooms

Among the different NFC technology manufacturers, Ving Card Elsafe is one company that has been specializing in coming out with hotel key cards based on NFC technology. Ving Card Elsafe has partnered with BMW to develop a new technology that would enable car drivers to book hotel rooms from their cars and use their car keys to open the room. This would be very much useful for business travelers who are in constant need of last-minute hotel bookings.

Using the built-in navigation system available in side the BMW car, BMW car drivers can search for the nearby hotels that are within the range of NFC standards. The driver can select a particular hotel and complete the booking from their BMW car. Once the reservation is complete, the vehicle navigation system informs the driver regarding the room number in the hotel and also guides the driver to that particular hotel. The access code that is required for opening the hotel room door gets downloaded automatically to the NFC enabled car key. BMW drivers can walk past the hotel check in counter and directly enter the booked room. Drivers can use their NFC enabled car key to open the Vingcard Elsafe Contact less door lock.

More and more top NFC technology companies are beginning to partner with reputed auto manufacturers to come out with such innovative NFC applications.

Technology Companies: Grow Or Sell?

The excitement and buzz of Silicon Valley is definitely what makes it the technology capital of the world, but the peer pressure in the area tends to make many entrepreneurs lose sight of reality. In the Silicon Valley, almost every entrepreneur’s checklist includes: get venture capital, grow beyond wildest dreams, and do an IPO or sell to Google. With less than 1% of startups getting funded and less than 10% of those companies having a great exit or going IPO, you have a 1 in 1000 shot of meeting the goals on such a checklist.

Of the other 999, most of them generate very little if any revenues and just fizzle away. Some become viable technology businesses with none or little outside funding and achieve significant growth until they get somewhere between $5 and $20 million in sales. While such companies are growing, most think that their growth path will continue for quite a bit longer than it actually does. Generally, once they get to that plateau, they get stuck and have a difficult time growing due to one of several reasons:

Their technology or offering starts becoming obsolete due to a new technology, service or website
Their well-funded competitors start to take their customers due to more expensive marketing campaigns, lower cost, or a better service
A company like Google starts to offer the product for free

Once you get to this point, it is very difficult to reverse the damage. At this point, many technology companies feel that if they just add value to the customer, they can usually offset the above negative factors. Sometimes, they can continue to grow, but usually either the competitor is one step away or the increase in value doesn’t warrant the increase in cost to the customer. So what is the best way to beat the plateau? When your company is at a long-term plateau, the answer is to sell the company or take on a majority partner that can help you grow through synergy, capital and management. If you don’t do one of these, you are definitely not getting the best return on your investment and there is a good chance you could lose your entire investment in a few more years.

In fact, the best time to sell a technology company is when you are growing. Our rule of thumb is that while the company’s revenues are growing greater than 20%, it is best to keep growing the company. When it starts teetering around 20% or dropping below 20%, it is best to sell the company. The reason is that selling a company exhibiting growing forecasts is much easier than selling a company exhibiting flat or nominally increasing forecasts. Buyers are typically looking at the forecasts of your company to determine its value, so it is much better being in a position to offer strong, growing forecasts that a buyer can believe.

Thus, the take-away here is that if you are self -funded or a bootstrapped technology company that saw or is seeing good growth, most likely, it will come to an end. Therefore, you have to make a decision whether you will continue trying to grow the company or whether you will capture the value you have already created for the company by selling when your company is in a strong position. If you attempt to continue to grow, there is a good chance, you will plateau and probably decline. Think objectively and choose the right path.

Neil Shroff is the Manging Director of Orion Capital Group, a mergers and acquisitions advisory firm. Neil is well-versed in mergers and acquisitions, operations, business development and management consulting. Prior to founding Orion Capital Group, Neil co-founded an overseas manufacturing outsourcing firm. During his tenure, Neil acted as the lead for two strategic acquisitions, and eventually worked closely with the board of directors to lead the sale of the firm.

Previously, Neil was a Managing Director for a Jefferies Capital Partners portfolio company where he led the company’s transition from a position of financial and operational distress to position of profitability. In his early career, Neil was a management consultant at SRI International and another small consulting firm where he focused on developing strategic recommendations for numerous clients in the biotech, medical device, and material technology industries.

Technological Companies Will Survive, by Innovating and Expanding Across Borders

The current economic situation worldwide continues to be one of crisis. Once in a while, some gurus predict the end of the crisis, but they usually do not agree on the exact date. Over time, management teams of most organizations have understood that the key to survival is standing out from the competition. The main elements to pursue in order to reach this goal are innovation and multinational presence.

As such, technological companies have a great responsibility: they must be the leading sector in the path towards economic recovery. In fact, they already play an increasingly important economic part, as large technological enterprises have become economic leaders around the world, and the role of small and medium-sized companies on a more reduced scale should not be underestimated either. In other words, technological companies of all sizes will act as triggers for recovery, as they boost the efficiency and productivity levels of other sectors.

Innovation is team work

Guido Stompff, an OcĂ© designer, highlights the importance of collective thinking for R+D in his PhD thesis, which he defended at the Delft University of Technology. “Innovation is often a new concept that usually arises from the interaction between experts, due to the fact that, when their knowledge is combined, new ideas appear that nobody had thought of before”. This new process, which Stompff refers to as “team cognition”, is the binding mechanism that aligns and coordinates group activities into a whole: the product.

When a company decides to invests their efforts in a product, their success basically resides in whether they are capable of standing out from the competition and positioning themselves correctly. In this sense, experts underline that it is not the rivalry among different products, but the customers’ view of these products that matters. This means that defining a target audience and highlighting product features essential to this target should be fundamental parts of the strategy.

Likewise, technological firms dedicate a large part of their revenue to R+D and adapt their processes to their clients’ needs. In other words, in addition to maintaining active players in the market, they are feeding back their experience from the field into their own processes. This ability to adapt and be flexible when needed will, without a doubt, mark the difference.

On the other hand, the competitive edge of small and medium-sized companies lies in their proximity to their clients. These close relationships enable these companies to innovate, as they turn direct first-hand information into new product development.

Future Perspectives

The Cluetrain Manifesto is a document written in 1995 that contains 95 ideas about how business relationships should develop in the newly connected market. One of its theses states that “Markets are now interconnected on a human-to-human level and, as a direct result, markets are getting smarter and profoundly joined in conversation. Companies that do not understand this evolution, are losing their best opportunity.”

International presence, both physically and virtually, means an added value for any company when competing in a globally connected market. In this sense, one of the Manifesto’s ideas highlights that “There are no secrets. The online market knows more than companies about their own products. Regardless of whether the news is good or bad, everyone is informed. ”

From the beginning of the crisis, management teams of technological companies have reconsidered their strategies and repositioning methods to adapt to the new global situation. The goal is to sell their knowledge, structure and technologies outside their borders, as close relationships in their immediate environment are making way for a more international presence, with more opportunities to obtain resources if they are competitive.

A company’s international presence may consist of different levels, which may or may not be mutually compatible. Establishing business in one or more countries tends to be a valid option mainly for large enterprises, while expansion strategies through partner alliances seem to be the most interesting option for small and medium-sized companies as these alliances maximize the organization’s presence abroad. As such, English is without a doubt the language of technology worldwide. However, other languages, such as Russian, Chinese and Portuguese, should also be taken into account, via Website translation and/or direct communication, in order to better reach these important markets. Finally, there are the social media platforms, of course. Social media has become an essential means for companies to spread information and create fluid interaction with their public.

Revenue-Based Financing for Technology Companies With No Hard Assets

WHAT IS REVENUE-BASED FINANCING?

Revenue-based financing (RBF), also known as royalty-based financing, is a unique form of financing provided by RBF investors to small- to mid-sized businesses in exchange for an agreed-upon percentage of a business’ gross revenues.

The capital provider receives monthly payments until his invested capital is repaid, along with a multiple of that invested capital.

Investment funds that provide this unique form of financing are known as RBF funds.

TERMINOLOGY

- The monthly payments are referred to as royalty payments.

- The percentage of revenue paid by the business to the capital provider is referred to as the royalty rate.

- The multiple of invested capital that is paid by the business to the capital provider is referred to as a cap.

CASE STUDY

Most RBF capital providers seek a 20% to 25% return on their investment.

Let’s use a very simple example: If a business receives $1M from an RBF capital provider, the business is expected to repay $200,000 to $250,000 per year to the capital provider. That amounts to about $17,000 to $21,000 paid per month by the business to the investor.

As such, the capital provider expects to receive the invested capital back within 4 to 5 years.

WHAT IS THE ROYALTY RATE?

Each capital provider determines its own expected royalty rate. In our simple example above, we can work backwards to determine the rate.

Let’s assume that the business produces $5M in gross revenues per year. As indicated above, they received $1M from the capital provider. They are paying $200,000 back to the investor each year.

The royalty rate in this example is $200,000/$5M = 4%

VARIABLE ROYALTY RATE

The royalty payments are proportional to the top line of the business. Everything else being equal, the higher the revenues that the business generates, the higher the monthly royalty payments the business makes to the capital provider.

Traditional debt consists of fixed payments. Therefore, the RBF scenario seems unfair. In a way, the business owners are being punished for their hard work and success in growing the business.

In order to remedy this problem, most royalty financing agreements incorporate a variable royalty rate schedule. In this way, the higher the revenues, the lower the royalty rate applied.

The exact sliding scale schedule is negotiated between the parties involved and clearly outlined in the term sheet and contract.

HOW DOES A BUSINESS EXIT THE REVENUE-BASED FINANCING ARRANGEMENT?

Every business, especially technology businesses, that grow very quickly will eventually outgrow their need for this form of financing.

As the business balance sheet and income statement become stronger, the business will move up the financing ladder and attract the attention of more traditional financing solution providers. The business may become eligible for traditional debt at cheaper interest rates.

As such, every revenue-based financing agreement outlines how a business can buy-down or buy-out the capital provider.

Buy-Down Option:

The business owner always has an option to buy down a portion of the royalty agreement. The specific terms for a buy-down option vary for each transaction.

Generally, the capital provider expects to receive a certain specific percentage (or multiple) of its invested capital before the buy-down option can be exercised by the business owner.

The business owner can exercise the option by making a single payment or multiple lump-sum payments to the capital provider. The payment buys down a certain percentage of the royalty agreement. The invested capital and monthly royalty payments will then be reduced by a proportional percentage.

Buy-Out Option:

In some cases, the business may decide it wants to buy out and extinguish the entire royalty financing agreement.

This often occurs when the business is being sold and the acquirer chooses not to continue the financing arrangement. Or when the business has become strong enough to access cheaper sources of financing and wants to restructure itself financially.

In this scenario, the business has the option to buy out the entire royalty agreement for a predetermined multiple of the aggregate invested capital. This multiple is commonly referred to as a cap. The specific terms for a buy-out option vary for each transaction.

USE OF FUNDS

There are generally no restrictions on how RBF capital can be used by a business. Unlike in a traditional debt arrangement, there are little to no restrictive debt covenants on how the business can use the funds.

The capital provider allows the business managers to use the funds as they see fit to grow the business.

Acquisition financing:

Many technology businesses use RBF funds to acquire other businesses in order to ramp up their growth. RBF capital providers encourage this form of growth because it increases the revenues that their royalty rate can be applied to.

As the business grows by acquisition, the RBF fund receives higher royalty payments and therefore benefits from the growth. As such, RBF funding can be a great source of acquisition financing for a technology company.

BENEFITS OF REVENUE-BASED FINANCING TO TECHNOLOGY COMPANIES

No assets, No personal guarantees, No traditional debt:

Technology businesses are unique in that they rarely have traditional hard assets like real estate, machinery, or equipment. Technology companies are driven by intellectual capital and intellectual property.

These intangible IP assets are difficult to value. As such, traditional lenders give them little to no value. This makes it extremely difficult for small- to mid-sized technology companies to access traditional financing.

Revenue-based financing does not require a business to collateralize the financing with any assets. No personal guarantees are required of the business owners. In a traditional bank loan, the bank often requires personal guarantees from the owners, and pursues the owners’ personal assets in the event of a default.

RBF capital provider’s interests are aligned with the business owner:

Technology businesses can scale up faster than traditional businesses. As such, revenues can ramp up quickly, which enables the business to pay down the royalty quickly. On the other hand, a poor product brought to market can destroy the business revenues just as quickly.

A traditional creditor such as a bank receives fixed debt payments from a business debtor regardless of whether the business grows or shrinks. During lean times, the business makes the exact same debt payments to the bank.

An RBF capital provider’s interests are aligned with the business owner. If the business revenues decrease, the RBF capital provider receives less money. If the business revenues increase, the capital provider receives more money.

As such, the RBF provider wants the business revenues to grow quickly so it can share in the upside. All parties benefit from the revenue growth in the business.

High Gross Margins:

Most technology businesses generate higher gross margins than traditional businesses. These higher margins make RBF affordable for technology businesses in many different sectors.

RBF funds seek businesses with high margins that can comfortably afford the monthly royalty payments.

No equity, No board seats, No loss of control:

The capital provider shares in the success of the business but does not receive any equity in the business. As such, the cost of capital in an RBF arrangement is cheaper in financial & operational terms than a comparable equity investment.

RBF capital providers have no interest in being involved in the management of the business. The extent of their active involvement is reviewing monthly revenue reports received from the business management team in order to apply the appropriate RBF royalty rate.

A traditional equity investor expects to have a strong voice in how the business is managed. He expects a board seat and some level of control.

A traditional equity investor expects to receive a significantly higher multiple of his invested capital when the business is sold. This is because he takes higher risk as he rarely receives any financial compensation until the business is sold.

Cost of Capital:

The RBF capital provider receives payments each month. It does not need the business to be sold in order to earn a return. This means that the RBF capital provider can afford to accept lower returns. This is why it is cheaper than traditional equity.

On the other hand, RBF is riskier than traditional debt. A bank receives fixed monthly payments regardless of the financials of the business. The RBF capital provider can lose his entire investment if the company fails.

On the balance sheet, RBF sits between a bank loan and equity. As such, RBF is generally more expensive than traditional debt financing, but cheaper than traditional equity.

Funds can be received in 30 to 60 days:

Unlike traditional debt or equity investments, RBF does not require months of due diligence or complex valuations.

As such, the turnaround time between delivering a term sheet for financing to the business owner and the funds disbursed to the business can be as little as 30 to 60 days.

Businesses that need money immediately can benefit from this quick turnaround time.