Sykes Enterprises - Essay Example

Sykes Enterprises Current Situation Current Performance Sykes Enterprises’ current performance, in spite of the economic problems, has been satisfactory. However, its financial performance has fallen short of the expectations of the industry speculations and thus there is a strong reason to re-consider the options available to Sykes to improve profitability and maintain relationships with the different states that have provided Sykes Enterprises with favorable taxation and land deals. Analysis of Strategic Factors Situational Analysis Sykes Enterprises is in a tough scenario: its revenues have not increased over the past periods and its competitive strategy has not paid off. Convergys Corporations and TeleTech Holdings Inc. have been the major players in the industry that have captured a larger segment of the market leading to small companies like Sykes Enterprises focusing on a cost-competitive strategies rather than quality competitiveness. Review of Mission and Objectives The mission of Sykes is to provide its customers with competitive rates so that it can provide its customers with the lowest rates. Sykes’ strategy is to compete with the industry leaders on cost. It has to thus ensure that its operations stay profitable for it to continue its operations. Its mission and objectives are aligned with the amount of competition in the market and allows Sykes to target the same companies its competitors are targeting however, offering the lowest rates in town. There is no need to review the mission and objectives, but the strategy needs re-working. Strategic Alternatives and Recommended Strategy Strategic Alternatives It is obvious that Sykes can take more than one action to improve its revenues and build a profitable business. The closure of its operations in India have resulted in consolidation of its costs in the United States. The competitors of Sykes have resorted to opening up call centers in South East Asian nations such as the Philippines to counter the high turnover costs and possible wage rises in Indian cities due to growing economies. One of the strategic alternatives for Sykes could be to introduce a culture of hiring fresh graduates and providing them training and binding them with contracts to serve Sykes for a period of two years. This would result in a significant drop in turnover for a temporary period. Reduction in the hiring and firing costs will result in lower running costs that will allow Sykes to offer lower rates to its customers. It would be wise for Sykes to continue its contracts with various towns and cities and gather benefits in taxation and other utilities offering employment in return. The reduction in taxes would result in a lower deductions in the revenues. The reduction would improve the profitability, though not necessarily the revenues. The current scenario asks for more involvement in the US rather than other countries. Significant cost reduction in Asian economies is no longer an onus and in countries that still offer lower operation rates, there is always the chance of high turnover costs and bad customer experiences – due to accents of offshore employees. Recommended Strategy Keeping into view the tough conditions of the economy, it would be wise for Sykes to combine the two strategies and work towards reducing its costs. Since Sykes mission and objective is reduction in costs to offer competitive rates in the industry, the two strategies could both be used to reduce the costs in order to provide highly competitive rates to corporate customers. This strategy would result in attraction of more corporate clients. However, Sykes should not close down any further call centers nor should it pursue an aggressive strategy within the US – current operations should be maintained until there is a significant rise in the profits. Implementation It would be wise for Sykes Enterprises to consider more large firms in the market other than SBC Communications and Microsoft. Reliance on two large companies for over 60% of the total revenue is not a very diversified practice. Reduction in costs can only be done to a certain level beyond which the bubble of efficiency breaks down leading to a rise in costs. Thus, this limit should not be pushed beyond its maximum. Implementation of the strategic alternatives should include market research and targeting of more clients such as Dell and HP that would lead to rise in revenues. The targeting of more corporate clients will lead to revenue rise. Though Sykes will incur marketing costs, it can be made sure that these marketing costs are minimized as a result on corporate clouding and intelligent market. It is not necessary for Sykes to outwit its competitors with creative advertising. A focus on the key competitive points of competitive strategy through emails and website marketing would yield the same response and coverage in the target market as any other expensive mode of marketing. Sykes should be able to get the message across to its clients. Evaluation and Control It is necessary for any company to engage in evaluation and control of strategy implementation. It is not possible for any company to implement strategies without there being measures of effectiveness and efficiency. Sykes Enterprises should institute a control plan that would result in measurement of the effectiveness of the implementation plan both quantitatively and qualitatively. Without these evaluation metrics, control would not be possible. The evaluation of the strategies would result in specific control procedures. Sykes can use market research and measures of profitability to check whether the strategies payoff for Sykes or not. There needs to be significant drop in costs for there to be a materialistic rise in profits. Without such profitability gains, it would be futile for Sykes to implement this strategy. The bottom line is: Sykes needs to periodically review the strategy implemented and compare the results with its existing profits as the benchmark. The need is to improve the profits from current levels and Sykes needs to ensure that the strategies are focused in the right direction or not. The formal evaluation and control program should be implemented across all the call centers in the US so that there is a standardized evaluation of the strategies. Furthermore, it will also result in the identification of the call centers that are underperforming or the ones that cannot yield any increase in profits from the current strategies. References 1. D. Palmer, Letter to the Company, St. Petersburg (FL) Times (March 27, 2004). Read More