European Stock Story - Teleperformance

By Rory Hammerson

Sustainability criteria are powerful drivers of a company’s valuation. In this piece, Castlefield fund manager Rory Hammerson looks at a recent example of how this played out for Teleperformance - one of the largest holdings in the European Fund.

Sustainable investing has come a long way from the end of the 20th century. If we look at the last two decades, the first was given a focus on the Environmental element of ESG (Environmental, Social and Governance) factors. Huge quantities of capital were spent on developing renewable technologies, wind, solar and other forms of generation capacity, to power our increasingly digital life.

2010-2020 showed a different angle of the ESG prism with a focus on the G - board independence, corporate governance and remuneration. This decade sees a post-pandemic eagle eye on the second letter of the triptych. The S - the most difficult of the three to measure, to gauge, and therefore to price. Social performance can be described as the employer’s attitude and culture towards its most important resource, its people. A massive industry has been created to look at this S, and when it comes to company performance, the S can make or break a business in a way that many investors fail to consider

Sustainability criteria are powerful drivers of a company’s valuation and we have seen an example of how this plays out in one of the largest holdings in the European Fund. Teleperformance ( is a French listed Business Process Outsourcing company involved in many aspects of customer experience (what you and I might very loosely term a call centre).

Teleperformance (TP) is involved in around 88 countries worldwide, speaking 265 languages and employing around 420,000 people across its footprint of 170 markets.[1] Founded in 1978 by Daniel Julien, who still runs the business, TP is the global leader in customer experience management.[2] In short, this means a global network of call centres providing corporate clients with crucial customer engagement information. It is a job which is often not a ‘career choice’ but can be seen as a steppingstone onto other professions, help fund studies or weather the increasing cost of living. Staff turnover in the industry is high and no one pretends it is an easy job to navigate an often-angry customer who is frustrated about their experience with any one of Teleperformance’s thousands of clients.

Teleperformance’s success has come at a price. Its rapid expansion and growth have attracted the attention of unions to piggyback on the global increase of its workforce.  To be fair to TP, unionisation is prevalent in 40% of the company’s countries across the globe, but until last week there has been no global framework agreement with unions so far and this is what union leaders have pressed hard for.

We have followed and closely scrutinised previous enquiries and complaints levied at TP over the past few years, highlighting the working conditions of Teleperformance staff. Complaints were found to be unsubstantiated, but the negative press has caused much friction and possibly slowed progress towards the recent agreement.

The latest complaint came in the form of a tweet from Colombia’s Economy Minister, himself an ex-union leader, contesting the working conditions of a fast-growing business in Teleperformance’s portfolio, that of content moderation on social media platforms. This sudden and unofficial attack on the company – TP had had no official notification - spooked investors who marked down the company share price by around 40% in one day.

“Events dear boy, events....” was Harold Macmillan’s famous quote, and how right he was. The allegations were serious and are vigorously disputed by TP. Nevertheless, the situation has forced TP to respond in a way that can help it to evolve its processes to improve the S of ESG substantially.

spooked investors marked down the company share price by around 40% in one day.

Again, we would impress upon our readership that TP’s response has been measured, fulsome and presented in a way that proves the firm demonstrates a desire to improve this area. Previous claims by union organisations elsewhere have been found to be wholly unsubstantiated, but there is some naked truth to the fact that union pressure has been very successful in highlighting their purpose of increased penetration in collective bargaining.

TP had so far kept unions at bay by refusing to sign a global framework agreement, and legally speaking they had the right to do this, but it has caused a tension point between a multinational with a huge workforce and the social safeguards where unions can exercise their own franchise power.

...TP’s response has been measured, fulsome and presented in a way that proves the firm demonstrates a desire to improve this area.

We watched the news break with real concern but are much comforted by the way that TP responded to the crisis. Julien wheeled out a large number of his people to answer investor questions.

They listened to feedback coming from shareholders and they have done two things to quell the storm around their heads: Firstly, the company was at pains to explain how it safeguards the employees who are involved in content moderation, providing longer breaks and access to professional counsellors.

TP is now going to exit the more challenging area of content moderation, which will dispel concerns over the wellbeing of moderators who potentially are exposed to egregious content.

Whilst we are supportive of this move, we would urge the social media platforms themselves to provide transparency on the issue to protect the wellbeing of moderators.

Secondly, senior management are now in constructive dialogue with UniGlobal, a global federation of unions with affiliates in 150 countries after signing a framework agreement.

We feel that Daniel Julien has demonstrated real curiosity here and his attitude has been forward thinking and wise. We often sell out of an investment on the back of this sort of corporate crisis, but TP’s response has been swift, open, and open-eared.

It was Churchill who told us never to let a crisis go to waste. Daniel Julien, a man whose vision has empowered and who employs over 400,000 people with his purpose, unsurprisingly opts for a European epithet from Friedrich Nietzsche in his latest letter to shareholders: “We are also very resilient, knowing that whatever does not kill us, makes us stronger”.





Picture: Adobe Stock images - Art_Photo


Information is accurate as at 07.12.2022. Opinions constitute the fund manager’s judgement as of this date and are subject to change without warning. The officers, employees and agents of CIP may have positions in any securities mentioned herein. This material may not be distributed, published or reproduced in whole or in part. With investment, capital is at risk.