Sunday, July 13, 2003

You're more familiar with Convergys than you think



By Mike Boyer
The Cincinnati Enquirer

CONVERGYS COVERAGE
SUNDAY:
Convergys: Council agonizes over take-it-or-leave-it deal
You're more familiar with Convergys than you think
Convergys could displace 5 companies

MONDAY:
Norwood fumes at incentives
Convergys first to use new extended tax break law
Amos: City's Convergys deal gives too much, gets too little

TUESDAY:
Close call on Convergys
Taxpayers want a bit of help, too
Convergys deal: Vote today (Editorial)
If you have a cell phone, there's a good chance your monthly bill was prepared by Convergys Corp.

If you're a subscriber to DirecTV's satellite television service, or purchased a PC from Dell Computer, you probably talked to a Convergys customer-service rep.

And in the near future, if you call the U.S. Postal Service's consumer help line, you'll probably talk to a Convergys employee.

From its beginnings as a subsidiary of Cincinnati Bell Inc., Convergys (pronounced CON-ver-gis) has become one of the world's largest players in the growing business of corporate outsourcing - providing services that help other large corporations sell their goods and services.

Each day, the company says, it processes 1.5 million customer bills and handles about 1.7 million customer calls via telephone and the Internet. Its clients include AT&T, Verizon, Sprint, Procter & Gamble and General Electric.

Here's a closer look at the company headquartered in downtown Cincinnati.

Finances

Convergys is a public company that's traded on the New York Stock Exchange (ticker symbol: CVG). Its shares closed Friday at $16.41 and are up 8.3 percent for the year to date.

The company's market capitalization, or the value of its outstanding stock, was $2.4 billion April 30.

The slowing world economy and increased competitive pressure have dulled Convergys' historical double-digit growth rates. Last year, it posted earnings of $146 million, or 88 cents a share, after restructuring charges on revenues of $2.3 billion.

Analysts expect the company to post revenues of $2.27 billion this year and earnings per share of $1.12.

Employment

Convergys has about 1,900 workers in Greater Cincinnati. It operates a call center in Norwood, but the bulk of its local employees - about 1,200 - work at a data-processing center at Sixth and Vine streets downtown. It has about 150 at its Atrium One headquarters on Fourth Street and the rest at 227 W. Seventh St.

Worldwide, Convergys has more than 44,000 employees in two data centers and nearly 50 customer contact centers around the world.

Top executive, local ties

James Orr holds the title of chairman, president and chief executive officer. He was paid $1.2 million in salary and bonus in 2002.

The company has a 10-member board of directors that features several local executives, including Kroger CEO David Dillon, Federated Department Stores chairman James Zimmerman and Western & Southern Financial Group chairman John F. Barrett.

Conversys and Cincinnati Bell made a $1 million contribution to the National Underground Freedom Center in 1998. Convergys sponsors such local arts groups as the Cincinnati Opera and Playhouse in the Park.

How it started

Convergys was created by Bell, evolving from two subsidiaries: Matrixx Marketing, a telemarketing company, and Cincinnati Bell Information Systems, which developed billing software for telephone companies.

Both subsidiaries grew out of Bell's desire to expand beyond its local telephone business following the court-ordered breakup of AT&T in 1983.

As a regulated utility, Bell lacked marketing savvy.

To fix that, former Bell CEO John LaMacchia recruited a retired P&G marketing executive, David Lahey, to develop a business plan. Lahey subsequently recruited other P&Gers for the venture - including chairman Orr.

By the late 1990s, Matrixx and Cincinnati Bell Information Systems combined were bigger and growing faster than Cincinnati Bell's local phone business.

On Aug. 13, 1998, Cincinnati Bell spun off the two businesses - renamed Convergys Corp. - to shareholders and in a subsequent public offering at $15 a share.

Growing beyond Cincinnati

In the past five years, Convergys has expanded globally through acquisitions. It also has moved into Web-based communications, broadband and cable billing.

"They are certainly the leader in call centers worldwide,'' said Michael Lattimore, an Atlanta analyst who tracks the company.

The company has been named to Fortune magazine's annual list of most admired companies for the last three years. It also is on the Calvert Social Index, a group of the nation's 600 most socially responsible companies.

But the recent slowdown in telecommunications and the economy in general has stemmed Convergys' growth. Last year, total revenues were flat largely because of a decline in its billing business.

The future

Last fall, the company announced a restructuring plan to close some offices and eliminate about 1,000 jobs globally this year.

Convergys has cut about 100 jobs this year from its Cincinnati area data-processing operations.

To grow faster, Convergys is expanding overseas.

While it has eliminated positions in this country, it has been expanding its call centers in India, for example.

Expanding overseas isn't just a cost-cutting move. Company executives say it is necessary to support corporate clients who are expanding globally.

Another growth initiative is moving into employee care. Convergys is administering health, welfare and other employee-benefit programs for its customers.

Last year, Convergys won its largest employee-care agreement when the state of Florida signed a seven-year, $280 million pact.

The company will handle benefit administration, recruiting, staffing and training for the state's 189,000 employees.

Convergys is one of the bidders on P&G's plan to outsource its human resource functions, such as travel, payroll and benefits.




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