Wednesday 07 October 2020

The quiet evolution of Liberata

LiberataThere are a number of positive developments happening “under the bonnet” at business process operations specialist Liberata, that have yet to grab much attention outside of the firm itself or their partners and clients.

A year ago, we took a detailed look at some of the initiatives and investment programmes that the firm was making getting “match fit for digital”. Having been acquired by Japanese BPO outfit Outsourcing Inc (OSI)back in 2016, the firm currently finds itself part-way through a three-year investment cycle into its core business and operations. Liberata is being given the luxury of being able to invest to future-proof its business, whilst accepting a short-term impact with a view to delivering sustainable medium to long-term growth in revenue and most importantly profitability.

Liberata has been making made structural investments into its core business (revenues and benefits admin, outsourced payroll and other “white collar” BPO) in both 2019 and 2020 and plans to do more of the same next year. Investment has included process standardisation across client contracts as well as the deployment of automation technologies. 

This investment has yet to be reflected in the top and bottom lines where a look at recent Liberata financials shows pretty slow revenue growth and lowish profit margins. However, the ambition remains to drive double digit EBIT and EBITDA margins once the investment cycle has come to an end. Come 2022, the financials should look very different as the investment washes through and where double-digit margins would be a first for the business.

The nature of this investment is supporting much greater delivery of online and digital services that will see the firm undertake less manual/labour intensive processing work. Reflecting this, headcount has already dipped below 1,000 staff for the first time -all without a concerted effort to make redundancies, down from 1,100 just a year ago. An increasing proportion of the workload is being digitised and processed via technology and automation, all meaning that smaller staff teams are likely here to stay.

Proving its worth through Covid

COVID-19 has challenged Business Process Services operators like never before, Liberata has been supporting customers at the same time as trying to address its own COVID-19-related operational challenges. 

Liberata had around 10-15% of its staff working remotely pre-pandemic, but that figure is currently running at around 90%. Some of these functions have proved to be more challenging to run remotely such as contact centres, but having been adapted service and productivity levels are now actually higher than they were pre-pandemic. Home working has also proved popular with staff, so the company is re-thinking how best to use its existing office space if more people elect to stay home-based.

Local Authorities and citizens seeing the benefits of investment

Local authorities have faced significant increases in demand from citizens, changes to duties and rising costs during the pandemic. This has seen Liberata help a number of councils such as Hounslow and North Somerset, deal with an increased number of Housing Benefits and Council Tax Support claims. To reduce the burden, councils have been increasingly relying on digital channels to support citizens and automation to improve efficiencies—the demand for these technologies will create new opportunities for Liberata.

The investment here that Liberata has made over last 2-3 years with harmonising processes for revenues collection and benefit payments has helped deal with the increase in volumes. Demand has also changed with citizens now using digital tools in increasing numbers. Liberata has seen self-service channels increase from 30-40% of transactions Pre-COVID to 60% as citizens realise that it is the most efficient way to contact the council. This is a step change in channel shift that will further support changes to the operating model of Local Government service delivery.

Liberata has also had to establish the infrastructure to service a range of new government schemes that have come in to help small businesses deal with the economic fallout of COVID, such as the administration of business grants and business rate relief. Standing up these types of schemes, and more recently Local Test & Trace support, Isolation Payments and Emergency Assistance Grants for its existing clients at very short notice resonates well with clients and will ultimately strengthen relationships. 

Strengthening its private sector foothold

At the very beginning of lockdown Liberata CEO, Charlie Bruin made his first acquisition, an employee outplacement company called Renovo that is now looking like an inspired bit of business, given current and predicted levels of redundancies and the need for these types of services. 

Renovo is a modest sized business that complements nicely Liberata’s growing Human Resource (HR) and Finance and Accounting (F&A) capabilities and which gives the firm a decent foothold in the private sector. The York-headquartered business currently delivers its services across the UK and Ireland through a core group of outplacement consultants, a specialist tech platform and a wider network of associates. 

Since the summer the business has been extremely busy having seen a sizeable uplift in demand with large volumes of staff including those previously furloughed, sadly facing redundancy. Positively, however, over 80% of candidates supported do return to work within 90 days. Sectors like airport groups, retail, leisure and hospitality have large numbers of staff exiting businesses that need quick and accessible support in areas such as coaching and CV writing. This responsive outplacement service might see a further increase in demand once furlough comes to an end through Q4 this year and Q1 2021. 

Looking beyond the numbers to 2022

Liberata has landed a number of contract extensions and re-wins with key clients over recent months including the likes of HMCTS, London Borough of Bromley and DWP that now gives the company a bedrock of long-term contracts that run to mid 2020s. Indeed, future visibility is now running at between 3 to 4 times annual revenue through forward order books.

The transactional services side of the business has also been particularly buoyant with an automation-led service for Universal Credit being sold into multiple Local Authorities that should open up doors for a “land and expand” sales strategy.

Add all of this to the inorganic growth from Renovo and you can see Liberata making progress on a number of fronts. If Liberata can add just one big BPO deal a year to the mix when the market starts to come back to life, top line growth should be energised.

The underlying performance of the business is already seeing the benefit of the investment programme which will take a further two years to flush through the business before you see those benefits translate to the bottom-line double-digit growth that CEO Bruin is aiming to achieve.

Posted by Marc Hardwick at '08:36' - Tagged: publicsector   localgovernment   hr   covid-19