In important news on French stocks, shares of Teleperformance SE (FR:TEP) plunged over 29% yesterday following an intriguing update on the disruption that artificial intelligence (AI) can cause to the call centre industry. Swedish buy now, pay later company Klarna said that its AI assistant, backed by OpenAI, is doing the work of 700 full-time agents single-handedly. The news sent TEP shares plunging down as investors were worried about the potential impact on Teleperformance’s business.
Concerns over the Impact of AI
Klarna said that the AI assistant handled two-thirds of its customer service chats (2.3 million) in 35 languages with customer satisfaction scores that were “on-par” with human workers. Klarna also witnessed a 25% drop in repeat inquiries, reflecting the efficiency of the chatbot. In addition, the fintech company sees a $40 million profit improvement in 2024, thanks to the use of AI technology.
Klarna CEO Sebastian Siemiatkowski said that he made this information public to build awareness and “encourage a proactive approach to the topic of AI.”
“For decision-makers worldwide to recognise this is not just ‘in the future,’ this is happening right now,” added Siemiatkowski.
Teleperformance already uses certain level of automation and AI for simpler processes. Reports are referring to the call centre’s 2022 annual report that said that Teleperformance was supplying services to Klarna through its units in Sweden, Finland, and Colombia. Also, the company had cautioned that nearly 30% of its call volumes could be automated in the next three years as chatbots enter the mainstream.
Analysts’ Reactions
As per wallstreetnow report, some experts shared their views after Klarna’s announcement. Morgan Stanley analyst Annelies Vermeulen said that the debate on AI’s impact on the business process outsourcing (BPO) industry has been a key one in 2024. AI could have broader repercussions on Teleperformance’s growth expectations and valuations. The analyst spoke about the need for clarity on “pricing deflation, automated volume, and future earnings trajectory to alleviate concerns among investors.”
On the other hand, TP ICAP Europe strategist Sarah Thirion noted that AI could, in fact, improve the customer experience and be used as a complementary tool instead of fully replacing human work.
Meanwhile, Deutsche Bank analysts have previously cautioned that AI could result in lower revenue growth and profitability for Teleperformance as compared to the last decade.
Is Teleperformance a Buy?
With four Buys versus four Hold ratings, TEP stock has a Moderate Buy consensus rating on TipRanks. The Teleperformance SE share price target of €178 implies 55.5% upside potential from current levels.
