Concentrix Corporation (CNXC) Earnings Call Transcript & Summary

Hello, and welcome to Concentrix Investor Day. My name is David Stein, Vice President of Investor Relations. We appreciate your joining our virtual event today. [Operator Instructions]. Today's presentation contains forward-looking statements, including future financial results, operating projections and cost estimates, which involve risks and uncertainty. Actual results could differ materially. Please refer to our most recent filings with the SEC, including our annual report on Form 10-K for additional information regarding uncertainties that could affect our future financial results. The company has no intention to revise or update any forward-looking statements made during the event today. We will also reference non-GAAP financial information, including adjusted constant currency revenue growth, non-GAAP operating income, adjusted EBITDA and free cash flow. A reconciliation of these measures is included in the appendix to the presentation. These materials and this call are the property of Concentrix and may not be recorded, rebroadcast or republished without the permission of Concentrix. We have an exciting event prepared for you this morning. Several members of the Concentrix leadership team will be discussing our vision, strategy and the future. After the presentations, we will close out the day with a question-and-answer session. During this time, we will be using the raise hand feature that can be found under the reactions button on years in screen. Now to get things started, I'm pleased to introduce our President and Chief Executive Officer, Chris Caldwell.

Thank you David. We are very excited to welcome you today, to our first Investor Day as a public company. We have a lot to cover to give you a better understanding of what we do, where we are going and why we see Concentrix being so different. We have assembled an amazing group of speakers today to present both in person and virtually. . After I walk you through the history of Concentrix and the market we operate in, Dinesh will be talking about our latest acquisition and why it's so important to us. Rick, Denise, Kathy will be walking you through some case studies that will bring our solutions to life. Switching gears a little, Bahar will talk to you about why mental health and wellness is so critically important to us. And while it started in our content moderation business, it's something we are driving through out our enterprise. Cormac is going to talk about how we have adopted technology into our operations, not only from improvements in efficiency but also helping our clients drive next generation customer engagement. Monica is going to provide some insights into where we are driving our future growth and how we look at our client set. Vijay is going to give some insights into what the future might hold in the CX in the years to come. And then finally, Andre will round up the formal part of the day with covering our financials. Now I have never been more optimistic about where Concentrix is with our capabilities and our place within the customer experience market. Over the years, our vision has always been to be the greatest customer engagement company in the world rich in talent and diversity. And now we believe we are perfectly positioned. We have the right client base that is helping to shape what CX can be. We have the right services and technology to support those visions backed by an incredible worldwide team. From a revenue and margin perspective -- term shareholder returns. So let's talk a little bit about customer experience. Thinking back to simpler times, people saw customer service as sort of picking up the phone, walking to the door, maybe sending a letter off, I might date myself by saying even sending a fax. But essentially, what customers wanted was to be known, to be treated well and treated efficiently, whether they were buying something or had a problem with something. Then scale happened. And what ultimately happened was that everyone started being treated the same. The industry had to change. And with the advent of digital and smartphones, brands now had better ways to identify you, track you and ultimately serve -- industry or customer relationship market at about $90 billion today. For a customer, it gave you more ways to interact with the company. Sometimes though, with the same frustrating experience. Think of it this way -- sorry, we had to change. With the advent of digital and smartphones, brands now had better ways to identify you and track you. The customer relationship industry was born. And we see that market at about $90 billion today. For a customer, it gave you way more ways to interact with that company, whether it be through your mobile device, chatting, web, maybe even social media, but it sometimes led to the same frustrating experience because you might chat with somebody, then call in and have to reidentify who you are and go over the exact same problem again. The reality is that much of the industry still operates like this today. The next evolution, though, is really taking that data from the smartphones, the webs and other ways of tracking and developing a deeper understanding of the clients, leading to a much more personalized experience. Many companies have tried to bolt on these capabilities to try and get a full view of their customer and drive a better experience for their customer. It might be getting more feedback and changing the journey better. It might be driving more insights into prompting offers to a customer that they might not necessarily understand that they want or need, but at the right time. At the end of the day, it started to develop that personalization. But what was really missing was bringing the IT digital services component to it. With IT services, you can really unleash what is possible with CX and drive a better customer experience. You can start to tie together disparate parts of the customer journey and drive a better connected office journey by the front and back office coming together. This means connecting experiences over devices. When I use my phone and I use my web, I get the same experience. When I call in or use social media, they know who I am, and it ties it all together. These touch points bringing together drive a better customer experience and better loyalty to brands. Together, we believe this market is about $550 billion. One thing that is important to note is that you'll notice a customer is always at the center of the journey. As we look at this $550 billion market, I wanted to break it down a bit by competitors and growth rates and look at it in 2 separate competitive sets. Now there is some overlap between the market because the 320 and the 90 and the 270, you're a little high -- well for Concentrix. We look at it as that $550 billion number. The first competitive set is really the CRM or CX market. We compete against very good companies that focus on one to a few of the service is mentioned. Thinking about content moderation, maybe voice non-voice services. perhaps it's analytics, mayben it's voice of the customer systems, consulting and even some digital design work falls into this. Although the digital work tends to be more off-the-shelf customization and implementation work. Few competitors can tie these pieces together while delivering at scale across multiple types of services for clients. This market is also incredibly fragmented with thousand competitors but very few of size. When we flip to the digital IT services competitor set, we compete with companies that have deep engineering talent, but lack the understanding of the customer journey and sometimes the deep domain expertise of the vertical they work in. This jointly impact -- a lot of this business is also driven by massive overhaul of legacy systems as well as digital mile solutions. Now when you bring them together again, even fewer competitors can bring these 2 worlds together at scale and deliver a reimagined CX experience that takes the best of the back office, front office, putting it together for effortless experiences for customers. The reason that this is so important is because this is now how clients are wanting to buy. They want the solution. They do not want to buy fragmented parts and they do not want to act like a general contractor, and so they're looking for high-value partners like Concentrix to lead the way. This is where we specialize and come in. At the heart of what we do, we bring together amazing people with a very deep understanding of the customer journey and our clients' business in their vertical and help develop the strategy. Once the strategy is developed, we really develop the solution and deliver amazing customer experiences to build these lifelong relationships with their customers. Simply put, we deliver personal experiences at scale that are high value for our clients by driving long-term relationships with their customers. Now what does this really look like in real life? Some of you might not be connected as much as our friend here, but make no mistake. This idea of personalized experiences is something you all want and expect from your preferred brands. Every day, Concentrix is powering just the small sample of personal CX experiences for their clients, to their customers. Maybe it starts out in the morning. With this measuring your blood sugar and giving a warning on your smart device, while updating your medical records that you might want a doctor's appointment. A little later on in the morning, after you figure out that your blood sugar is up, you might want to go for that Bahama's vacation. And we know that by where you've been surfing on the web. A little later, you're relaxed by looking at social media. And what we do is make sure that the content aligns to the social standards as well as what the company is looking to represent to you who is surfing on the web. Later on, you might check in on that elective surgery and figure out that has been approved that your health insurer is now going to pay it. Now that you're in good health, you figure it's time to invest in that house. And so we help you fill out that mortgage for your financial institution, credit score you and then put the package of documentation together to help underwrite and fund your mortgage for the lender. It's been a busy day already. But by dinner, you're completely wiped out. You want to sit back on the couch and order your food. We enable that service of delivering from restaurants to your house. While you're eating, you're surfing the metaverse and catching up on NFTs, and you see an NFT that you want to buy to add to your collection. We help you do that as well. Now enough with the virtual world. You're thinking about going on that car trip, but you need to buy that car. So we help you configure your new car and understand when from the factory it's going to be delivered. With that new car, going out in town, you need those new shoes. And so we also help you customize the new shoes that you want. If you're a sneaker head, customize them to the exact specifications, track when they're going to get to you and also sign you up for a loyalty program to make sure that you're hip all year round. Later, you've had a long day. You sit back and listen to the music. We help that subscription service, manage, bill you and also support you as you listen to your music over multiple devices. And then lastly, when you're asleep, we're making sure that no fraud is happening on many of our clients' systems and proactively alert you if you think your account has been compromised or they think your account has been compromised. 24 by 7 by 365, we are there powering these solutions each day with our talented team and powerful technology. And again, this is just a small sampling. With all that we have done, we still believe we are just getting started. While we have always believed an amazing customer experience is a key ingredient to any client's business, more so than ever, research is showing that businesses see this as well. A top priority for executives is to drive a unique customer and better customer experience. And a top 3 priority is customer trust and loyalty and customer experience around the digital initiatives. Some of this certainly was brought on by the changes in the world has seen with COVID. But also new economy companies have built better customer experiences and are driving share, and this is driving the point home of investing in customer experience. We believe we are the right company to take advantage of this new focus on customer experience. And a lot of it comes down to how we build our business and our guiding principles. It all starts with how we select clients to work with. We are not after thousands of clients, but fewer clients with deeper engagements where they believe CX is a strategic imperative to their business. That relationship with these clients has to be focused on long term. We want to make sure that we're investing with clients who want to be with us for decades. We also believe if we want to make sure that our clients are successful, they will reward us with more business as we make them successful. So we are happy to disrupt our own business on a continual basis for the benefits of our client. This requires investing in deep domain expertise, a global footprint and selling solutions based on how the client consumes services not how we want to sell them. This will earn our loyal client base. And as the industry consolidates, as we have seen, and we believe it will continue to consolidate, it allows us to be taking more share and become indispensable for our clients. All along this journey, we believe in doing right by the communities we operate in and being diverse within our business and giving back. That begins at the top. We are incredibly thrilled to have a diverse Board that are passionate, driven and engaged in our business. They bring a level of expertise, guidance and governance that completely complement our executive team. From an executive team perspective, we have always believed in having our management team operate around the world and being close to our business and clients, not in the head office that loses touch with both. This proved an unintended strength as we went through the early days of COVID impact. We had to move over 65% of our staff members to being remote within a few weeks, but our governance and management principles were the same as before. As I mentioned, equally important in operating the business is supporting clients around the world. And with that, we give back with our ESG initiatives around the world. I would encourage you to go to our website and download our newly updated ESG report that details our initiatives and commitments over the next few years. We are very passionate about it and believe it also resonates with our clients as a key differentiator and our staff as a place that they want to work. So we see ourselves in this huge market that is growing with the right capabilities and the right guiding principles. We thought it would be helpful to share how we look at the market a bit closer, so you understand how we invest and take advantage of it. In our market, we believe there are things of super cycles of growth. This happens as new offerings or new delivery mechanisms become either quickly adopted or required. An example of new technology being adopted might be chatbots, for instance, where clients are looking for a more cost-effective way and easier way of dealing with chats coming in. Required might more be like content moderation where social standards or government regulation requires social media companies to manage what they're presenting on their platforms. Sometimes these super cycles will launch a new competitor to relevance. Sometimes, it also allows for share shift to happen between competitors who are leading edge. But what we see time and time again is that the spend always comes back to scale players who are able to offer more than just specific functions or service. This is really important as investing at the right time to take advantage of these super cycles is critical to us. Now these are some of the super cycles we have seen and grown through. We have never solely depended on these super cycles for growth nor for longevity, but they are incredibly important to us. When offshoring started, we helped build a global footprint to help our clients have attractive labor alternatives. As the e-commerce boom happened, we were one of the first companies to develop an online ability to credit -- process credit cards without having a brand ambassador listen to the credit card number. As digital transformation came in, we were one of the first CRM and CX companies to invest in these capabilities with our Tigerspike investment, driving UX, UI enterprise mobility. And finally, we've been in content moderation for longer than most of the industry solely focused on a better experience for our ambassadors as well as the output for our clients. As an example of what we do, coming up and making investments, we're also looking further ahead. The metaverse is one of those areas. We're starting to understand how to support people and customers in this new world. We also have clients who are now looking at how to embrace Web3 with cryptocurrency, and we also have clients who are now starting to sell and market NFTs in this space. Lastly, in our content services space, we're doing a lot of work on ethical AI and helping clients train their models to be less discriminatory or biased. It's important to note that these super cycles do not drive a significant portion of our revenue as we look forward and are in the early stages, but it gives you an idea of where we're investing and where we're looking. Vijay is going to go even further ahead with where we see the evolution of CX later in the presentation. That focus on looking ahead has allowed us to grow to be a market leader. And we really look at our growth in 3 steps -- CX platform. And it was important to understand which verticals we wanted into, what the global footprint need to look like and why technology needed to be so critical to our growth. The next phase we went into was really transforming our platform to drive scale and enter even new higher-margin verticals. And it started with our IBM acquisition, with other acquisitions and finding with our Convergys acquisition a few years ago. And now with our PK acquisition, we're even further positioned to grow. While we have done a number of acquisitions, one thing we are very, very focused on is our one Concentrix philosophy, which integrates our acquisitions immediately upon purchase, allowing to leverage our purchases very quickly to the benefit of our clients and nondisruptive to our staff. And you can see that as clients have also responded well to how we think about the marketplace by giving us opportunities to grow. While our top line has grown, what is key is also our non-GAAP operating income has grown over 630 basis points, showing the value we're delivering to our clients. This is something that we believe we have the ability to continue to grow for both revenue and margin. Now this brings us to today. We deliver CX solutions to over 750 clients of which over 125 are new economy clients and over 100 are Fortune 500. This is a very unique plan set that we'll be able to continue to allow us to grow for many years. Monica will talk to you about why our client strategy is important to our growth and our philosophy of running a business. We have invested in technology and now have over 340 IP assets, including patents and over 50 technology platforms that are proprietary to us. That focus on the right clients and the right solution offering has allowed us to build an amazing client portfolio across our verticals. It has allowed us having a very diverse revenue base, both from a geographical standpoint, but also a vertical standpoint and a client standpoint. In fact, our top 5 clients represent 25% of our revenue last year. Our clients are also marquee brands or companies that are soon to be marquee brands but are all recognizable. In fact, 8 of the top 10 consumer global electronics companies are our clients, 4 of the top 5 worldwide -- 7 of the top 10 new fintech clients -- companies are our clients. 50 of the top -- sorry, 5 of the top 5 U.S. banks are our clients, 3 of the top 5 global e-commerce companies are our clients, 4 of the top U.S. health insurance companies, 3 of the top 5 global IPOs in 2021 are our clients. And finally, 4 of the top 5 social brands are clients. What an amazing client base and shows you the diversity and resilience within our revenue. We deliver for these clients at scale across the world. In fact, 48 of our top 50 clients we deliver for in multiple, multiple geographies. And also with 65% of our staff working from home, we have been able to enter new markets faster and more cost effectively for our clients over the last 2 years. Our passion for CX and pushing to drive where the limits can be has really allowed us to innovate and change the industry. This is being recognized by industry experts and analysts. But more importantly, our company is recognized for our diversity, culture, happiness and engagement. And when you have happy staff, that leads to happy clients as well. Now as we became a public company on December 1, 2020, we progress published a number of things in our first year. And it's a good time to look back at how we did against our commitments. We talked about being growth that we were going to grow faster than the market. We, in fact -- sorry, we, in fact, are growing at 35% with our strategic brand clients and over 18% with our integrated partner clients, which Monica will explain a little later. We talked about relentlessly innovating and developing new digital assets. And in fact, we became an Amazon Connect reseller as well as launched our VOC Essentials platform that has over 15,000 daily users now within the first year. We talked about further investing in emerging markets. and our emerging market growth was over 20% last year. And then finally, we selectively talked about acquisitions, and we believe that our final acquisition of PK is a real game changer for us in the fiscal year. This will be able to allow us to deliver more world-class technical solutions at scale. I'm incredibly pleased that the CEO of PK, Dinesh has now come to be the President of Concentrix Catalyst. And with that, I'd like to welcome Dinesh and have him present PK. Thank you very much.

Thank you, Chris. Good morning, everyone. First of all, I wanted to say I am delighted to be here today as part of the Concentrix family. As Chris mentioned earlier, the PK acquisition, we believe, is highly complementary and truly enhances our end-to-end technology capabilities. There are 4 key factors why we believe this acquisition is very much in line with the Concentrix vision and accelerates our strategy. First, PK brings a strong portfolio, advanced digital experience, technology and intellectual assets. Secondly, it actually enhances the digital transformation capabilities at scale. Significant experience working with Fortune 250 customers. And third, it operates in the high growth digital IT services market. The pandemic, as you all know, has truly accelerated that spend in this sector. And then finally, this acquisition is both accretive on and to both EPS and top line revenue growth for us. Let me give you a quick preview into PK. PK was a leading customer experience design and engineering firm. And we partnered with the world's best brands to create pioneering experiences that accelerate digital outcomes for our customers. Our clients will tell you that we bring together great design and strong technology to deliver moments that matter to their customers. This coming year, we expect to grow about 20% to deliver $530 million of revenue at an $85 million adjusted EBITDA. With over 5,000 people across 11 locations in 4 countries, PK has been recognized and awarded worldwide for designing and engineering digital experiences at scale. But as Head of the customer experience team, the number that we are most proud of at PK is the NPS as measured by a third party. So as we come together as Concentrix Catalyst, the combination of Tigerspike and PK presents us with a new palette of opportunities. Tigerspike brings in additional design and digital engineering expertise and also an international presence. Together, we believe that applying a CX first approach, along with deep technology expertise to any business challenge will ensure improved outcomes in our joint customer base. And as a combined entity, we expect to grow 20% and deliver $630 million of revenue this year. Needless to say, we have a tremendous opportunity in front of us. So we think the best way to describe the opportunity in front of us is to talk about how the services that we deliver have a transformational impact on our industry-leading customer base. Let's look at it from 3 lenses. First, we're going to talk about the power of the Catalyst and the Concentrix teams coming together. So we will talk to you about a joint customer where we believe we have tremendous impact. Next, we will talk about how our outcome-focused approach is driving technology-enabled, digital-first transformation of customers. And then we'll also talk about how technology is accelerating transformation for clients and operations. And finally, we will showcase how strategic brand partnerships are driving innovation and organic growth in our customers. So let me walk you through an example of the one Concentrix approach that Chris talked about for a large client that we have in common. This is a Fortune 50 customer in the high-tech industry that is driving tremendous digital transformation for enterprises across the board. Today, this is a strong client for both Catalyst and Concentrix. It's a top 5 client and award-winning for both of us. We have a rich set of services that we are delivering very successfully to this client. Concentrix has a strong presence with customer engagement services for sales, support as well as running programs. Catalyst on the other hand, has a strong presence on the business side, delivering CX strategy and tech-enabled digital sales services. As you can see, these are very complementary with little or no direct overlap today. And to make this opportunity real, let me run you through an illustrative opportunity. You can see here our technology client is considering a new offering for it's customers, a market that is traditionally penetrated through digital channels. In the past, Catalyst would drive the strategy and design and Concentrix would then operationalize the global support. As you can imagine, this tends to result in a disjointed customer experience. And as we know today, customers expect a seamless delivery. What we are now able to do is to help our clients reimagine the entire customer experience, from the first brand interaction through to how they purchase and engage with the brand. And as a combined entity, we are able to deliver on those customer touch points with the global scale that Concentrix really excels at today. I'm very excited. I'm really excited about the path that we are on today. And that's because this is the power of Catalyst and Concentrix coming together. So next up, I'm delighted to introduce Rick Rosso , who's Executive VP and Head Sales and Account Management for us. He is going to talk about a few case studies, starting with the power of Catalyst and Concentrix coming together. Over to you, Rick.

Thank you, Dinesh, and good morning, everyone. This better together case demonstrates how generally unique Concentrix is as it relates to our ability to reimagine everything CX for an amazing global brand. Our client in this case is a global footwear and athletic brand, known for industry-leading customer experiences and passionate and loyal customers. This is a client who's an independent but highly valued relationships with both Concentrix and with PK going back many years. Concentrix had operated the customer support and progressed to designing, optimizing and providing critical insights to deliver outstanding services to this brand, avid consumers as the brand accelerated into direct-to-consumer. The focus on outstanding service, flexibility and agility and innovation helped Concentrix build a very trusted relationship and become the primary strategic partner for customer support across all channels and across high-value consumers. Similarly, PK had worked with the same client to design and build and later enhance the brand's membership program, creating a world-class membership experience, resulting in attracting a significant number of new members and driving up the commerce engagement with the brand. Now the power of Concentrix plus Catalysts helps us uniquely be able to make design and technology changes that can further improve consumer and member experiences by leveraging an end-to-end flow through design and insight process which will help deliver improved outcomes to the client in terms of expanded member enrollment, higher spend per member and reduced member effort, in addition to improved net performance -- Net Promoter Score and customer effort for all consumers, including the loyalty members. This client has demonstrated a strategic interest to also engage in established commerce in metaverse. Once again, the power of Concentrix plus Catalyst will be able to help us support the strategy and then to design, build and operate the metaverse's commerce and membership activities in an accelerated way to help them gain early entrant advantage. This next case really fits into the category of digital transformation and strategic brand partnerships and demonstrates how Concentrix acts as a trusted partner to help new economy brands move from initial stages of growth and initial customer support designs to be able to scale at the speed of their hyper growth, while upping their game in terms of customer engagement execution. Our client in this case is a large global fintech brand providing mobile banking and related services. This brand has been growing their customer base at unprecedented levels and felt that their customer support processes and capabilities were limiting their ability to introduce new products or to deliver the customer experience, their avid customer base deserved. Our clients shared that they needed a partner that could help them optimize across all service channels, help them support a growing number of disparate and complex functions supporting their customers, bring in best practices in servicing critical financial interactions and then help them better meet the needs of a $10 million and growing base of customers. Concentrix work with our client to design and optimize a number of the key nonstandard processes, set up and help launch support for several critical new products, provided subject matter experts to build out key functions to support the brand and leverage our customer journey experts and data scientists to redesign a number of customer journeys. We also help test and deploy digital and automation technologies, which drove huge impacts in social media data ingestion. And in addition, our team worked closely with our client to help them meet their compliance activities in an accelerated time frame. Our client recognized that at this point in their business, they needed a deeper and more impactful partner, valuing customer experience execution, financial services expertise, digital and automation leadership and a culture that would allow them to do what they do best, which is to create a one-of-a-kind product experience and culture for their customers. We are proud to be the customer experience strategic partner for this client. This next case is also one that demonstrates digital transformation and strategic brand partnerships and shows how Concentrix uniquely partners with new economy brands looking to navigate hyper growth, high-impact changes while looking for expertise to establish best practices at scale. Our client, in this case, is a leading global brand providing cryptocurrency exchange services in over 100 countries. This brand is experiencing tremendous growth in customers and at the same time is adding significant function and capability to support the global members to meet compliance expectations. Our client came to Concentrix looking for a partner who could provide insights best practices and relevant fintech and transaction security expertise to help the brand deliver the improved customer experience at scale and with high velocity. Working with our client, we were able to establish the global operational framework for each of these customer channels with focus on the most critical customer experience journeys. We rapidly build out initial interaction centers in key markets -- work-anywhere design to ensure we were able to build the team of brand ambassadors with the unique skills required to deliver to this global standard. As we establish these teams around the globe, our data scientists began to analyze the opportunities to improve the operational efficiency, reach channel and identify opportunities to further reimagine the customer experience journeys. While by no means this is program at completion, the initial contributions from the work we've completed with our clients are significant. Already, the teams have delivered improved customer experience journey, supporting the clients more than 56 million customers in record time while implementing a broad set of customer experience support activities across the new interactive channels. All the while, we've been collaborating to deliver against a dynamic set of regulatory expectations and preparing for the customer experience changes to support a high-growth future. Now this last case I want to talk about falls in the category of digital transformation and really helps demonstrate Concentrix ability to help our clients reimagine then design, build and operate a transform way of supporting their customers. It's about a unique ability to harness in one company, the consultants, the experience design, the process design, the customer experience infrastructure and the customer experience operational expertise to help our clients bring a transformed journey to life. Our client in this case was a government entity who provides public service to their citizens to assist those with hearing or speech challenges to be able to communicate via a relay service. This critical service has become quite outdated and was not meeting the needs of the constituency and was costly. Concentrix provide the client with a unique approach and proposition. Rather than just find a way to do more of the same for less, we started with an agile design and build project to visualize a reimagined way to leverage technology and user design to modernize the experience. Concentrix then designed, built and went live with a new customer experience infrastructure including a mobile app, SMS, messaging and video. Today, this new customer experience solution has driven significant adoption of relay users to the new mobile app, helps significantly reduce the cost to support the constituents and driven a much improved user experience. In short, more users have a richer and more timely communication experience for a fraction of the old model cost. Now I'd like to turn it over to Denise McCutchen Grace to discuss our next case. Denise leads our customer interaction technology team and partners with clients to help them realize their digital transformation goals. Denise, over to you.

Thank you so much, Rick. This client is an iconic U.S.-based home goods retailer with more than 37 million customers. They entered the pandemic with 100% brick-and-mortar advisers and limited digital capabilities, and they needed a strategic partner who had the scale, agility and offerings to meet their bold vision to provide an Amazon-like experience for their customers. Ultimately, this means digital first. We deployed 10 different technologies for this client. Several are customer-facing and enhance their experience such as self-service channels to give them more ways to get answers using voice and chatbots with AI and machine learning and to enable the shift to more digital interactions as a channel of choice. We also deployed solutions that give our ambassadors more information about the customer in their journey, so they can service them personally and with empathy. We've achieved some amazing outcomes together, just one year into our partnership. I'll share more on them later. First, let me explain how we did this together. Concentrix is unique at that we engage with clients in a very consultative way, digging deep to learn what they want to achieve and collaborating with them on the right solutions to achieve the outcomes. We brought our ongoing investment in the latest CX technology, data science, analytics and best practices to bear which allowed this client to focus on their changing retail environment, brand growth and development. We kicked off the relationship with a customer experience analysis. Our data scientists captured and documented customer journeys to help us understand the consumer's happy path and the moments along that path that cause them pain. This post-purchase CX journey is one output of this initiative. Now I'd like to show you a short demonstration that is representative of the experience we created. [Presentation]

Our focus from day one has been to quickly help this client bring their customer experience vision to life. Within the first few months, we've implemented both a conversational IVR and a messaging solution, including bots that resulted in about 41% of chat and messaging conversations being either deflected or resolved by self-service. At the same time, we were able to reduce the handle time of conversations by 27% for voice and 12% for messaging. This is valuable time that the customer gets back. Going forward, we continue to innovate with this client and the nature of rapid innovation is that we will hit speed bumps in the road. The great news is that we, the one team of Concentrix and the client continue to take chances and fail fast and succeed together. It takes that kind of partnership to fly with a project like this one. It was great to walk you through the success story. Now I'm going to turn it over to Kathy Juve, the Executive Vice President of Customer Experience, Technology and Insights, who leads the team that provide deep insights and technology to clients on their CX journeys. Kathy?

Thank you, Denise. So this next case study is about digital transformation for a regional health care provider. So this provider has 220 clinicians across 65 locations. And as they grew, they struggled to respond to patient requests, dropping over 40% of patient inquiries because they did not have the modern digital capabilities, and they were forcing patients to call into busy doctors' offices for everything. And I think we've all been in this situation before when we've been put on hold when trying to reach our doctor's office or been in the office waiting for the front desk while they answer calls from others. So this is a very frustrating experience for patients and staff, but it's also very inefficient. So the root cause of this was that they had grown rapidly through M&A, and they found themselves with multiple legacy and siloed digital CX systems and undesired technology debt. And what they wanted was to create a modern experience and simplify their technology and their operating structure. So what I'm going to show you now is how we reimagine an entirely new experience through digital transformation. [Presentation]

Great. So what you saw there was a completely new experience. And there are a few key elements to the solution that I'd like to highlight. So first of all, we evaluated their existing technology and processes, and we created a plan to migrate and integrate into one digital CX solution leveraging the cloud. Our analytics team provided ongoing insights into the customer journey to guide the strategy and we built our solution, including Amazon Connect, and Amazon Lex to centralize the Digital CX technology into one platform, which we also manage for them. We also integrated into their back office system, Allscripts, which is a patient electronics record system. And as you saw in the video, this technology enables patients to interact with natural language virtual agents and other digital means. And on the adviser side, the new technology enables them to centralize their patient assistance center, creating significant efficiencies for patient interactions and also improving the experience. And in this solution, we also provide advisers to support the live patient request as well. So the results were really great. Through our partnership, we achieved a 40% cost savings for Digital CX. They save $500,000 per integration -- per clinic in integration costs, which was a substantial cost for them. It also only takes now 2 to 6 weeks to onboard a clinic. And that's from months, sometimes up to 6 months. They also achieved their objective to eliminate tech debt and move to an OpEx model with us and also provide, obviously, a much better patient experience and responsiveness to patient care. So this next case study is another example of digital transformation. And I'm going to demonstrate here how we use our technology and services to drive digital transformation for a top 10 bank who wanted to improve their Net Promoter Score. So this bank wanted to make CX the cornerstone of their strategy to help them drive growth and differentiate their brand in a very crowded and disruptive marketplace. But they have legacy platforms for collecting customer feedback that actually still use excel files. And they also needed help to decipher the data to turn it into insights and then device action plans that they could deploy to really drive the business changes that they need -- that they needed to do. So what they really liked about us is that they wanted to work with a single partner who could integrate and handle all the capabilities that they needed, which included experience design, strategy, technology, professional services and to do this for them on an ongoing basis. They did not want to coordinate with multiple vendors and become a project management team. But instead, they really wanted to focus their efforts on the CX strategy and implementing those changes inside the bank that would really drive the change that they needed. So in our solution, we reimagined a new enterprise management ecosystem for them that would incorporate 16 company divisions and functions where the bank was engaging with consumers. So this included their mortgage banking group, their retail banking group, digital properties, just to name a few. And what we did is we installed our enterprise platform, Concentrix CX, which is a voice of the customer platform to mean analyze feedback across the organization. Our software enables them and us to analyze survey data across all channels to capture the voice of the customer for the bank in real time. We use natural language processing and AI in our text mining engine to identify the common themes and pain points across the bank and our CX professionals work hand-in-hand with the bank to identify the business changes that will drive the best ROI for skill set improvement on an ongoing basis. The bank staff had visibility into their own voice of the customer and satisfaction levels so they can see how they are doing. They also receive automated recommendations for improvement. And bank executives, including the CEO, have visibility into customer sentiment and satisfaction. Our insights are also used to improve a variety of processes across the bank that include things like base staffing, outbound communications, promotions and other ways to improve their mobile app or digital assets. So the result is really exciting. As you can see, the outcome was that we were able to improve their NPS by 20 points in a year because of their top-down enterprise mandate and support from their executive team, combined with our VOC technology and our talented consultants working daily together to achieve these results. So now I'm going to turn it back over to Rick Rosso. Rick?

Thank you, Kathy. Great story. And I'd like to just offer one final example of our deep strategic brand partnerships. Our client in this example is a high-growth, large social business, who also sells a set of high-technology consumer products. Our clients' key challenge was how to scale their business model at speed around the social and advertising business while also transforming their approach to consumer products. Their business requirements for fast-changing and had very high expectations for care, support and moderation. The client had demonstrated that they needed a high-value partner ecosystem, which could support their multi-geo demands be very agile and ability to ramp up at scale but also be efficient and collaborative. A change was needed from their broad set of vendors serving a patchwork of transactional services to something which could be accomplished only with a deeper relationship and more strategic capabilities and commitments. Concentrix, which had initially had a limited role in sales and support on the core business, and a more significant role in the niche consumer space was provided with the opportunity to play a much more significant role as a direct result of the outstanding performance in those areas and a proven track record of strategic partnering. As we worked with our client, it became clear that their business model and partner expectations were unique and substantial and it would require a specialized approach to help meet and exceed their needs. Over the next 2 years, Concentrix is focused on several key investment areas to build the right strategic model, including dedicated teams to support multiple business lines, developed a custom rapid deployment model to support simultaneous launches, invested in dedicated analytics and insight resources and identified and built multiple custom assets and tools to create better execution. In addition, we were put to test to demonstrate that our ease of working true agility and flexibility and investing for the long term were aligned with the clients' expectations. I'm proud to say, as a result, Concentrix has become the top-rated partner in the most recent rankings while expanding and supporting the client's initiatives simultaneously in serving their customers from a sales, sales support, global operations and consumer products care and moderation. The performance by our team has provided significant confidence in our client to leverage Concentrix to scale on all critical business areas to deploy new approaches and pilot new processes exclusively with Concentrix to learn and adapt and to jointly look for paths to innovation. The client has been able to grow at unprecedented scale and quality across many critical business areas and is accelerating their presence into metaverse's products and services. What this has meant for Concentrix is that we have been rewarded with significant and sustained growth, over 86% CAGR over the past 4 years. And as a trusted deep strategic partner is positioned to grow substantially as our client continues to expand and as they create new market spaces. This strategic partnership creates tremendous stickiness between Concentrix and our client, based on our ability and willingness to solve more and impact more of what creates the most value for our client. Now I'd like to hand it over to Bahar Ozkan, our global leader of staff wellness. Bahar is the leading subject matter expert in occupational wellness and is a licensed clinical psychologist with over 9 years of experience in psychotherapy and corporate wellness. She focuses on executing corporate psychological health and safety programming through research and innovation. Bahar, over to you.

Thanks, Rick, for the introduction. Hello, everybody. I'm really delighted to lead our global valving practice at Concentrix. It is a very intentional practice, which may not be what you see typically in this business space that we operate in. However, this approach reflects heavy understand the nuances of being needs for both our industry and demographic profile of our workforce. Our practice is differentiating us in the marketplace. It is also serving as a benchmark and a voice of authority for our clients as we are assisting them with guidance on valuing strategies. Let me share a little bit about what I mean by that. Firstly, I had the privilege of leading a team of almost 40 clinical professionals. Combined, we tally up 190 years of clinical expertise in psychology, psychotherapy, occupational health and public health. The clinical team is interwoven into our delivery structures. So they work hand in glove to provide counseling service to our staff as well as educating our leadership to comfortable them with a cultural balance first environment from their morning debriefing with the teams through managing staff cognitive load and supporting the sign of stress. That expertise is fused with clinical research and personalized [ balding ] plants. When you look at the demographic of our workforce, this is strategically important. Generational awareness of Wellnest means accessible anytime with hybrid choices of remote and in-person support. Also, global pandemic has affected mental health of 45% workforce. It is business critical to have flexible and accessible valving support that answers all kind of needs. For us, that starts with pre-hire process. With clinically-led psychometric assessments, we match resilience suitability to the role. It continues into wellness and resilience training and coaching to our staff. That extends our easy-to-use valving tooling, dynamic design of our work environment and work at home balance activity plans that offer diverse options for all kind of personalities. And we continue that support post exit process as well, where our costing service continue to be available to staff if they decide to leave. So how does that play a value in our business? Our staff retention levels are really strong. Indeed, we have seen some of our lowest attrition in our most complex programs such as trust and safety. And the reason is our relentless commitment to support our staff. Before I wrap up today, I will take a quick moment to speak about our cognitive innovation research hub . Like every great clinical mind, we want to get the job right and keep getting better. Our innovation hub makes that possible. Clinical research, academic partnerships and leveraging best-in-class medical technology are all allowing us to learn what is new and better in [indiscernible] space. Let me quickly share an example of what that means with Wellnest Comprehend. Comprehend is a cognitive and neuroscientific research project to accurately understand resiliency and engagement in the workplace by correlating AI data on blood oxytocin with individual heart rate, to give us an understanding and reading on psychological safety, we have dependable data, not an [indiscernible] service. That research is allowing us to predict work and set saturation levels, explore optimal shift timing and duration, optimum break structure for our staff, task rotation options and further improve personalized value interventions. Other implied run strategies include global digital health tools, also in line with many references you heard today on early metaverse adoption, we research on what that means for the R and AR world. All our investment in mental hub leads to reduced stress, increased resilience and more effective feedback. Now I'm going to hand you over to my colleague, Cormac Twomey, who is going to talk about how we scale the use of technology in our CX digital operations today.

Thank you, Bahar, and good morning or good afternoon, everyone. Bahar has given a great example with Wellnest Comprehend of how technology can enhance and optimize experiences to deliver significantly better outcomes. The adoption of technology like this is accelerating the reimagining of the experience across all aspects of the customer journey. And the brands we support are looking for us to deploy technology solutions to accelerate better outcomes for their fans and the ambassadors that support them. Now rather than talk about what we're doing in that space, we thought we'd bring that to life by playing a short video, which shows how we are using technology to create these great experiences for our brand's fans and the ambassadors. [Presentation]

Great. So the technologies that you show on that video are deployed at scale across Concentrix's digital customer experience operations. In 2021, we hired 89% of our ambassadors virtually and use digital technologies to train over 100,000 of them. We used digitally an AI-enabled facial recognition technology to screen over 160 million images a week to ensure we're creating a safe, secure environment for our brands. And we have deployed smart assist technology to over 114,000 of our ambassadors. This deep immersion in tech has created a culture where over 2,000 of our frontline ambassadors have had over 4,500 innovations implemented, which have contributed to us automating over 1.1 billion transactions in 2021. So what does this mean for our brands and for CNX? 61% of our clients rated innovation 100% or better year-on-year. Of those clients, those that rated us 93% plus grew 29%, significantly above the enterprise growth rate. And for the new economy clients subset of those, that growth rate rises to 37%. This technology focus has led to 65% more clients buying talent and tech year-over-year. And when we look at the new economy subset of that, that rises to 71%. And those new economy clients buying talent and tech are growing at 45% year-on-year. This data clearly demonstrates that a digital-first mindset is pervasive culturally and operationally across the Concentrix Digital CX operations and illustrates why that matters to the brands we support and ultimately underpins our ability to maximize the market growth opportunity in front of us. On that note, I'm going to hand you over to my colleague and great friend, Monica Egger. She is going to take you through how all of this comes together.

Thank you, Cormac, and hello, everyone. Now that you've heard about who we are, the work we're doing to leverage our strategy, tech and talent to drive key outcomes for our clients, how we're leveraging tech to support our teams and brand investors every day and a small bit about the exciting future of CX. I'd like to talk to you about our growth strategies for 2022 and beyond. Our strategy continues to be around the 4 key areas that drove such nice progression in 2021. We believe this will continue to provide both short and long-term benefits for our business. We also take you through one layer down on these strategies for 2022. So you have an understanding on why we believe them to be the winning formula. First, we'll start with clients. We'll continue to execute on our strategy to expand wallet share through deeper client relationships. As we talk about clients, as Chris referenced earlier, it isn't about the number of clients that we have, the types of relationships we have with those clients and are they aligned and investing in their brand from a CX perspective. One way we think about our clients is in 2 categories. Enterprise clients and new economy clients. Enterprise clients leverage Concentrix to support scale, efficiency and predictability in their CX operation. New economy clients looked at Concentrix to be agile, support hyper growth and provide a fresh perspective as they're beginning their journey. Over time, we believe the needs of our new economy clients and our enterprise clients will converge. Today, we successfully serviced both of these client bases at scale across the world, which positions us well to capitalize on opportunities. As an example, over time, the efficiency, predictability and depth of experience that's valued by our enterprise clients will be valuable to new economy clients as they grow. Similarly, the traits that are valued by our new economy clients and our agility and new ideas, fresh perspective will be sought by our enterprise clients as they respond to strong market disruptions and changes to their business models. In the end, both will look to Concentrix to be nimble, provide scale and adapt as we service their changing needs. As you can see, both of these segments are growing healthy year-over-year. We believe we will benefit during their evolution as well as at an end state. And when you think of our new economy clients, don't instinctively assume they're small. As said earlier, they number in 125 and they have $7.5 trillion in market cap. Another way we think about our client set is in terms of the depth and type of relationship that we have with them and the level at which we're embedded in their operation and critical to their brand strategy. Not surprisingly, we classify the vast majority of our relationships at a high level of integration and criticality to our customer operations and their brand strategy. The more essential we are to these clients, the faster they grow by consuming more of our services at scale. Our second strategy is about relentlessly innovating and adding digital solutions to how we serve our clients. This may change the way that we serve them, how we have traditionally served them, but it does build a deeper and stronger relationship. In fact, we often get asked how much of your revenue is digital? It's a really difficult question to answer because digital permeates our business. As you've heard through the case discussions today, digital offerings are integrated across the business. They're integrated into the way in which we service our clients for end-to-end solutions. We independently sell them to clients and they are also embedded in our operations to help support our brand ambassadors as they support our clients. Here's an example of some of our digital solutions, many of which have been talked about today, during the case study reviews. In addition to the Concentrix capabilities, we have partnered with leading -- industry-leading technology companies in order to provide end-to-end solutions to our clients. Cloud infrastructure providers, natural language providers, RPA providers, these partnerships and combined with our capabilities position us very uniquely to deliver end-to-end solutions to our clients. Our third growth strategy involves continuing to grow in emerging markets. This is an important source of revenue diversification for us as well as the strategy for incubating new technologies and finding new -- global new economy clients. As Chris stated earlier, this market continues -- we see this market continuing to grow for us at a 20%-plus clip. Emerging markets are key for both global brands and new emerging brands. In fact, 27% of our new economy clients start in these markets and could grow to be the next big global brand. Focusing on these markets also allows us to support the existing global brands who are looking to leverage the market opportunity in these countries. As a fun fact, the market cap of the new economy clients in the emerging markets is $1.3 trillion. And lastly, we will continue to look for ways to add to our business through M&A. Looking to expand our capabilities in key growth areas by adding deep domain expertise, accretive client portfolios and technological capabilities. As stated, our focus for M&A will include those targets that provide deep domain expertise. I think sales gen, analytics, specific vertical expertise we may be looking for, attractive client portfolios that allow us to take advantage of new economy clients and new technologies that enhance our overall business. As we have been in the past, we will be disciplined in our approach to M&A. M&A will be accretive to the overall business, and we will only transact if there's a cultural alignment with the target. We have a strong balance sheet and an ability to pay higher multiples, but only when we perceive long-term value for the business and our shareholders. And as you can see, we have a very successful track record of accretive M&A from IBM to PK. All have added incremental capabilities, client portfolios, capabilities and enhancement to our brand. Now for a brief glimpse into the future, I'd like to turn it over to Vijay Ijju, co-founder of our latest acquisition, PK. Vijay?

Thank you, Monica, and good morning, everyone, from Denver, Colorado. You've heard some compelling stories about what we have done for our clients in delivering on the brand promise of everything CX. At Concentrix, we continuously innovate CX as I look through the crystal ball and peak into the future of CX. 3 years from today, this Investor Day event will be hosted in the metaverse. In a virtual NASDAQ world with the backdrop of Times Square and an immersive investor session with speakers and attendees. Each of us we'll have our digital avatars, which will engage in smaller breakout spaces, which are highly immersive, real time in nature and persistent. This is the metaverse experience or MX, as I call it, which will come in the 2- to 3-year time frame. Working our way backwards from there in the next 12- to 24-month time frame, there's going to be a significant shift of the experience towards the edge, which is all around connected vehicles, smart cities, smart factories and in general, smart everything. The edge is the last mile of the connected experiences, which will allow us to deliver immersive experiences with semantic and rich content, intelligence and data being deployed on the Edge. This is the path to ICX or immersive connected experiences. Now the building blocks for delivering the immersive experiences over the Edge and into the metaverse are already here with AI, machine learning, automation, which are driving interactive and intelligent experiences or IX. And finally, tying what's on the glass experience to the middle and back of an enterprise ecosystem or the business of experience, BX, to deliver a holistic customer experience. Let us unpack these starting with IX. Intelligent Experience is about the next evolution of CX and infused with AI, one-to-one personalization of the next best action in a customer journey driving a highly personalized experience just based on customer insights and context. This is where moments and micro moments are personalized with AI that is modeled upon individual preferences, contextual data and external data sources. And ambient experience is a natural way to engage with a conversational interface. With advanced NLP and NLU, these intelligent interactive bots have the ability to be sensitive and understand the customer intent and take the appropriate actions. Catalyst created an experience like this using Amazon's Alexa for voice-activated ordering for a large quick-serve restaurant. When it comes to voice ambassadors, AI-driven agents can work side-by-side with digital operations ambassadors and drive a better call experience. They can be trained to sense tone, sentiment and respond accordingly and automatically pull together contextual and personalized responses. Several use cases are possible here, and this is very relevant within the CRM and [ CT -- XI ] business lines within Concentrix. Over to the business of experience or what I call as BX. The experience on the glass is definitely paramount. And what's more important is what happens behind the glass. That's on the business side of experience. This is about -- all about delivering a compelling experience in the middle platform provided by hyper-automation. And this is a high-growth market, hundreds of billions of dollars being spent on this space. And it's fueled by the labor shortage that is driving a lot of the hyper automation. The proliferation of data across the organizational silos, cloud on-premise versus the Edge, it presents a new problem for delivering compelling experiences. And the middle platform is a fabric that pulls together all of the APIs, events and data to deliver on the experiences. The business of experience or BX is very critical where our clients are going to be spending a lot of money in the next 12 months. Next, about immersive experiences, reimagining the drive-through ordering experience by using computer vision-based detection of a license plate, matching that to prior orders and personalizing the drive-through ordering experience and more importantly, saving seconds in the drive-through lane. The Edge is where 5G IoT, rich content and AI and machine learning come together to deliver a compelling experience. The investments that are done by the hyperscalers today like in the Edge, is creating the building blocks for delivering immersive experiences in the future. Connected vehicles and the experience there is inside the vehicle where the vehicle is the next smartphone with apps and infotainment in the vehicle. That's consumed by people in the car. Now the pandemic accelerated the move to the Edge, and we're going to see this evolve over the next 12 to 24 months. And now into the metaverse. Just what exactly is the metaverse? And why is it becoming the main topic of discussion across all settings? The metaverse is the next evolution of the Internet, which, in a sense, is the Internet in real-time 3D, which is community-driven with different virtual worlds network together. And this evolution of the Internet will allow for immersive experiences, open exchange of value that is trustless and permissionless. Now trustless is a good thing. It means there is no single intermediary and trust is distributed and verified on the blockchain. Permissionless means you don't have to be credentialed to access the metaverse. From a CX standpoint, the metaverse will create tremendous opportunities for brands to engage with their customers. I mean, we are familiar with brand engagement, which is direct-to-consumer and personalized to the customer actions. In the metaverse, you as a person will have complete privacy with respect to your digital identity. And however, your digital avatar is going to interact in a virtual world and engage with the brands. And brands will be thinking about moving from D2C to D2A or direct to avatar and one-to-one personalization will move towards one to many hyper-personalization across different virtual worlds. The evolution of retail will happen in the metaverse, which will give the ability for retail brands to display digital goods that look like the real goods and allow the avatars to try on these digital goods and buy them. And this will lead to commerce and value exchange of both digital and real goods. Now the forcing function for all of this has been the pandemic and the lack of social interaction has fueled the need for a different way to collaborate and socialize in an immersive world rather than on Zoom and Teams. This is what has opened up the opportunities in the metaverse. A lot of use cases open up in this new world, virtual offices, virtual events, even in the enterprise, we are seeing simulation and training as examples. Let us look at Web 3.0. And Chris touched upon this a little bit. I'm going to unpack that a little bit more for you. And the underlying technology that drives the metaverse. If you go as far back as the mid to late '90s where the first generation of the web came about, it was mostly around e-mail exchange and exceed a very little rich content. Almost everything was consumed over low bandwidth connections. Web 2.0 arrived in 2007 with the launch of the iPhone and the app ecosystem. And this is the area of mobile with user-generated content, social media, wearables and other omnichannel devices. Web 3.0 is all about real-time 3D and the consumption of content which is semantic image. It comprises of metadata about an entire representation of the real world in 3D, enabled through the Edge infrastructure and 5G and content hubs that drive a highly immersive experience. At the foundation are the protocols like blockchain and virtual platforms like Unity 3D, ROBLOX, Minecraft, which enable the creation of these virtual worlds avatars being able to consume content and also deal in commerce and other activities of value exchange. The building blocks for Web 3.0 are already here. Now the one thing we have to be careful about, especially with the metaverse is around security, buyers and the possibility of cyberbullying. This is something we must be cognizant about when we design that customer experience. Here is a quick showcase of some of the work that we are exploring within the Web 3.0 space, around 3D simulation. [Presentation]

In closing, if you don't believe in the reality of the metaverse coming in the next 2 years, I would say talk to your kids, especially those who are between 8 and 17. For them, the metaverse experience is very natural, and that is how they interact and socialize with their friends. Our intent at Concentrix is to invest more into all of these capabilities and drive a better end-to-end customer experience. I'm going to now hand off to a very happy Bengals fan, our CFO, Andre to talk about our financial objectives for FY '22.

Thank you, Vijay. I'm very excited about the role that we're going to play in shaping the industry as we move to the future. And thanks for the shout out about the Bengals. We're very excited. In this section, I want to talk a little bit about our strong financial profile, our recent financial results, our guidance for 2022 and some longer-term financial objectives that we have for the business. First, though, I want to talk a little bit about some other cuts of our revenue to highlight the diversification of our revenue across verticals and geographies served. At the time that we were getting ready to spin off just a little bit over a year ago, we talked about the 9% CAGR in our strategic verticals that was masked by the purposeful reduction in our communications vertical exposure. And we did talk about the fact that, that exposure was coming to an end. In 2021, we grew at over 20% across each of our strategic verticals and saw stability and even a little growth in communications. It's also important to note the diverse sources of revenue from a geography-serve perspective and the strong growth we've seen across each of these markets in 2021, the Americas Europe and Asia-Pac, all growing quite strongly. We have seen an acceleration coming out of COVID of our revenue growth, margin expansion and cash flow generation, and we believe that will continue into 2022. Yes, we saw a bit of a pause in the second quarter of 2020 as the pandemic started. But our strong performance during the pandemic led to accelerating growth that started to show up in Q4 of 2020 and has continued as we've moved forward. With that, we've moved our non-GAAP operating income up meaningfully to 13.1% in 2021, up from 11.5% in 2019 pre-pandemic. You see a similar trajectory in our EBITDA margin, reaching 15.6% in 2021. And across all these cycles, even the year with the pandemic had an impact on revenues, we saw a strong free cash flow generation. Even with the meaningful working cap investment we saw in 2021. Looking to 2022, we believe we are poised for revenue growth, further margin expansion and increased free cash flow. Last week, we announced our earnings and we provided guidance for Q1 and the full year 2022. In Q1, we expect revenue to be between $1.51 billion and $1.54 billion. and non-GAAP OI to be between $190 million and $205 million. This includes 2 months of PK, given that the transaction for the full year, we expect revenue to be between 6.6 million This equated to adjusted pro forma revenue of 9% to 12%. Our non-GAAP OI expected to be in $890 million and $930 million and at the midpoint of our guidance, that equates to a meaningful margin expansion up from 13.1% in 2021 and to 13.9% in 2020. Today, we are very pleased to share some longer-term financial objectives for the business. By 2025, we expect our revenue to $10 billion or more with $8.5 billion coming from organic growth, About $1 billion from future accretive M&A, which will continue to be a core part of our growth strategy. This equates to a [indiscernible] from 2023 [indiscernible] PM. On today's business to approximately 4.5% by 2025, with nearly all of our revenue being tech-infused and a large digital component in our revenue as well. The drivers of our growth are many. We are a leader in a $550 billion market that is growing quickly. We're poised to grow with new economy and enterprise clients across our strategic verticals. We're driving deeper strategic relationships with clients, leading to wallet share gains. We're winning new logos. And all of this growth will have a meaningful technology and digital component. Clients are looking for our winning combination of CX strategy, tech and delivery talent. The last driver of our revenue growth, as I've said, will be a continuation of our role as an industry consolidator, adding capabilities, domain expertise, technology and client portfolios that we can grow. Our M&A will be accretive and will drive long-term financial returns. From a margin expansion perspective, we're again very pleased with the progress we've made in getting to 13.1% margin in 2021 and we're very confident in our guidance that we've rolled out for 2022. We see an opportunity for continued long-term margin expansion. Those will come from growth in more complex, high-value services, operational efficiencies and internal technology automation, as Cormac has talked about, control of more end-to-end processes and outcomes-based pricing models. Let me drill down a little bit on that last one. We see an evolving mutually beneficial trend towards a different financial model, a different contracting construct with our clients around outcomes rather than inputs. Today, our revenue is largely transaction-based. Revenue was driven by some unit of input or output, and the result is a pretty linear relationship between revenue and labor. In the future, and we're seeing this already in our pipeline, we're going to see transactions that are -- and relationships that are more based on the CX solutions with an outcomes-based pricing model. This will align our goals between ourselves and our client, revenue growth will no longer be linear with labor growth. And this could take the form of gain sharing, fixed-price contracts or situations where we get a percentage of sales that we drive or a percentage of cost savings that we help the client accomplish. Our investment in capabilities to drive client outcomes and drive efficiencies, position us for margin expansion as the client model involves in this way. This next slide is a graphical depiction of our revenue growth at over 10.5 -- sorry, over $10 billion in 2025. It starts with the midpoint of our guidance range for 2022, and then adds the 9% CAGR in revenue growth, driven by growth with new economy clients and enterprise clients to get to that $8.5 billion in revenue. To that, we add the $1.5 billion that we think that can come from an inorganic growth to get to at least $10 million in revenue by 2025. It's important to note the role catalysts will play in these numbers. As Dinesh mentioned, in 2022, we expect Catalysts to be $630 million of revenue. We believe that over this time period, it will have a 20% revenue growth CAGR, which means that Catalyst itself will be roughly $1.1 billion in revenue, entirely organically by 2025. Moving to a graphical depiction of our margin drivers. Here, we see our margin moving from the approximately 13% in 2021 through our revenue -- or sorry, our profit guidance in 2022. And then the drivers towards that approximately 14.5% by 2025. Again, growth in more complex technology-infused services will take our margins up, will drive operational efficiencies and automation and will control more end-to-end processes and move to more outcomes-based models. Those are the things that have, frankly, helped us get our margins to where they are, and they'll continue to expand our margins to 2025. I'd like to now go a little over our capital structure, pro forma for the close of the PK acquisition. Basically, our 11/30/21 capital structure updated to show the debt that we issued to fund the PK transaction as we amended our credit facility. We have ample liquidity of over $1.2 billion, consisting of our $1 billion revolver, some cash on hand and a little room on our $350 million AR securitization. After the close of the PK transaction, total debt is $2.4 billion, that consists of a 5-year $2.1 billion term loan and $300 million or so that was borrowed on our AR facility. Gross leverage pro forma for PK was about 2.6x, net leverage about 2.4x. We have a strong balance sheet and a strong financial position. We have ample liquidity, and we believe a strong free cash flow generation will drive debt reduction to under 2x by the end of 2022 while supporting our dividend, assuming no further M&A this year. Our capital allocation principles remain largely unchanged from the time of our spin. We're going to invest to grow the business. We're going to invest in organic growth including enhanced capabilities. That will require CapEx at something like 3% of revenue each year. We have financial flexibilities I've described for accretive M&A. Our strong free cash flow supports our view that we can carry up to 3x leverage and maybe a little bit more with the ability to delever very quickly if we ever get above 3x. We're committed to our quarterly dividend, and modest share repurchases under our $475 million remaining authorization, although our near-term priority will be debt reduction. We are very, very proud of the return that we've driven since our spin just over a year ago. We've outpaced our CX BPO peers and the other indices you see on this slide. But despite that, we're not satisfied. Despite the execution, we trade, we believe at a significant discount to where we should be and to our peers. We're convinced that with continued execution, towards our 2025 objectives, we can cut into and then eliminate that discount. In summary, we believe we are a very attractive investment. We are a market leader in a growing market at a time where CX has never been a more strategic priority for businesses, whether they're new economy or enterprise clients. We're executing our strategy to grow and we're winning with that strategy. You can see it in our results, and with that, strong margin expansion. We have unmatched CX capabilities, bringing together strategy, talent and technology. As Vijay mentioned, we're looking to the future. We're not just focused on where the industry is today, but we will lead it as it continues to evolve. We have great brand relationships across enterprise and new economy brands, and we're getting more embedded with our clients and growing wallet share every day. And lastly, we believe we have a compelling valuation versus our peers. As we think about the math here, we think that we can grow at that 9% CAGR over a prolonged period of time. With that, we can generate strong margin expansion. From that strong free cash flow to support some level of capital return as well as participation in accretive M&A. And all of that wrapping around all of that, the opportunity to bring our valuation multiple up over time. We think that math makes us an attractive investment now and into the future. That wraps up the prepared remarks from this session today. I hope you found them enjoyable. At this point, we'd like to move to the Q&A. I'd like to invite Chris, Dinesh and Monica to join me to take your questions. And David Stein will be our moderator. Guys?

Thank you, Andre. [Operator Instructions] Our first question is from Ruplu Bhattacharya from Bank of America.

The first question is for Chris. You're guiding for organic revenue growth of 9% year-on-year. In that respect, can you talk about new win rates, average contract size and renewal rates, so that we have an idea of where that's trending today and how you see that progressing over time? And then my second question relates to margins. You're guiding for 60 basis points of improvement from fiscal '22 to fiscal '25. Can you help us segment how much of that improvement will be from each of those 3 buckets you mentioned, the outcomes-based pricing models, the operational efficiency and the more complex services that you're providing. So any details there would be appreciated.

Great. Thanks, Ruplu. So a couple of things. Let's talk about your first number of questions. From a win rate perspective, generally, we're very focused on the types of clients that we're going after and the type of engagements that we work with. And so I would say we're well within the industry stands of win rates. It's not quite 50%, but it's quite reasonable from that perspective. And we don't see necessarily any large changes within our Concentrix business in our Catalyst business because it's a lot more customization that normally starts off with strategy, the win rates we expect to continue to move up from that perspective. From a renewal perspective, we're generally all high, high, high and have been for a number of years high 96%, 97%, 98% bouncing around. And normally, the disengagement happens because either the client is looking for a price point or less services that we're not prepared to support and/or directionally is challenged from what we want to implement. And lastly, we do have M&A within our marketplace that will happen where if we are a smaller partner within that new organization, we might not necessarily win the ongoing business. But win rates -- sorry, renewal rates, very, very, very steady from that perspective. From a pricing environment, I think we've talked about this a few times. We see pricing relatively stable. Where we see a game changer is from the Catalyst perspective of coming in and providing that solution. It's much harder to compare the pricing when it's an outcomes-based contract where we're really about driving value for that client. It becomes a much different conversation than someone saying, hey, how much is it to transact or take this chat or this social media content moderation or whatever the case may be. And so we do see some ability to increase sort of the value we drive from our pricing, not necessarily from increasing the end price as we go forward. And I think we've been executing well on that, and we continue to see those trends going forward. The second question around really margin value add. It goes back to Monica's point that it's somewhat hard to talk about because we really are driving margin across 3 pillars of technology. And one is certainly from our own operations, as Cormac talked about, about embedding it, where we become more efficient, and that we don't -- I don't want to say we don't put a price tag on that to the customer, so it doesn't attract revenue, but it certainly makes us more operationally efficient. The second one is really where we're designing sort of applications and the client might want to pay and maintain those as a separate billable item. And so that really falls into our catalyst business. And you'll see, obviously, our margin accretion as that goes forward. And we've talked about that we see catalyst improving over the next little while similar to our Concentrix business. And then lastly and probably the least margin that's going to grow is our core services business. We still believe that we can add higher-margin business into it as we get more and more higher-value, stickier business in that segment, but it will be at a slightly lower rate than I think from a catalyst perspective. Andre, anything you'd like to add?

No, I think that's about right. I think as you think about the first margin driver that I talked about was growth in more complex service, certainly growing faster in catalysts and frankly, getting the benefit from some of the investments that we've made there, frankly, PK had made and the Concentrix is making now making together we'll give us some leverage on those investments and that will certainly be a driver.

[Operator Instructions] Our next question comes from Vince Colicchio from Barrington.

Chris, I'm curious, as far as some of the case studies you provided, how long does it typically take from building new relationships to getting that deep with your client set?

That's a great question, Vince. I mean the reality is that 2 or 3 years ago, it would take actually probably about 2 or 3 years to get to those types of conversations because you have to earn that trust and development. I think now what we're seeing with the pandemic and how we perform within the pandemic of being a true trusted partner, the relationships actually gets sold at that transformational level day 1. And so a number of the case studies that we actually talked about were net new clients within the last 2 years that we actually developed and from a consulting perspective, design the solution and develop this solution and implement that solution all as one. And now that we have them running at the sort of a much higher hybrid state of customer engagement, the conversations get even more exciting because then we start talking about where can we take it further. And that goes into some of the new areas of growth that we see, whether it be in sort of Metaverse or whether it be in and some of the other areas that we're investing in. So it's really changed, frankly, over the last 2 years around how clients are engaging and how quickly they're engaging in transformational deals. There's very few people who are looking for sort of typical old relationship outsourcing that was more in vogue probably 3 to 4 years ago.

And the second question is that in terms of super cycle, how do you think about the timing of investing in those areas? Do you try to get ahead of the curve? Or do you wait until those cycles start kicking in?

Vince, that is a great question. We spent a lot of time talking about that internally. Being it too far ahead of the curve, which we have done in a few times, we actually never get the yield on our investment because we're not quite sure where things will go. And some super cycles that appear to be super cycles fizzle out very, very, very quickly or get commoditized very, very quickly. And then too late, that share has already moved and -- or those new opportunities have already gone. And so really, the only way to kind of get back into it is by possibly buying someone who is in the super cycle phase. The reality is, is we've been really good hitting it where it's starting to come up the maturity curve, it's starting to get to that place where it needs to have scale, global operations, really operational rigor, and then invest heavily from there. But we look at these super cycles much earlier. Good example would be Metaverse. We have been supporting AR and VR for probably Andre, gosh, 1.5 years to actually almost closer to 2.5 years, pandemic kind of compresses time. and looking around how people can support and engage and do commerce within that place, very low volume, as we mentioned. But now all of a sudden, we're starting a big uptick in the opportunities that are coming forward. And because we have the domain knowledge and the expertise and able to support it, we're really prime and front and center when we're having those client conversations around who they want to partner with to take them into the new areas of growth.

Our next question is from Ashley Ellis from Cross Research.

I have a couple, if I may. My first question is for Andre, and sorry if you kind of touched on this, but it was difficult to follow you on that first slide for the long-term targets. But could you maybe discuss the 4 growth strategy pillars that Monica laid out, how you would kind of rank those in driving the 9% growth rate? And then is there any assumption of benefit from the super cycle? I know, Chris, you said that you're not super dependent on it, but are you sitting in some sort of growth contribution from that?

Yes, I'll cover that last 1 first, Ashley. Not much of a contribution expected there from -- at that 9% CAGR from any kind of super cycle event. So -- and then as I go back to the pillars of the Monica went through, first of all, the first 3 are the organic pillars. And those get us to the that 9% CAGR that gets us to the $8.5 billion in revenue. I would say the most impactful one will continue to be the first one, which is deeper, more strategic client relationships. We always talk about the fact that 75% of our growth comes from existing clients, I think that just continues. It's a little hard then to parse out the next one. which is relentless innovation because it really supports that stickier relationship, that more embedded relationship with those strategic partners, our strategic clients. And then emerging markets, we're growing quite nicely there. We grew 20% in the most recent year. but it's still a relatively small portion of our revenue, I think it's roughly 10% or so. So it might have probably the -- if I was a stack ranking to 3, hard to differentiate between 1 and 2 because 2 are so supportive of 1 and frankly, of 3, but those first 2 would come first.

Okay. Got it. And then for margin expansion, that was the 14.5% by 2025. Should we think about that as maybe being more back-end loaded? I think you're still kind of investing in platforms and technology. So do you expect that to ramp? Or should it be pretty linear?

I would actually think of it as being pretty linear. As we think about our longer-term plan, that's certainly how it shows up there. So I don't see a real step function there from our 2022 guidance to the 14.5%. So I would think of it, again, being pretty linear.

Okay. And then my last question is for Chris. You mentioned 65% of employees are working from home. And during that time, you were able to enter new markets faster and more cost effectively. I'm just wondering why is that? And if it's so beneficial, are you still targeting to get back to kind of 30% at home? Or do you think that might change?

So a couple of reasons. First of all, I think the clients are much more receptive to work at home going into a new market than historically they've been. They generally want to say, hey, do you have an operation there? How long have you been in the country? What else are you doing within that country? But now for the search of talent, they're saying, hey, if you've got the domain expertise, which we do, and you have the operational rigor to support work at home, which we do, then they really see it as an extension of a program that we're already running for them within their business. And so that's what makes it sort of an easier conversation to have and able to get into it. Now I preface that with the type of work that we're doing. We still do a lot of work that is very, very -- has a very large requirement for security, which needs to be on-premise. And we also operate in countries where also just culturally, it's more desirable to be on-premise besides being work at home. And so while we see 65% of the business now and we see sort of with some types of services being able to enter new markets in a much more aggressive and cost-effective manner, the reality is we still have a large chunk of business that require security and culturally will need to be on-prem. Why we think down is because we have seen where countries have had a prolonged work at home exposure, where there is a group of the population, a group of our staff who go, hey, I want a sense of community. I want to come into a building. I want to partake in a lot of things that help drive the culture of Concentrix and drive of what we do. And so as an organization, we're not ruling out that we're going to have this very hybrid function where we might have some people come in a few days a week, maybe a week a month might be in all the time or some staff who will completely be work at home for the entire time. As long as it's good for our clients, as long as it's good for our staff, we will support it in a modern work environment.

Next question comes from Oscar Val Mas from JPMorgan in London.

Yes, it's Oscar from JPMorgan in London. I had, I guess, 2 questions. The first one is a follow-up on the previous one. Could you talk about, I guess, the benefits of work from home on the OpEx side and whether they are included in the guidance to get to 14.5%. That's the first question. And then the second question is around I guess, onshore versus offshore, and how do you see that changing over the next 5 years to 2025? And then maybe related to that, as the third question is employee scarcity or price inflation in the U.S. is that a significant issue that you're facing? And if so, how do you mitigate that? So apologies 3 questions.

No problem, Oscar. Hopefully, I can hit them all and certainly, Andre and Monica jump in. I think the first question is, from a guidance perspective, it is included in terms of how we see our workforce and where they work from in the marketplace. And to be quite honest, we have not seen a material difference in work at home from bricks-and-mortar. While there is the savings of the brick-and-mortar, there are other expenses such as broadband Internet, such as more security processes, such as virtual learning platforms, a host of other investments we've made to make sure that our staff at home still enjoy the same culture, operational rigor and security as much as we can as they would be within work at home -- sorry, with on-prem. So we haven't seen sort of this huge bountiful margin expansion. And quite frankly, if there was any margin expansion just driven by work at home, the reality is, is that, that generally gets worked out with the client and goes into sort of the pricing model as you look at when you renew deals nothing else. So long, long response back, but how we look at where our staff work is built into our guidance. Now I forgot the second question. That's terrible Oscar. What was the second question?

Offshore, Onshore.

Offshore, onshore. And that kind of ties into the labor mix. The reality is that what we're most focused on with clients is it doesn't matter where people are is do you have the skill set, scale and domain expertise to deliver. Some client strategy is to drive as much as they can offshore. Some client strategy is to have sort of this hybrid of onshore, offshore, depending on their client segmentation. So they might say, hey, some customers, we want handled here. Some customers we want handled there. The benefit of working with us is that we can really have staff onshore, nearshore, offshore, doesn't really, really matter. Now to your third question about labor scarcity and shortage in the U.S., we have made comments that the reality is that labor is getting more expensive in the U.S. We have continued to be competitive in the marketplace by increasing our wages. That necessarily hasn't always been reflected in pricing. And so what it's really driven is more conversations with our clients about how do we automate more, what else can we optimize? And so while the price per unit might go up, the actual billing doesn't necessarily go up because it's working within the budget. And we see that happening, frankly, for the foreseeable future of where we have that balance in discussions. Now if they don't have the budget, then clearly it goes to nearshore and offshore. And so we continue to see sort of good growth from those regions. But again, it's really what the client was is what we're able to deploy across our delivery infrastructure.

Our next question comes from Dan Moreno from Citadel.

Good to see you. SP1 I guess just 2 for me. One, if you could unpack this year's guidance for PK, I guess, a 20% revenue growth, maybe just like some of the drivers of the portfolio, which areas are growing faster, slower, et cetera? And then maybe as well the phasing throughout the year, maybe Q1, like the first half being -- we don't necessarily have the pro forma, so that would be helpful. And then on the M&A side, on your 2025 guidance, it'd be helpful to kind of understand the kind of targets you think about, that would be helpful.

For sure. So Dinesh, why don't you take the PK drivers of the growth?

Sure. So I think from a demand perspective, we are seeing demand across the board across all of our service lines and all of our verticals as well I think our clients are spending and spending big on digital technologies. So from a growth perspective, we see the strategy and design piece of it, which is how we usually go into a customer, start laying out what the experience should look like. And then as you go through the service lines, we get into digital, we get into automation and analytics. So we're seeing growth across the board from a PK perspective, right? And as we merge Tigerspike and PK together to form the Catalyst unit, we're seeing a lot more demand on the design side as well because Tigerspike comes with some really good design capabilities as well. So I think it's a broad-based gross growth that we've been seeing for this year.

Yes. And what gives us confidence around the numbers is really around how they book their projects. So when we look at the client set and due diligence and we looked at how they look at their spend within the PK business, frankly, the year is fairly much baked at sort of almost sort of the first quarter of the year and sort of that go-get amount is a very reasonable and sort of identifiable number. And when we look at where they were last year and where we look at this year, they're actually in a better position from a positioning perspective as well as, frankly, what is already booked and in the case. So a large degree of confidence in where PK is going to perform and certainly where catalyst is going to perform.

And I would say not a whole lot of seasonality in the business. So that 20% growth rate that we've projected is pretty ratable across the quarter. So a pretty linear growth rate from Q1 through Q4.

Correct. Now from an M&A perspective, what a lot of the questions we got from investors is when you think of M&A, what do you think of a size perspective, what's big, what's small, what are the capabilities you're looking for? And so really, when we look at building our business, our M&A strategy goes back to driving new domain, deep domain expertise into our client base that will allow us to increase our share of wallet, continuing to look at technology that's going to help us to transform the industry. And so that is clearly something we're interested in. And then the client set, we're looking for opportunities where we can buy a business that has clients that we can then layer in our services and technology and grow, as we've been very successful doing that for a number of different acquisitions. From a size perspective, we expect that we will buy in that $1.5 billion of revenue. We don't expect it to be all 1 transaction, although it could. The reality is it's probably going to be 2 or 3 that are going to be pieced together around the different areas that we were looking at buying, investing in. But it should give the investors a fairly good idea of some of the size and thought pattern we're going into from an M&A perspective.

And Chris, timing matters, right? So if we have been sitting here literally 3 months ago, that would have been a $2.5 billion M&A target. But we went out, we bought PK and with the growth that we expect to see there, pretty much retired $1 billion of revenue as we look out to 2025. No pressure there, buddy.

No, absolutely. And one of the things that we wanted to share with the Investor Day was really kind of giving this long-term picture because while we have known about sort of the number we want to get to that $10 billion number and known about what amount we want from an M&A perspective, we haven't publicly gone out and said it. And I think this gives us sort of -- or gives the investors clear clarity on what we see as the of the possible from an M&A perspective.

[Operator Instructions] Our next question comes from Jeff Mo at Mawer.

So I had a couple. First one is looking traditionally at your M&A, there's been at least a couple of I would call up acquisitions like the IBM Obviously, now with $1.5 billion over 4 years, that seems to exclude that type of acquisition, even though traditionally have created quite a bit of financial value from that. Just wondering if my interpretation is correct and why you might be shying away from doing that type of acquisition? And then second, I remember in the presentation that there was a chart showing the 3 levels of partnership and how as you deepen your partnership, the growth rates increase. I was actually also wondering if you could share roughly the percentage of revenue from each of these partnerships today and how that's been changing compared to, say, 3 years ago?

For sure. So the first question, I'll answer by saying when we went out originally, and it goes into those 3 phases of growth from how we think of our company history perspective and looked at transformation, we're very focused on building out sort of a global footprint, and we're very focused on building out capabilities. And we believe we've got that through the IBM acquisition, acquisition and the Convergys acquisition. And then certainly, from a PK perspective, from a technology perspective, the PK acquisition. And that's not to say that we wouldn't look at another large scale play. But the reality is that the capabilities and market that is out there isn't necessarily the most attractive to us right at this time. I mean there'd be a few things that we'd be very interested in. But the reality is that timing has to be right. And right now, we just don't see anything in the near horizon that makes us sort of think that we can do it. Also, when we look at those, we see a lot more duplication if it's like-for-like North American-based type of opportunities where we just be sort of doubling down on things that we already have. and that's never been our strategy. It's always about adding incremental value to what we can do and offer to our clients and offer a new potential plants who are coming into our business. So that's really how we think about it. Again, never say never. But the reality is we believe that there's other areas that we can invest in the new client base, new capabilities and new technologies for our business. In terms of the 3 kind of categories of clients, our philosophy is really about kind of moving clients up the ladder, so to speak. So if a client comes in as a partner, we're just not interested in a partner. It's about, okay, how do we get them to be an integrated partner, How do we get them to use more technology, how do we get them to use more of our services, how do we get multi-geographic delivery? And that goes back to sort of 48 of our top 50 clients use us in multiple geographies. And the vast amount of majority of the 50 clients also use a technology that we have developed or that we have installed and implemented and maintained for them. And then obviously, from the integrated partner, it's about becoming that strategic brand partner because we know that drives growth. Now while we don't say sort of the size of each of those areas, the reality is that the biggest part of our business is really that middle part as we're moving people to the strategic brand -- strategic integrated brand partners and the smaller part of our business is really sort of the partners, which is really the first feeder of our entry point, I guess, is the best way of putting it.

Yes. I think actually, if you look at the slides, Chris, it is the percentage of revenue is broken out there, Jeff, and for the CFO, and I'm going to fail it now, but I think it's roughly 20% in that strategic brand partner. The vast majority right around 2/3 in that kind of middle category and about only 13% in that lowest category. And where would that have been maybe 3 or 4 years ago, much higher in that lower grouping. I talked about the very purposeful reduction we made in the telecoms vertical. Some of that work that we're no longer doing certainly would have been classified there. And so it would have been a larger percentage for sure.

Yes. And one thing that we talked about on our last earnings call that got us very, very excited is really about the new economy companies starting with us and starting with technology, where I think 71% of our new economy companies now have technology as part of the solution. Historically, those new economy companies would have come into the partner level and have taken a while to get into the integrated partner level. But now we're seeing them jump in right to the integrated partner level and actually some migrating into that strategic integrated brand partner. So really, really excited about the trends that we're seeing.

Our next question comes from Tom Maher at Hilton.

I had a couple of questions, some of them are short term and a little bit longer term. First of all, in the very short term, and we're a little bit past the sort of panic stage of the pandemic, but I suspect that there was somewhat of a scramble to be able to work remotely and to address all the client needs. Just curious in the early stages of what you're looking at in terms of operational margin improvement, where there are some things that have to be sort of optimized that were done for experience versus how you would actually want them longer to turn. Maybe I'll start with that and then I have a couple of follow-ons.

Yes, that's a great question. Yes, absolutely. We saw at the beginning of the pandemic back in sort of March, April 2020, where we spend over what we needed to do and not the most efficient way, primarily to focus on supporting our clients' businesses and supporting our staff. That's all we cared about, right? It was simply kind of getting through what we need to get through. And as time has gone on, we've operationally and become more efficient in all of those things that go along around asset shipping and asset retrieval around training, around managing our connectivity with close to 150,000 remote individuals around the world. All those things, we become better and better at and believe we still have some room to grow. So there's no doubt about it. At the same time, as we've been kind of making those operational efficiencies, we have been investing much more around security and around other capabilities to make the work at home environment as similar as we can to the bricks-and-mortar environment. So there's been some trade-off, but we continue looking ways to be significantly more efficient in our operations, as well as, by the way, in our bricks-and-mortar operations as we go. There are some things we've learned from a work at home perspective that we've now been able to deliver in a bricks-and-mortar perspective as well. And your follow-up question?

Yes. Sorry on to mute. Sorry about that. Yes. So one of the earlier questions was discussing the cost of labor in the United States. And I was kind of curious about it from a couple of different dimensions. So 1 is more on the availability side in terms of how much that's driving customer demand to you. And then I thought a little bit more about it. And I'm kind of curious if that workforce is going to be more sort of changing over time. Do you have clients that say, regardless of whether we can get the labor, we're concerned about the continuity of that care, if you will? In other words, it would drive to your more automated/standardized performance metrics, et cetera. Just wondering how much that sort of a demand enhancement for Concentrix?

That's a good question. Frankly, that's not really the conversation that it starts with the client. The client starts off with capabilities and do you have the right footprint and the right domain expertise. And then it gets to, okay, where do you think we should deliver these services from on the solution from. And then when we talk about North America, clearly, there's a price and a time to ramp metric that goes in that might be different than if we were doing at nearshore and offshore. From a hiring and ramping perspective, we can generally do things offshore, nearshore faster than we can do it onshore, just because from a labor perspective of who we're going after. I think from a continuity perspective, that's kind of at the beginning of the conversation around what's that customer experience going to be and how are we going to deliver it. And what clients are really, really focused on is how to differentiate it. they don't want to replicate generally what they have either internally or with another partner when we start talking to them. They really want to figure out, hey, can we do something different? Can we sort of drive a much more frictionless, effortless type of engagement with our clients. Can we -- our customers, can we treat them in a sort of much more higher level of intimacy way and deliver long-term relationships with them. That's tending to be the conversation before labor. As we sort of pointed out on our earnings call a few times, labor is tight in North America as well as in some parts of Europe. And we have to be competitive in order to make sure that we get the talent that we need and we've taken steps to make sure that we do that. On the Catalyst side of the business, we've also made the comment that high-tech labor, there is a generally high level of demand globally. And so frankly, we have to be very, very focused on an environment for our people, making sure that we are a premium employer to drive the right type of retention, and we've been very, very successful. And that's 1 of the things that we actually were super thrilled about with the PK acquisition is because the 5,000 individuals, very, very deep domain talent, a lot of expertise, and frankly, well below attrition rates that we've seen in other companies in that segment. So super excited about bringing them into a part of the team.

And just 1 last one, if I could. And it's interesting, you were talking about some of your new economy clients starting at that sort of partner phase and then trying to move them up. And this is more from my understanding of that client base, if you will. I would think some of them are closer to sort of virtual companies, meaning they don't have an internal function. They're just launching. And I'm just curious if that happens where you're sort of there completely outsourced customer care versus some sort of just coming in once it's already established. Because I would think some of those at least the smaller, newer ones, never had an internal function, if you will, so I would go right to you. Just curious if some of them kind of evolve that way.

Absolutely. That's exactly what we see more and more of. I mean the 2 models that new economy companies go to is they might -- because of rapid growth go to a small boutique player who say, hey, we're going to start off with 5, 10, 15 people, maybe doing very basic level of service. But they quickly realize they need something that's got scale, operational excellence and can support their business on a global footprint perspective. And so we step in, and to your point, they generally outsource everything because they're solely focused on what their application is or what their service is or what their brand identity is. And so they love outsourcing, and it's a very robust growth area for us, as you've seen, as -- Now we're on a run rate of $1.3 billion annually in that new economy companies. And so really, really exciting. Companies that we start with very, very small do sometimes take a little bit to incubate. But to your point, we are starting by helping them figure out their global strategy, helping them to segment their customer base, helping them to figure out what that great customer experience is and benchmarking it to other industries and other competitors in that space. And so provide really a high level of high touch and high value when we first talk to them. And those relationships are very rewarding because they drive for a significant period of time and also power a significant amount of our growth.

Okay. Our next question comes from Alex Waldorf at Silvercrest.

I had a question about is sort of technology delivery inside the call center as well as with some of the more digital capabilities. I mean we've just seen -- and the question is sort of around how Concentrix thinks about delivering a best-of-breed experience using the technology building blocks that are out there. I mean, we've seen some consolidation or attempted consolidation at kind of the routing layer. We've seen other companies focus a lot on workforce optimization, software. And I'm just wondering to what degree the company as Concentrix has maybe like a federation strategy where you have -- you're utilizing different tools in different places. Or do you have preferred vendors that you're standardizing on based on maybe the ability to serve your needs better in some of the more digital forward areas? Or do you have bespoke solutions that you prefer? Just it seems to be an evolving landscape, and I would be interested in how the company thinks about staying up the curve from that standpoint?

That's a great question. And I hate to say all of it, but we really do take it across the board. And so to kind of give you some philosophies around how we think about things. From a technology standpoint, we really look at, can we develop something internally that's differentiated that we don't see off the shelf that we can continue to maintain and invest in for the long term. And that's really the 50 platforms or it's actually more than 50 platforms that we've developed. And that helps everything from how to manage a floor of staff doing all sorts of different types of services, how to automate perhaps their workforce schedule, so that they can do split shifts and half shifts and on-demand peak shifts and a whole lot of unique ways of managing sort of the workforce. That might also be in terms of how we do our customized reporting, where we build a data can bring all the data in and then do on-demand reporting. And so where we think we can be very, very differentiated, we develop ourselves. And the acquisition of PK has given us a lot of extra technology and talent that they've developed similar philosophies that we can now kind of put across our enterprise. When we look at partners to work with, if we believe, to your point, future forward, they're really cutting edge, they're doing things that we would never catch up with or is not something that we believe will be a differentiated service specific to our clients, then we'll partner. And we'll partner in really 2 ways. One might be on a client-by-client basis that they might have some domain expertise. They might be a standardization for a client. But if that client has no preferences, then we always have these sort of key partners that we work with to kind of implement the technology off the shelf and deliver what we need to from that perspective. And then in terms of the solution that we offer for the clients, is very broad spectrum. So we look at everything from how to do the workforce, how to kind of deliver the work product, whether it be voice, nonvoice, social media, how we handle that product, how do we turn it around, how do we deliver. How do we measure quality of that product. How do we -- when we look at a brand ambassador's Workday when they're sitting on a terminal, how do we shrink multiple screens from multiple different client systems down to 1 pane of glass, how do we automate as much as possible on that pane of glass so that it's easier and faster and more efficient. How do we use machine learning to kind of learn what that person is doing to kind of create better knowledge bases so that new brand ambassadors are coming on to the program can reach speeds to proficiency faster. And that kind of continues all the way along the way as we deliver services for our clients. And to your point, they can be very, very They can also be very standard where we have sort of a clear path of saying, okay, year after this, boom, boom boom, here are the building blocks and let's implement what we do. The exciting part about bringing Catalyst in the conversation is not only can we do that, but with the expertise that Catalyst brings around API management around data around AI, around a lot of the stuff that is in the back end writing to systems of record, we're actually creating the systems of record and then driving the data back and forth it really provides a lot more intimacy to that type of customer journey that we can deliver and that customer experience that we can deliver holistically versus a lot of very disparate systems. So again, I feel like it's a real game changer of what we can do to drive a better customer experience.

[Operator Instructions] We have a follow-up I see from Ruplu.

I just wanted to ask a couple of follow-on questions. The first one on CapEx and free cash flow. Coming back to the fact that you still have 65% of your employees working from home, I realize that, that number probably will come down as more people get back to the call centers. But if we look pre-pandemic, I think you only had like 5% of your staff working from home. So presuming that a significant portion of that staff remains working from home, as the COVID spacing requirements get relaxed, do you think you'll have any underutilized capacity? And how would that impact your CapEx requirements going forward? And if you can touch on free cash flow expectations as well?

So why don't I touch the first one, you take the second one. So Ruplu, the reality is, is that we have and we continue to always look at our footprint from delivery and payer space down where we don't need it and invest in new space where we need it. In fact, the last 2 years, we have taken out thousands, thousands, thousands of seats within our enterprise in some places, primarily North America and other places where work at home is very, very mature. And then we've also added thousands of seats in some of the new emerging countries as well as some of the new countries that we've got on into for the last year. So it does somewhat balance it out. But this is something that literally look at continually to make sure that we've got the right footprint for our business, not only for now and later. We also tend to overspend in our facilities to make sure that the right environment for our team members so that they're vibrant, they're live, they have lots of social spaces and gathering spaces. And so really, they're inviting for our team members to come into and work within the environment. And I'll turn the second part of the question over to you.

Yes. So the result of all of that, Chris, is we do still see Ruplu, free cash flow at roughly 3% of revenue. That probably is lower than where we saw it 3 years ago when we were so much in brick-and-mortar. So we see that coming down to roughly the 3%. We're really confident in our ability to generate strong free cash flow in 2022 and beyond. So we think that, that free cash flow will be elevated from the pro forma for PK, roughly $380 million of free cash flow we saw in '21 towards -- not all the way back to a metric I used to use in the business where free cash flow would equal 100% of non-GAAP net income, but we'll move in that direction. The reason we might not get all the way there is we're seeing really strong revenue growth, which comes with some investment needs in working capital. And so that has a little bit of an impact there. But we'll get closer to that metric in 2022 and probably even closer beyond '22 as we move forward.

Got it. Thanks for the details there on that. Just on the last one, I want to ask you about the disruptor clients. You've mentioned that several times, and that's one part of your growth strategy for that 9% organic growth. I got a question yesterday which was pretty interesting. And what I'd like to do is to drill into that a little bit, if we can. I mean, do you have disruptor clients, both in developed markets as well as developing markets? I mean, some of your competitors have tried to create a business going after developing market disruptor clients. And typically, those customers are more demanding and more cost sensitive. So how are you able to make a profitable business out of that? And then is there any risk to -- depending on these high growth disruptor-type clients. Because essentially, you're kind of depending on them to grow to get their funding. These are probably venture capital-funded clients. So do you see any risk in that portion of the business?

Yes. So good question, Ruplu. And frankly, a lot of things there. From the new economy perspective, we actually see these clients, similarly globally, I mean, we don't have clients who want to pay us more than they have to, and we don't have clients who don't want us doing more than we did yesterday today. It's a demanding business, and they expect the best, and that's what we're focused at delivering. And new economy clients are no different. What we like about the emerging markets and new economy clients and the emerging markets as a whole, is that there is no labor arbitrage. They are looking for new technology. They're looking for higher automation. They are looking for better strategies around thinking. And that helps us kind of globally take those best practices and roll it out everywhere. And also the new economy clients in those that we are focused on getting and as Monica talked about is 27% of our new economy clients, they're not insignificant. I mean, when they've got a market cap of over $1 trillion, these are well-funded start-ups. Some of them have gone public in the last 1.5 years to great fanfare and done quite well. So they're quite established and certainly demanding, but frankly that's okay because that makes us as a better organization to support them, and we like that. If you also look at one of Monica's slides that she went through where we talk about the future of the business, and this is not a year or 2 years from now. But over the next sort of 5 years, we really do see sort of the new economy clients and sort of these enterprise clients kind of evolving into sort of this evolved converged enterprise, where the types of demands, the types of services, the types of how they engage customers will be very, very similar. Because there's no bank right now or most banks are not sitting back right now, letting fintechs kind of take their customers without a fight. And there's no sort of software companies who are letting sort of new economy disruptor companies come up kind of sit back and take their share. They're fighting equally as hard. And from our perspective, if we're supporting both of these client bases, then that growth rate at some point, and again, not in the next year or 2 or 3 years, will converge, we believe, and helps drive us continuing forward. So it's really, really important to pick clients. And we do believe you need to support both the enterprise clients and the new economy clients to have longevity in this business. In terms of clients not getting funding, in terms of clients who are going to be challenged in terms of we spend a lot of diligence with these clients to try and make sure that we're picking the ones who are going to be the real leaders in the space. And so far, that's worked out, although we have had clients who have lost funding in that space and unfortunately, they go away. Unfortunately, we've also had clients in our enterprise space have challenges and either be bought or go out of business over a period of time as well. And so really, that health of that client and that picking the right client is so critical for our growth strategy, and we think we're executing very, very well on that right now.

All right. We have a follow-up from Jeff Mo.

A couple of more questions from me then. First is around go-to-market. So with all the acquisitions with the spinout, I'm just wondering, today, what does your go-to-market look like? How large is the team? And what are the different ways you're trying to use to capture net new logos?

So great question. I mean, first of all, our team across Concentrix and Concentrix Catalyst is probably close to about 200, give or take. And we have a very focused list of clients that we want from a new economy perspective and an enterprise perspective. And it goes to clients who want to invest in the brand, they're looking for a differentiated offering. They like to buy in solutions and they also truly believe in a long-term partnership. So we have a very defined list of clients that we want. And that's also, by the way, how it helps us from an M&A perspective because when we see a target such as PK that had a number of clients that we're very, very interested in as well as existing clients, it makes it so much easier to know that's the right acquisition to do. But we have this very defined list. And then we really kind of go through a very set process of kind of qualifying, starting discussions, having a relationship to Dinesh's point, there might be some early consulting or design work that we do to kind of get them engaged. And then slowly, you build that relationship and start to kind of look at some of the media work that they might have to do. That sales process, and I'll comment on the Concentrix side and get Dinesh to comment on the Catalyst side. On the Concentrix side, pre-COVID, that could be anywhere from 12 to 24 months, long process, lots of checks, lots of engagement prior to even writing that first contract. Now with COVID, it's actually sped up a little bit. We're seeing those decisions made, and I'll defer to Monica because she looks after all the pricing. But generally in 3 to 6 months, we're seeing that kind of speed up from a decision-making process. We expect it to get a little longer as things get more stable and steady as we come out of the pandemic. But Dinesh, from a Catalyst side?

Yes. I think if you really look at -- I think Chris touched upon this in the beginning, which is the fact that we are very selective about the customers we want and what we go after. So after careful planning, we select the customers that we want to go after, and it's a combination of new economy clients, it's a combination of large enterprises that need -- look at what the spend -- additional spend is happening. And the way Catalyst has been able to capitalize on the opportunities by focusing on large digital transformation programs within these customers. So even though we are project-based, once we enter into a large digital transformation program, that's a multiyear program that keeps on giving. So we work with them as long as the deliveries are good, as long as we continue to service them well, those opportunities start becoming bigger, larger. And over a period of time, you're able to build a meaningful large customer. The second piece of this is we are very, very excited about the Concentrix list of customers, and we just started the joint go-to-market discussion. I think there's a huge opportunity for us to combine forces, look at end-to-end. We talked about one of the case studies where -- we lead with strategy and design, we build out the ecosystem and then working with Concentrix kind of have the entire global operational piece fit in as well. I think this is a tremendous opportunity in front of us. And the cycles, we are in a super cycle. We need to be able to capitalize it.

That's really helpful. And my second question was around the -- at least the perception in the marketplace that you -- your company perhaps is maybe less strong on new economy type ability to deliver work. So certainly, there's companies focused only on that, for example, TaskUs, ECX, has come to the market recently. They obviously have a higher multiple than you. But even some traditional companies like Telus International or Teleperformance, also having higher multiples seem to have at least at or marketing around that. So I just want to hear your perspective, do you feel there's still gaps in your ability to deliver? Or maybe when you recast the presentation, your Glassdoor scores just way lower. So DoorDash doesn't want to come to you. Could you like speak to that dynamic as whether or not Concentrix truly is behind the other players in terms of capturing new economy revenues?

Yes. All I will say is that we're probably pretty poor on the marketing side. We have great competitors set in the new economy side, and they've done a great job. But the reality is that when you look at our new economy clients, we're on a run rate of $1.3 billion, which is bigger than the vast majority of those people you mentioned, even combined, when you look at some of the competitors. And so we think we're doing very well. We think the market demand for our services in the new economy space is very, very strong. We continue to add new economy clients every single quarter across a broad spectrum of verticals, geographies and services that we offer. And so I wouldn't say that. I would say we're actually leading the way in a lot of these different areas and have been leading the way for some time. We just have not necessarily done the best job of telling investors about what we're doing and how we're doing it and why we're growing in this segment and why it's important to us. And in fact, if you look at our growth rate in the last quarter, I don't want to misquote, so I'll look to Andre, it's about 48...

48%.

48% year-on-year growth in our new economy clients at that higher run rate to get to the $1.3 billion annualized run rate. So we're very excited about this space. We think it resonates really, really well. We think our clients I appreciate the services that we do. And we continue to win, time and time again, from some of the smaller players where the client is looking for global scale, much more operational rigor, much more understanding of regulations in a lot of different countries we operate. And in the fintech sector, specifically sort of the maturity levels that we have to do for our large enterprise banks as they grow into that and they're under more regulatory scrutiny. So honestly, we think we're doing very, very well in that new economy space.

Makes sense. And sorry, I just wanted to follow up on something that Dinesh said earlier. You said you feel like you're on a super cycle right now. I assume you mean for outsourced, yes. Maybe you could just speak a little bit more to that point about what maybe is different? Is it because of COVID? Is it because of Web 3.0? And kind of what are the things that point you towards saying this industry growth rate is now different than it was 5 years ago?

That's a great question. I think, first of all, clients through COVID have changed some of their buying thoughts and buying habits and also kind of reflected on their own delivery mechanisms. And some clients had challenges getting their own infrastructure up and going during COVID when it was going to work at home. Some of the clients had capacity challenges where they had, sort of, concentration in a few different areas around the world and weren't able to necessarily deliver services. And so they really looked at their partner relationships somewhat differently. And the partners who did well they said, "Wow, we want to move more business to you and maybe even business that we've never outsourced to you." And partners who did poorly sort of were slowly kind of wound down over a period of time. And so when we took a poll of our clients back in July of 2020 about how we performed during COVID, 96% said that they would grow more with us based on how we developed, delivered and drove their business during sort of the shutdown when they had challenges within their infrastructure. So that's kind of changed the mindset of how clients, I think, are looking at sort of partners in general and the benefit of outsourcing. Now the other factor that also came in is that a number of clients are trying to figure out how to make the cost structure more variable of work that was historically done internally. And so that has also driven a lot of conversations where clients are saying, "Okay, you know what, we've got these fixed costs, what can you do? What can you make more variable and doing it?" The super cycle that Dinesh kind of talked about and really, we've seen as well and one of the reasons why we went out and made a fairly large acquisition in the IT digital services space, is that the scarcity of labor and scarcity of capacity during COVID and the need to service customers at a much higher rate and remote rate really got clients to think about how to reinvent their digital infrastructure, how to think about servicing clients -- sorry, customers differently, and needing to speed up those types of implementations as quickly as possible. And a good example that I used, gosh, almost a year ago, was we had a tech client, who we had literally talked to about chatbots and conversational IVR for probably a year. And they said, "Wow, we're thinking about it, and we're not sure and we're not sure how to get our IT systems working the right way to support what you need." And then as COVID hit, they suddenly lost so much capacity of just staff of their own teams that they said, how quickly can you get this done? And we literally had it up and running in a few weeks, and we had a number of clients to do that. And similarly, PKs are at the same thing over the last sort of 2 years, they've seen sort of much larger growth rates than 20%, driven by this need to very quickly deploy digital solutions. Now we're seeing sort of the big heavy lift changes that are happening to really change how companies function with their data internally, that I think we can also take advantage of going forward.

Our next question is from Ketul Nathwani from Fidelity International.

Thanks. Just had a couple of questions, if I may. Firstly, on the M&A. Just specifically, I wanted to dig into kind of how you get to a $1.5 billion number. I mean, presumably, it's a little bit more thought than just gets you to a nice round of 10 by '20 to '25 sales. So maybe you can discuss, I guess, on one side, kind of the underlying assumptions, how much knowledge of likely available executable targets went into it. And then on the other hand, how you thought about kind of what the balance sheet capacity side of the equation would have looked like in order to add $1.5 billion sales. Because if you just look at the PK multiple that it would stretch your balance sheet to do another $1.5 billion of those sales with just debt. So just kind of wondering how you think about it and whether you consider issuing equity as well to kind of execute on some of the things you're looking at.

Yes. So great question. So again, when we looked at where we are growing and we look at sort of 3- to 5-year cycles and we started a couple of years ago when we did the Convergys acquisition, thinking about what's sort of the next 5, 6, 7, 8 years look like. And what we kind of modeled was, as an industry, how is it growing? Which competitors do we see are going to grow? How big are they going to grow? How big do we need to be to be relevant at that size and at that time? What kind of capabilities do we need? If we build those capabilities, what kind of revenue growth would they see and help us grow? And so a lot of the thought went into kind of getting to what the size of relevance would be and to be the market leader by 2025. And it so happens that it's around $10 billion. And so there was some marketing put in place to say, "Hey, let's pick $10 billion." But it was slightly a little bit over than $10 billion was when we did our math kind of calculations around it. As Andre said, when we bought PK, that certainly retired a portion of it. And now we have about $1.5 billion left to sort of either grow faster organically or do from an M&A perspective. When we looked at the targets around what we look for, clearly there's a timing element, right, both from a multiple play perspective as well as what's available, as well as who would like to do something, as well as what you're capable of doing. And so we look a lot across the areas that we're interested in, both from size, client base, capabilities, technology, and have sort of a fairly, kind of, high-level view that's clear around where we think we're going to add in. And to your point, is it all going to be IT digital services? It's not. From a multiple perspective, that would stretch our balance sheet. Would we be interested in doing something with equity? We've never said no. But is that sort of the first thing that we'd go to? Probably not. So it will be a combination of different types of services, client bases and capabilities. It will be sort of a blended multiple is the best way of thinking about it. And depending on the opportunity, if it was really transformative for us, and we really thought it was worth it, would we look at a cash and equity combination? Possibly. But again, we believe that we have an ability to grow our multiple and think that we are going to concentrate with that and cash as we go forward.

And an ability to carry a decent amount of leverage given that we have such strong free cash flow. And a great example is [indiscernible] was a little bit hidden as we were part of SynXis we levered up pretty significantly in the Convergys transaction and paid that debt down and brought leverage down pretty quickly through a combination of debt reduction and then, of course, increasing the earnings. And so we got our leverage down at the spin. It was 1.1x or something like that. So our preference, I think, will always be to use cash in transactions up into that 2 point, 3x leverage, maybe a little bit higher, but the thought that we can delever quickly, but we'll look at other strategic options if they drive the right returns.

That's really helpful. I just had a quick second question, if I may, on just kind of what you're assuming in terms of the kind of margin evolution. So clearly, the last couple of years has been a pretty big meaningful step up. And then just kind of with the trajectory moderating, I'm just wondering kind of what the headwinds are because I think about kind of strategically where you're going, bundling more technology and growing brands effectively than greater than adding headcount and delivery centers and growing kind of more complex, higher-margin work like what PK do, surely, those should be all accretive to sort of margin evolution over time. So just kind of wondering where the offsets are.

So the offsets, I mean, clearly, labor is our biggest cost and will be for some time. So we look at what the labor markets are and have kind of that factored into where we need to be to be competitive. I think also, we tend to invest heavily in technology, and some of those platforms will take a while to mature. Some of them will mature very, very, very quickly. But if you look at all the initiatives that we have and all sort of the type of technology we're bringing to bear, that is a continued amount of investment that we're sort of unapologetic for because, frankly, it drives the right stickiness with our clients, and I guess it gives us new opportunities to grow. Other headwinds that we deal with from time to time, we're still kind of figuring out when COVID will get to a normalized state. We call out while we don't exclude those from our numbers, we call out what we're spending on COVID on sort of a quarterly basis. It's not insignificant. And so we continue to see those, sort of, expenses kind of come through our business. Hopefully, they'll go soon. But we have those types of headwinds as well within our business. And then lastly, just the overall cost of business. I mean just in terms of the other insurances and other types of expenses are not insignificant. And we see those kind of continuing to increase as we do our best to kind of offset that with other leverage in our business. But those are the type of headwinds that we look at and build into our models.

But you're right to conclude, yes, we're really proud of where we've taken our margin to the steps we've taken to get it to where it is. And those are the things that give us the confidence that we can get to that 14.5%.

Correct.

Okay. It appears that there are no more questions. [Operator Instructions]. I see Jeff has a follow-up.

Jeff, I love it. What's your question?

I love to challenge you guys, Chris, I do a good a -- it's a pleasure. I'm curious then on the spin-off from SYNNEX. So kind of 2 related questions here. One is in the whatever it's been 12, 18 months that you've been alone out. What are some things that you feel you're more able to do now than before, if anything has changed? And then second, how has the team and the kind of decision-making structure or the pace of decision-making changed as an independent company versus under SYNNEX?

Yes. That's a great question. I'll start with the second part. I mean the pace of decision-making is faster. I mean clearly, we have one less layer of management over us. We were effectively operating autonomously as part of SYNNEX. And so we had our own, sort of, finance, tax, treasury and so forth and so on. But we still report the CEO of SYNNEX and then obviously, the SYNNEX board. And so taking out sort of that one level, definitely kind of speeds some up. We also have a very, very engaged Board of Directors who are just absolutely fantastic to work with, a lot of experience on scale and growing and in this type of industry. And so when we're talking to them, they understand the business and they're able to kind of give feedback very, very quickly. Unlike our past board, which was an amazing Board, but their core focus was on the distribution business. And so when we would talk about going into new countries or talked about new services, a bit of a different conversation and some more education that had to go into it. So we found some benefit from that. In terms of running our business, I mean, the reality is, is that we're able to be more aggressive from an M&A perspective. And clearly, we've demonstrated that with the PK acquisition. We're able to be more aligned to what we need to do for our staff base around ESG and around things that resonate with our staff base, which was slightly different than our parent's company staff base. And so I think those things have allowed us to be a little more independent and different in the last 12 months. The general operational rigor, reporting and sort of the day-to-day management of the business, fundamentally though, has not changed. We were running it like this well before we separated and became our own public company.

All right. That makes sense. I want to go back to a part of a question I asked earlier, so specifically around employee reviews and the culture of the firm. So 2 of the new disruptors at IP recently are PDCX and [indiscernible] made a really big deal about how strong their employee reviews are on various forms like the Glassdoor indeed. And then when I look at your scores, a little bit lower on that front. To what extent do you think employee ratings like that do reflect culture? And how important is it in your industry?

I think culture is incredibly important in our industry, although I would look at slightly different metrics to be quite candid. I mean what we look at is we look at our own internal CSATs from our staff. And our goal is that 85% of our staff or above have a high promoter score within our business and they are enjoying and engaging in what we do, and they believe they understand how they add value to the organization and they continue to plan to be with us. And then we look at our attrition scores. And what I can tell you is that from our attrition scores across sort of like-for-like businesses, like-for-like type of operations, like-for-like countries, we're best-in-class in almost right across the board. And what I can tell you from our staff engagement scores, we generally teeter between that 85% to 84%, 83% and from an engagement score perspective. And so we're very happy, and we're very focused around what we do. And I think that gets recognized when you look at third-party platforms that survey and actually go out and proactively done versus places that actually solicit scores or that people are incented to kind of score, the reality is, is that we won for diversity, we've won for culture, we've won for innovation, we've won for team building, we've won great places to work in many jurisdictions that we operate in. And so to us, culture is something that's very deeply embedded. And we think we do a very good job at driving the right culture for our team members. Can we do better? Absolutely, always can do better, but very proud of what we've accomplished. And that's really the metrics we look at when we think of our corporate culture and engagement scores.

And then specifically on culture, can you speak to the Convergys integration there? Because they perhaps had some lower scores. And obviously, you brought on a lot of staff from that acquisition.

Yes. So I mentioned that in our M&A slide about One Concentrix, the reality is we have a very clean and clear methodology around how we bring people into our organization, and it started with our IBM acquisition. If you think about it, we were sort of a scrappy, young -- gosh, decade-old company with about 11,000 people and we went out and bought IBM, which had about 30,000 people that came across as part of the IBM transaction. Very different culture. And we really developed this methodology to bring people into our culture, where we do road shows, we talk about what our beliefs are. We talk about what's important to us. We talk about how we treat each other and how we treat our clients. And we're very non-apologetic about it of saying, "Hey, if this isn't for you, raise your hand and no worries we'll take care of you. And frankly, we will exit the business and you'll find something that matches you. You're not a bad person, just not a fit." But what this drives is cohesion, to what our goals are around as an organization and from a culture perspective. And every time we bought a company, what we've seen is an increase in CSAT. We've seen an increase in ESAT, we've seen better communication around the enterprise. And we see sort of that alignment around our culture as being a key driving factor of what we do. And so we've been very, very, very successful with our acquisitions about bringing that in. Now Convergys and IBM might be examples of cultures that were slightly different. PK was one of the cultures that we believe is incredibly aligned. And so when we started talking to due diligence, it was like talking to a mirror, and that was really, really powerful for us. And so as we look at acquisitions, if we're paying a premium, paying a multiple, we want that closer to our culture. If it's something that we're going to change and move some things around, then we go through our culture process to align people to our said culture. But very, very kind of clear and driven methodology around how we do that and the benefits we get from it.

Thanks, Chris. Maybe my final question here is, so as the CEO, obviously, you have a very strong team, and I presume a lot of things are delegated out. But looking over the next 1, 3, 5 years, what are the maybe key 3 or 4 things that you are trying to drive and spending your time on to make sure the organization gets right?

That's a great question. Number 1 is culture. We just talked about it. We believe culture differentiates us and how we think. And for those of you who don't know our culture statements, our culture statements are all about being bold, having contrarian views of running a business, being disruptive in the marketplace, valuing knowledge, openness and transparency, having high integrity, right, and all contributing in being 1 Concentrix and being fanatical about our clients and staff. . And so from my perspective, one of my key initiatives is driving that culture. We have incredibly bright people in our business who come up with amazing ideas on a daily basis. We have incredibly bright people in our business who really are helping drive the transformation that we talk about and are leading the key studies. There's no help needed from me on that. Amazing, amazing, amazing, amazing team, right? My job is helping drive a culture, being the ambassador for the business as we integrate and talk to clients, looking from the M&A perspective with a team of individuals that help as we look at targets for that. And then really making sure that we've got the right succession planning in place up and down our organization, which we've done extremely well at over many, many, many years. And so you are right, incredible team, I think world-class and look forward to kind of continuing to grow the business with them.

Sorry, just to summarize, so you spent -- you said culture #1 and you expand upon that a lot are things that you folks on.

Number one. Culture is number one. Looking at where the industry is going is really #2, which ties into capabilities and from an M&A perspective. And then number 3 is really working with our clients on where do they want to take their businesses and helping them. Well, actually, I think we're coming up to time. So I did want to thank everybody for their interest in Concentrix today. It has been hopefully very useful for you to understand a lot more about who we are and what we do. And hopefully, a really deep understanding of where we're going. We believe how you create the future is really investing early, and we've been doing that for many, many years. And hopefully, you see some insight to how we want to continue to be a leader in this industry by where we're going to invest in the future. We look forward to spending more time with you at our quarterly analyst calls and investor calls after that. And certainly, if you have any questions after this, please feel free to direct them to David Stein, our Head of Investor Relations. Thank you again. It's been a real pleasure and look forward to talking to you soon. Thank you.

Thank you, all.