TWST: Could we start out with a history and an update on TeleTech?

Mr. Tuchman: TeleTech was founded in 1982. We pioneered the industry by helping corporations handle large, complex, customer-initiated interactions across multi-channels and locations around the globe, 24 hours a day, seven days a week. This year will mark our 20th anniversary, which we are celebrating by breaking the $1 billion revenue mark. Today, TeleTech has 31,000 employees operating in 55 centers that currently are housed in 12 countries and are serving 27 different countries, speaking 26 different languages.

TWST: What has gone on at the company over the past year or so that investors should focus on?

Mr. Tuchman: I think last year was a challenging year. It was a year when TeleTech needed to return to basics. It was a year in which we rationalized some of the new-economy initiatives the company undertook that have proven to be not fruitful, and return to our core offerings of providing our services to a very limited client base, primarily the Global 1000, and providing our capabilities under long-term contracts. That's what we've been able to accomplish in the 2001 timeframe. We've also focused dramatically on reducing our cost structure. We brought our SG&A from about 24% down to approximately 21.5%. We've committed to the Street that we would bring it down to 20%, or below, by mid-2002. We are confident that we are on track to making that a reality. We've also streamlined our corporate overhead, reducing it from roughly 6% of revenues to roughly 4% of revenues. So we've had a pretty significant impact on that component of our cost structure. We've also talked about needing to reanimate our big deal pipeline. We went from having a pipeline that was an assortment of small deals on a global basis, to a pipeline of very significant opportunities and have demonstrated the benefits of having a large-scale pipeline by recently announcing a $1 billion-plus deal with IBM and Nextel in an eight-year contract. In summary, that is what we were able to accomplish in 2001 and the first quarter of 2002.

TWST: How did you get off track?

Mr. Tuchman: That's a question that is a bit difficult. We got off track because the Board and myself decided that we were going to bring in a new management team and that I was going to move into the chairmanship role only. In hindsight, we've realized maybe that wasn't the best decision. So we made the decision to change course and in doing so, we were able to really change the focus of the company. The previous management team was here for roughly 16 months and focused on productizing TeleTech from a solutions provider that we've been historically known, to more of a productized services provider. Although that was beneficial in winning numerous small deals, it really didn't serve us well in the large deal pipeline. So we returned to our roots, and are focused on the large deal pipeline. In addition, there was too much capacity built and too much capital dollars put to work. Because of the unusually high attrition of the dot-coms and the new initiative clients, we ended up in a scenario where our capital in 2000 ballooned to almost $120 million. In 2001, I was able to slash that by more than 60% to approximately $55 million. The result is we are now saddled with excess capacity. That's the bad news. The good news is that it creates significant operating leverage and we think we're doing a very good job of filling the excess capacity. The excess capacity is creating a drain on our margins, so we are very hopeful that we can get that excess capacity filled throughout this calendar year.

TWST: As we look out over the next 18 months, where do you see the biggest opportunities for the company?

Mr. Tuchman: I think what you're going to see over the next 12 months is a very significant focus on our European operations. Europe has not been a stellar performer for us. Quite frankly, not only has it not been breaking even, it's actually been losing money. North America and Asia Pacific are doing well and there is going to be a significant focus in making sure that Europe becomes a profit contributor. In addition, South America, which excludes Mexico ' Mexico is doing fantastic ' due to the Argentinean crisis, is also not performing well. Our goal is to get Argentina to a bare minimum of breakeven, which is where Brazil is currently operating. We need to get Argentina in the same situation with the goal of seeing it turn a profit in 2003. So I believe there is going to be a tremendous amount of focus in taking the non-performing assets and making them perform as quickly as possible. There will also continue to be a significant focus on continuing to build our large deal pipeline not only in North America, but also around the globe. Lastly, we'll continue to focus on cost reduction and streamlining our operations. Nothing is more important to us than improving our operating margin to where we believe ultimately it needs to go.

TWST: In this kind of economic environment, are those mega deals available?

Mr. Tuchman: Absolutely. As a matter of fact, this economic environment breeds those deals because large corporations around the world are running out of things to do to bring their cost down. As an example, in the Nextel-IBM deal, there is $1 billion in savings during the first eight years of the contract. That translates into approximately $125 million per annum in savings they will realize the first year of operations. Those are real dollars that accrete to EPS improvement and therefore, it's very attractive for the Fortune 50, as well as the Global 1000, to hear our message, to meet with us, and to talk to us about how we can have a similar impact on their business.

TWST: Are you getting a hearing?

Mr. Tuchman: We are having no issues at all with getting a hearing. Our only issue is our own internal bandwidth and our ability to make it across the globe and meet with all the various different opportunities. I would say that our pipeline of opportunities, and of large corporations wanting to meet with us, is at an all time high. We do believe that part of that is due to our brand equity and the experience of being able to perform for companies like Ford Motor Company, Allstate, American Express, Citigroup, Nextel, Qwest, Verizon, etc. Another part of it has to do with the state of the economy. They're looking for a player that's large enough and has the scale to take on large projects where it involves the transitioning of potentially thousands of employees. We've clearly demonstrated that through all the different contracts we've been able to acquire over the years and renew.

TWST: So it's not new to you.

Mr. Tuchman: Not at all. What we are seeing as a potential trend, but it's too early to say, is ' historically, these large corporations have tended to outsource anywhere from 5% to, let's say, 20% of their overall volumes. The rest they've chosen to maintain internally. What we are now starting to see, like in the Nextel arrangement, is that more corporations are starting to see the economic value of outsourcing all of their relationship management capabilities ' not only front office, customer care capabilities, but back office capabilities. And that's really the spirit of our focus, going forward ' trying to limit our client base and win management of the entire customer base, both front and back office.

TWST: Who are you competing with for this business?

Mr. Tuchman: Historically, we have been always mis-categorized into the tele-services space. I think now the Street is beginning to acknowledge that there are some very fine companies out there but they really do provide a different kind of capability than we provide and they serve a different niche. Wall Street tends to believe that we compete more with other companies in the call center space, when in reality we don't compete with them at all. The competitors that we are starting to see crop up are companies like EDS, IBM, Accenture, PricewaterhouseCoopers, and Computer Science Corporation. I think the good news, or the silver lining is ' the majority of them, thus far, with the exception of EDS, have said that they really want to be in this business and they'd like to be the prime and provide technology and systems integration capabilities but they don't actually want to provide the people and the infrastructure. Therefore, they'd rather subcontract it like IBM has done with TeleTech, the way Computer Science Corporation has done with the State Department and TeleTech, the way SAIC has subcontracted with TeleTech for the Brady Bill for the FBI, etc. We believe these companies have the ability to become valuable channel partners to us, versus competitors. However, that being said, EDS has the ability of being a formidable competitor. They clearly want to be in this space and they want to provide a complete capability without having to go to the outside. Therefore, we're seeing them in roughly 15% to 20% of the deals that are out there. The majority of the deals that we go after are not RFP-based and therefore, we are actually creating the demand. Therefore, it's safe to say that in a high percentage of these opportunities it's a make versus buy. Meaning, are you going to partner with a company like TeleTech, or, are you going to try to work through a third party consulting firm that's going to help you get there on your own? What we are finding is that many of these companies have already gone through that evolution of working with consultants. They did not accomplish what they needed to accomplish. They're now looking to us to be able to assist them in helping them cross the river and get the value out of their customer base that historically they have not been able to get.

TWST: What kind of growth are you capable of generating over the next few years?

Mr. Tuchman: That's a question from a Reg FD standpoint that we try to stay away from. But what I will say is that historically TeleTech has enjoyed a compound annual growth rate over the last six years ' if you exclude last year ' in excess of 40%. Last year, because our growth rate was, quite frankly, not satisfactory at all, and was, for the first time, in the low single digits, our compounded annual growth rate was approximately 38%. That being said, what we've communicated to the Street is a conservative 12% to 15% growth in 2002. We believe that it is entirely possible that the company could, in fact, grow beyond that rate, but at this point in time, with the uncertainties in the economy, as well as the uncertainties of who we are actually at war with and what impact that could have on the economy, we're choosing to keep more of a conservative posture and guide in a more conservative fashion.

TWST: As we look longer term, what kind of operating margins should you be capable of generating?

Mr. Tuchman: We believe that next year ' 2003 ' it is possible for us to achieve margins in the 10% range. Our goal would be the following year to be able to see if we could actually start to approach the 12% range. Next year, we see a couple of hundred basis points of growth opportunity in operating margin and the following year, another 200 basis points.

TWST: What's the risk here, other than the general economy? What could keep you from achieving your goals?

Mr. Tuchman: Many people have assumed that our risk is primarily execution. I think history shows that over the last 20 years, execution has really never been our risk. Our real risk is the ability to successfully sell, market and close large deals, and bring them on in a timely manner. That is what I lose sleep over and is one of our most significant risks. I would say the second risk is our ability to deal with the European issue in a timely manner. Those are really the two risks at hand. The company continues to renew all outstanding contracts. We've had virtually no revenue attrition year-to-date, albeit very early in the year, and we are not seeing any indicators that there is any attrition in the near term, other than what we've communicated to the Street as clients that are on our watch list. So I think that we feel fairly confident. We think it would be premature to have a bullish attitude because let's face it ' we came out of a challenging year. We want to demonstrate some credibility and so we're intentionally laying low and being as conservative as we can.

TWST: How do you feel about the value the market is putting on the company at this point?

Mr. Tuchman: The market, over time, is a very efficient place and the company will be valued how they see fit. Right now our stock, based on the information that the market has, is probably trading in a range of $12 - $13. Based on the information the market has, they probably feel that's fair. That being said, I think that as we communicate more information, I feel very confident our stock will do what it needs to do. I guess that's my way of saying to you that we are going to put one foot in front of the other and we're not focused on our stock price. We're focused on execution and performance. We think that will speak for itself and that the stock respond accordingly.

TWST: So that will be the key driver ' the numbers that you're putting up?

Mr. Tuchman: There is no question in my mind that as the market sees us meeting our numbers, and as they see the true leverage-ability in our model, and as they do better analysis of how well we are truly doing in North America and Asia Pacific and they realize that we're outperforming the entire industry as a whole, I think they will come to the conclusion that the margin we are showing is in fact related to the issues I have already mentioned. There is nothing broken about the company. We just simply have to get to some of these other areas. Mind you that March 22 of this year will be the full year that I have been back on board full- time. We have accomplished every goal we set out and in most cases we've exceeded the goal. I'm looking forward to getting past the stage of blocking and tackling in North America and expanding my reach out to other regions that can use some of the executive leadership's experience and focus.

TWST: Do you have the balance sheet in place that you need?

Mr. Tuchman: Absolutely. Our balance sheet is by far one of the strongest balance sheets in the industry. We are in a net cash positive position. The company has approximately $75 million to $80 million in debt and we have a cash balance on hand of $105 million. Therefore, one could say that we are a company that doesn't have debt. We think we are under-leveraged, and so we think that the balance sheet not only handles our internal growth nicely but gives us opportunities in the future, from a potential acquisition standpoint, as well.

TWST: What would you look for, if you were looking at acquisitions?

Mr. Tuchman: We are very focused on Europe right now, so Europe would certainly be of interest to us. Other areas would be where we could buy capacity at a lower cost than we could build it. We are certainly not looking for anything that wouldn't be immediately accretive. We believe there are opportunities out there. Also, I will say acquisitions are not a focus of ours right now. We are not on the M&A hunt and we are not focused on it. We believe there is more than enough opportunity to grow this company organically and to get us to a multi-billion-dollar company. We'll be opportunistic and if opportunities arise that make sense for us to look at, we'll take a look.

TWST: If you were sitting down with some potential longer-term investors, what two or three reasons would you give them to take a look at TeleTech today?

Mr. Tuchman: There might be more than two or three, but I think you have to take a look at what the demand curve is for customer management solutions from an outsourcing perspective. There is no question they are going to continue to accelerate. You have to look at the fact that our competition, for all intents and purposes, is going away and that we are truly starting to command true leadership. From a global standpoint, we are the largest in the world. We are the second largest in North America, in revenues, and will be able to maintain that position, if not grow upon it and be the largest in both theaters. Our international capabilities are becoming more and more critical and our ability to provide near-shore and offshore labor cost reductions is next to none. We pioneered this capability in Canada. We've expanded it to Mexico. We then expanded it into the Philippines and you'll see further expansion. We believe that's going to create a significant competitive barrier because we have been operating internationally longer than any other company. Another point would be our ability to partner with leading consulting companies and systems integrators, including a demonstrated track record with PricewaterhouseCoopers and now with IBM. Futuristically we will add more partners, and that is clearly an area of differentiation. Our balance sheet clearly is a significant benefit. We are in an industry that is growing at a rate of 20% per annum. We believe we will get more than our share. So I believe there are many, many reasons why one would want to get focused on us ' the stability of our recurring revenue, the fact that we continue to layer revenue on top of revenue, the fact that the company has never endured a quarter of operating losses is pretty impressive. The fact that we have an impressive client list of Global 1000 companies, more than any outsourcer in our space, is equally impressive. I believe there are many reasons why one would view us as an investment that brings long-term potential and stability. Including the fact that we are going to continue to grow the top line ' there is going to be earnings growth on a go-forward basis of 20% to 25%. We will successfully launch Nextel with more than 4,000 employees in a very short order of time. We continue to strengthen all of our tight fiscal management controls and are going to maintain a very conservative capital structure in a pretty rocky economy. Those are the primary reasons why one would want to take interest in TeleTech, and I believe it all boils down to our company strategy and our long-term objectives.

TWST: Thank you. (TM)

KENNETH D. TUCHMAN CEO TeleTech Holdings, Inc. 9197 South Peoria Street Englewood, CO 80112 (303) 397-8100 (800) 835-3832 - TOLL FREE (303) 397-8671 - FAX e-mail:

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