KN74174

KEY NOTE Call Centres : October 2004

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This report covers: Call Centres

TABLE OF CONTENTS

Executive Summary

1. Introduction

Overview

Research

Problems in the Research Process

Definition

2. Strategic Overview

Market Dynamics

Slower Growth Rates

Table 1: The Number of Call/Contact Centres and Workstations in the UK (number and 000), 2000-2004

Different Estimates

Size of Call/Contact Centres

Table 2: The Estimated Number of Contact Centres in the UK by Number of Workstations (number and %), 2004

Regional Variations

Table 3: Regional Distribution of Contact Centre Workstations (%), 2004

Encouragement for Remote Areas

Competitive Structure

Financial Services Organisations

Table 4: The Number of Contact Centres in the UK by Industry Sector (%), 2004

Public Sector Spurs Outsourcing

Costs Freeze Out Small Companies

Leaders in Customer Contact

3. Work in Call and Contact Centres

HIGH STAFF TURNOVER

Staff Turnover Worst in Outsourcing

Table 5: Turnover of Call/Contact Centre Agents in the UK by Industry Sector (%), 2004

Survey Results for 2000 and 2001

Survey Results for 2002 Onwards

STARTING WAGES STATIC

CLOSE MONITORING

Outsourcing

CAREER SCOPE BEGINS TO GROW

Awards

MULTISKILLING FOR HAPPY STAFF

4. The Outsourcing Boom

OUTSOURCING FOR OUTBOUND

Problem of Unprofitable Outsourcing

FLUIDITY: COMINGS AND GOINGS

Shifts, Closures and Openings Overseas

Expansions in the UK

GLOBAL Trends

RAPID EXPANSION Overseas

EUROPE SLOWER TO CONTRACT ABROAD

PUBLIC SECTOR BOOST

Drive from New Labour

NHS Direct

Table 6: Funding for NHS Direct (£m) 2003/2004-2005/2006

5. Call Centre Specialists: The Communications Root

Overview

British telecommunications

Table 7: Turnover, Pre-Tax Profit and Number of Employees for British Telecommunications PLC (£000 and number), Years Ending 31st March 2002-2004

Table 8: Financial Performance of British Telecommunications PLC (% and £), Year Ending 31st March 2004

CABLE and WIRELESS

Table 9: Turnover, Pre-Tax Profit and Number of Employees for Cable and Wireless PLC (£000 and number), Years Ending 31st March 2002-2004

Table 10: Financial Performance of Cable and Wireless PLC (% and £), Year Ending 31st March 2004

CONVERGYS

NORTEL NETWORKS

SITEL

Table 11: Turnover, Pre-Tax Profit and Number of Employees for Sitel UK Ltd (£000 and number), Years Ending 31st December 2000-2002

Table 12: Financial Performance of Sitel UK Ltd (% and £), Year Ending 31st December 2002

THUS

Other Companies

IMS Group

RSL Com

6. Call Centre Specialists: The Systems and Software Root

Overview

ACXIOM

Table 13: Turnover, Pre-Tax Profit and Number of Employees for Acxiom Ltd (£000 and number), Years Ending 31st March 2001-2003

Table 14: Financial Performance of Acxiom Ltd (% and £), Year Ending 31st March 2003

BLUE PUMPKIN

Table 15: Turnover, Pre-Tax Profit and Number of Employees for Blue Pumpkin Software UK Ltd (£000 and number), Years Ending 31st December 2000-2002

Table 16: Financial Performance of Blue Pumpkin Software UK Ltd (% and £), Year Ending 31st December 2002

BUSINESS SYSTEMS

Table 17: Turnover, Pre-Tax Profit and Number of Employees for Business Systems UK Ltd (£000 and number), Years Ending 31st December 2000-2002

Table 18: Financial Performance of Business Systems UK Ltd (% and £), Year Ending 31st December 2002

CINCOM SYSTEMS

Table 19: Turnover, Pre-Tax Profit and Number of Employees for Cincom Systems (UK) Ltd (£000 and number), Years Ending 30th September 2001-2003

Table 20: Financial Performance of Cincom Systems (UK) Ltd (% and £), Year Ending 30th September 2003

CITEL TECHNOLOGIES

Table 21: Turnover, Pre-Tax Profit and Number of Employees for Citel Technologies Ltd (£000 and number), Years Ending 31st March 2001-2003

Table 22: Financial Performance of Citel Technologies Ltd (% and £), Year Ending 31st March 2003

CONCERTO SOftWARE

Table 23: Turnover, Pre-Tax Profit and Number of Employees for Concerto Software (UK) Ltd (£000 and number), Years Ending 31st December 1999-2001

Table 24: Financial Performance of Concerto Software (UK) Ltd (% and £), Year Ending 31st December 2001

DTS GROUP

THE MERCHANTS GROUP

Table 25: Turnover, Pre-Tax Profit and Number of Employees for The Merchants Group Ltd (£000 and number), Years Ending 30th September 2001-2003

Table 26: Financial Performance of The Merchants Group Ltd (% and £), Year Ending 30th September 2003

MITEL NETWORKS

Table 27: Turnover, Pre-Tax Profit and Number of Employees for Mitel Networks Ltd (£000 and number), Years Ending 27th April 2001-2003

Table 28: Financial Performance of Mitel Networks Ltd (% and £), Year Ending 27th April 2003

NICE SYSTEMS

PLANTRONICS

Table 29: Turnover, Pre-Tax Profit and Number of Employees for Plantronics Ltd (£000 and number), Years Ending 31st March 2001-2003

Table 30: Financial Performance of Plantronics Ltd (% and £), Year Ending 31st March 2003

7. Call Centre Specialists: The Telemarketing Root

Overview

BROADSYSTEM

Table 31: Turnover, Pre-Tax Profit and Number of Employees for Broadsystem Ltd (£000 and number), Years Ending 30th June 2001-2003

Table 32: Financial Performance of Broadsystem Ltd (% and £), Year Ending 30th June 2003

CJ GARLAND

Table 33: Turnover, Pre-Tax Profit and Number of Employees for CJ Garland & Co Ltd (£000 and number), Years Ending 31st October 2000-2002

Table 34: Financial Performance of CJ Garland & Co Ltd (% and £), Year Ending 31st October 2002

CLIENTLOGIC

Table 35: Turnover, Pre-Tax Profit and Number of Employees for ClientLogic (UK) Ltd (£000 and number), Years Ending 31st December 2001 and 2002

Table 36: Financial Performance of ClientLogic (UK) Ltd (% and £), Year Ending 31st December 2002

CPM UNITED KINGDOM

Table 37: Turnover, Pre-Tax Profit and Number of Employees for CPM United Kingdom Ltd (£000 and number), Years Ending 31st December 2000-2002

Table 38: Financial Performance of CPM United Kingdom Ltd (% and £), Year Ending 31st December 2002

HARTE-HANKS

Table 39: Turnover, Pre-Tax Profit and Number of Employees for Harte-Hanks CRM Services UK Ltd (£000 and number), Years Ending 31st December 2000-2002

Table 40: Financial Performance of Harte-Hanks CRM Services UK Ltd (% and £), Year Ending 31st December 2002

INKFISH CALL CENTRES

Table 41: Turnover, Pre-Tax Profit and Number of Employees for Inkfish Call Centres Ltd (£000 and number), Years Ending 30th June 2001-2003

Table 42: Financial Performance of Inkfish Call Centres Ltd (% and £), Year Ending 30th June 2003

Table 43: Turnover, Pre-Tax Profit and Number of Employees for Domestic & General Group PLC Ltd (£000 and number), Years Ending 30th June 2002 and 2003, and 39 Weeks Ending 31st March 2004

Table 44: Financial Performance of Domestic & General Group PLC (% and £), 39 Weeks Ending 31st March 2004

ISKY EUROPE

Table 45: Turnover, Pre-Tax Profit and Number of Employees for iSky Europe PLC (£000 and number), Years Ending 31st December 2001-2003

Table 46: Financial Performance of iSky Europe PLC (% and £), Year Ending 31st December 2003

THE LISTENING COmpany

Table 47: Turnover, Pre-Tax Profit and Number of Employees for The Listening Company Ltd (£000 and number), Years Ending 31st October 2001-2003

Table 48: Financial Performance of The Listening Company Ltd (% and £), Year Ending 31st October 2003

MGT

MM GROUP

Table 49: Turnover, Pre-Tax Profit and Number of Employees for MM Group Ltd (£000 and number), Years Ending 30th June 2001-2003

Table 50: Financial Performance of MM Group Ltd (% and £), Year Ending 30th June 2003

PROMOTIONAL LOGISTICS

Table 51: Turnover, Pre-Tax Profit and Number of Employees for Promotional Logistics Ltd (£000 and number), Year Ending 31st December 2000, 78 Weeks Ending 30th June 2002 and Year Ending 30th June 2003

Table 52: Financial Performance of Promotional Logistics Ltd (% and £), Year Ending 30th June 2003

RESPONSE HANDLING

Table 53: Turnover, Pre-Tax Profit and Number of Employees for Response Handling Ltd (£000 and number), Years Ending 31st January 2001-2003

Table 54: Financial Performance of Response Handling Ltd (% and £), Year Ending 31st January 2003

MOVING AWAY FROM TELEMARKETING

8. Call Centre Specialists: The In-House Root

Overview

CAPITA

JARVIS

Table 55: Turnover, Pre-Tax Profit and Number of Employees for Jarvis PLC (£000 and number), Years Ending 31st March 2001-2003

Table 56: Financial Performance of Jarvis PLC (% and £), Year Ending 31st March 2003

MANPOWER

SERCO

Table 57: Turnover, Pre-Tax Profit and Number of Employees for Serco Group PLC (£000 and number), Years Ending 31st December 2001-2003

Table 58: Financial Performance of Serco Group PLC (% and £), Year Ending 31st December 2003

VERTEX DATA SCIENCE

Table 59: Turnover, Pre-Tax Profit and Number of Employees for Vertex Data Science Ltd (£000 and number), Years Ending 31st March 2001-2003

Table 60: Financial Performance of Vertex Data Science Ltd (% and £), Year Ending 31st March 2003

VENTURA

9. Promotion and Consulting

CONSULTANTS' MAJOR INFLUENCE

ADVANSTAR BIG IN CONTACT CENTRE COMMUNICATIONS

Exhibitions

10. An International Perspective

India

Indian Honeymoon Not Yet Fading

Costs

Labour Turnover

Customer Views

ASIA, THE CARIBBEAN AND LATIN AMERICA

PAN EUROPEAN

VAT HARMONISATION

QUESTIONS THAT CUSTOMERS Might ASK

11. PEST Analysis

POLITICal Factors

Privacy Legislation

EU Differences

E-Commerce

ECONOMIC Factors

Business Consequences

Consumer Consequences

SOCIal Factors

No More Calls, Thanks

The Over-tired Society

TECHNOLOGical Factors

12. Consumer Dynamics

Overview

Customer Attitudes

Automated Answering Systems

Survey Findings 2000-2004

Table 61: Attitudes to Call Centres (% of respondents), 2000 and 2002-2004

Key Findings

Table 62: Perceptions of Call Centres (% of respondents), 2002, 2003 and 2004

Key Findings

Time Wasting

Table 63: Customer Perceptions of Time Wasting by Automated Telephone Answering Systems (% of respondents), 2000 and 2002-2004

Personal Service — Local Communication

Table 64: Customer Perceptions of Personal Service in Call Centres (% of respondents), 2000 and 2002-2004

Personal Service — Real Person Versus Automated Answering Service

Table 65: Customer Perceptions of Personal Service in Call Centres (% of respondents), 2000 and 2002-2004

Remoteness

Table 66: Customer Perceptions of the Remoteness of Call Centres (% of respondents), 2000 and 2002-2004

The Internet

Table 67: Customer Perceptions of the Use of the Internet Rather Than a Call Centre (% of respondents), 2000 and 2002-2004

2004 Survey Results

Preference to Speak to a Real Person and Automated Telephone Answering Systems Waste Time

Table 68: Preference to Speak to a Real Person and Automated Telephone Answering Systems Waste Time (% of respondents), June 2004

Preference for Local Offices and Call Centres Make Organisations Too Remote

Table 69: Preference for Local Offices and Call Centres Make Organisations Too Remote (% of respondents), June 2004

Helpfulness of Call Centre Staff

Table 70: Helpfulness of Call Centre Staff (% of respondents), June 2004

Understanding Call Centre Staff

Table 71: Understanding Call Centre Staff (% of respondents), June 2004

Preference for Contacting Organisations Via the Internet and Call Centres Benefit Customers

Table 72: Preference for Contacting Organisations Via the Internet and Call Centres Benefit Customers (% of respondents), June 2004

Organisations Benefit More from Call Centres Than Customers Do and Call Centres Reduce Loyalty

Table 73: Organisations Benefit More from Call Centres Than Customers Do and Call Centres Reduce Loyalty (% of respondents), June 2004

Call Centres Offer Good Employment Opportunities and Little Job Satisfaction

Table 74: Call Centres Offer Good Employment Opportunities and Little Job Satisfaction (% of respondents), June 2004

Overseas Call Centre Staff Pretending to be in the UK and Politeness of Call Centre Staff

Table 75: Overseas Call Centre Staff Pretending to be in the UK and Politeness of Call Centre Staff (% of respondents), June 2004

Customer Satisfaction

13. The Future

IN FAVOUR OF OUTSOURCING

CHEAP, BUT MAYBE NOT SO CHEERFUL

COST PRESSURES RESTRICT SCOPE FOR BETTER CONDITIONS

VIRTUAL REALITY

DISTANCE FOSTERS DECEPTION

SELF-SERVICE MIX

LITTLE UNANIMITY OVER FORECASTS

Forecasts

Table 76: The Forecast UK Call/Contact Centre Industry, 2005-2009

IMPOSSIBLE GAP?

15. Further Sources

Associations

Publications

General Sources

Government Publications

Other Sources

Bonnier Information Sources

EXECUTIVE SUMMARY

In the UK, the call centre industry continues to expand. In 2004, employment in call centres is increasing at around 10% a year, although this is a slower rate than if outsourcing overseas had not become such a major trend. There are 5,535 call centres with ten or more workstations in the UK in 2004, an increase of 23.8% on 2000. Year-on-year growth in 1999 and 2000 was 15% and 12%, respectively, but this has since slowed to 7.9% in 2001 and 5% in 2002 and 2003.

In 2004, the majority of contact centres are small, with fewer than 50 workstations. Only 1.1% of call centres have over 1,000 workstations. In terms of location, London and the South East have a quarter of all the contact centre workstations — which tend to be in small- and medium-sized centres — in the UK. New, very large centres are mostly located in less-developed areas, qualifying for Selective Regional Assistance. Financial services, including banks, building societies, insurers, loan companies and credit card companies, among others, account for around one call centre in seven, more than in any other category.

Contact centre staff rarely stay in a post for long. In the UK, estimates of turnover vary considerably, but annual average labour turnover is around 15% to 25%.

Outsourcing is a buoyant market, growing between 15% and 20% a year. High start-up costs for contact centres work in favour of established outsourcing specialists. The status of English as the world business language means that companies in the high-cost English-speaking countries, such as the UK, have plenty of choice for outsourcing locations. Contact centre operations that serve markets where other languages are spoken have much less scope to outsource to low-wage economies.

India offers big attractions for contact centres and business process outsourcing, as labour costs are one eighth of those in the UK. Most of the contact centre business in India is foreign owned. Convergys — the world's largest contact centre outsourcing company — GE, IBM, Accenture and other multinationals are responsible for over 70% of the value created by outsourcing in India.

Attractive potential locations for multilingual contact centre operators include the new EU states in Eastern Europe, while aspirant EU members such as Romania, Bulgaria and Croatia are also likely outsourcing centres. North African countries, notably Tunisia and Morocco, are outsourcing locations for France and Spain, and South Africa, with a large number of English speakers, is a fast-growing location for contact centres.

Insourcing, which involves outside firms delivering call/contact centre services in the client's location, is set for a growing role. Insourcing enables organisations to bring in the expertise they lack, while still maintaining strategic control.

Regarding call centre numbers and jobs, Key Note forecasts for 2004 are more optimistic than for 2003. This is the result of the continuing, strong, public opposition to offshore outsourcing for complex communications that require both parties to understand each other fully, as well as the advance of Internet protocol (IP) telephony and workforce optimisation technologies that help UK-based centres to compete on price with offshore ventures. In addition, there are growing doubts surrounding the quality of infrastructure and security systems in many low-wage regions, particularly in the Philippines, Indonesia and China.

Text © 2004 Key Note

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Last updated by Amanda Porteous 2004