MP74094

MAPS : CALL CENTRES : October 2004

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This report covers:call centres, VAT harmonisation, EU differences, e-commerce, social factors,the internet, promotional logistics, response handling, India, Asia, The Caribbean and Latin America, pan European,

Companies covered include: SITEL, Nortel Networks,THUS, Acxiom, Blue Pumpkin, Citel Technologies, Concerto Software, DTS Group, Mitel Networks, Nice Systems, Plantronics, Broadsystem, CJ Garland, Clientlogic, CPM United Kingdom, Harte-Hanks, Inkfish Call Centres, ISKY Europe, The Listening COmpany, MGT, MM Group, Capita, Jarvis,Serco, Vertex Data Science, Ventura,

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.

TABLE OF CONTENTS

Text © 2004 Key Note

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Last updated by Amanda Porteous November 2004