Call Centres Market Assessment 2006: Industry Report

Call Centres Market Assessment 2006

Product Type: Market Research Report
Published by: Key Note Publications Ltd
Published: January 2006
Product Code: R310-1272

Description

The call centre industry in the UK continues to expand, despite the high-profile exodus of many large contact centre operations to low-wage locations overseas. However, employment has grown more slowly than if outsourcing overseas had not become such a big feature of communications. Greater productivity per employee, facilitated by workforce planning software, automated voice recognition, improved call distribution systems and other technological enhancements that raise output have also tempered the rise in call centre jobs. Contact centres for the public sector — central and local government, police, health, fire and ambulance services, and so on — were probably the major trend of 2005.

More than three-quarters of the contract value of outsourced call/contact centre services is for outbound calling — but unsolicited outbound sales calling to UK customers is in terminal decline. Permission marketing is taking its place.

Effective response to callers on incoming lines is so important to brand values that many companies do not risk outsourcing them, even within the UK. For call centre employees in India and other Asian countries, provision of peak-hours services to the US and Western Europe means they have to work anti-social hours. Staff turnover that often exceeds 40% a year damages customer service, because few staff stay long enough to acquire detailed knowledge about the organisation they are paid to represent. Alternative locations with attractions for contact centre operators include the new EU states in Eastern Europe. South Africa, with a large number of English speakers, is also a fast-growing location for contact centres. The negative aspects of outsourcing include the potential for theft, such as the selling of personal information about customers.

Key Note's surveys since 2000 indicate rising customer dissatisfaction with call centres, and in 2005 the increase in dissatisfaction appeared very steep indeed. People dislike automated answering systems, and an overwhelming majority claimed to have wasted time navigating option menus. More than eight in every ten respondents to Key Note's 2005 survey said they would opt for speaking to a real person instead of dealing with an automated system; furthermore, almost nine respondents in ten preferred to speak to staff in a local office. More than eight in ten said that call centres made organisations too remote from their customers, and almost three in every four respondents thought that call centres benefited organisations more than they benefited customers. More than three in four agreed than call centres could reduce customer loyalty. Almost three respondents in four criticised telephone sales staff for being too persistent and putting them under pressure. Among a range of other issues covered by the survey were customers' ability to understand call centre staff, attitudes towards the practice of foreign call centre agents assuming false UK identities, and perceptions of improvement or deterioration in the helpfulness of call centre staff in the past year.

The coming enforced move away from an oil-based economy is likely to result in relocalisation of economic activity, and lifestyles with less commuting, fewer long-distance holidays and more remote shopping, which would create more demand for contact centres. The technological context in which contact centres will need to work includes voice-data convergence, service-oriented architecture, real-time infrastructure, open-source software and global sourcing. Virtual contact centre technology is speeding the development of dispersed, networked centres.

The successful businesses that operate contact centres in the UK are getting larger, and the gap between the big and the rest is widening. By 2010, the number of independent contact centre businesses should have fallen substantially. Companies that outsource contact centre operations, or run their own, are starting to look beyond costs to the enhancement of brand values. The contact centre sector continues to suffer downward pressures on margins. In the future, businesses that have outsourced to low-wage economies will be forced to reassess the effectiveness of the economic models they have adopted, because long supply chains will become increasingly uneconomic. After globalisation will come a phase of relocalisation, to keep supply chains as short as possible.

Table of Contents

Executive Summary

1. Introduction

The Topic

Objectives

Methodology

Original Research

Problems in the Research Process

Definition

2. Strategic Overview

MARKET DYNAMICS AND SEGMENTATION

Employment in Call Centres Still Rising (Moderately) at Home

Table 1: Estimated Employment in Call/Contact Centres in the UK by Sex (000 workers and %), Autumn 2002-Summer 2005

Figure 1: Estimated Employment in Call/Contact Centres in the UK (000 workers), Autumn 2002-Summer 2005

Table 2: Employment in Sales and Customer Service in the UK by Sex (000 workers and %), Autumn 2002-Winter 2004/2005

Growth of UK Contact Centres is Slowing Down

Table 3: Contact Centres and Agent Positions in the UK (actual number and 000 workstations), 1999-2005

Figure 2: Number of Contact Centres in the UK, 1999-2005

Figure 3: Number of Contact Centre Agent Positions in the UK (000 workstations), 1999-2005

Reconciling Estimates

Most Centres are Small

Table 4: Contact Centres in the UK by Size by Number of Workstations (number of centres and %), 2004 and 2005

Table 5: Regional Distribution of Contact Centre Workstations (%), 2004 and 2005

The Public-Sector Boom

Costs Freeze Out Small Companies

COMPETITIVE STRUCTURE

Table 6: Leading Contact Centre Companies in the UK by Turnover, Pre-Tax Profit and Number of Employees (£m and number), 2003/2004

Key Points

3. Work in Call and Contact Centres

High Turnover, Rising Demand

Outsourcers Have Highest Staff Turnover

Table 7: Estimated Staff Turnover of Call/Contact Centre Agents in the UK by Industry Sector (%), 2004

Figure 4: Estimated Staff Turnover of Call/Contact Centre Agents in the UK by Industry Sector (%), 2004

More Staff Required

Wages Rise — and Managers Lead the Way

COMPANIES Suspicious of Home Working

Building A TRaining ladder

THE Benefits of Looking After Staff

Key Points

4. The Outsourcing Wave

Outsourced Cold Calls to Hit Buffers

More Comings than Goings

New Centres and Expansions in the UK

Bucking the Trend

Moving Overseas

Cutting the Workforce

The Overall Picture

Global Reach

Key Points

5. Contact Centre Specialists: The In-House Root

OVERVIEW

Capita

Table 8: Financial Results for The Capita Group PLC (£m, number, % and £), Years Ending 31st December 2002-2004

Ventura

Vertex Data Science

Table 9: Financial Results for Vertex Data Science Ltd (£m, number, % and £), Years Ending 31st March 2002-2004

Key Points

6. Contact Centre Services: The Telemarketing Root

OVERVIEW

Moving Away from Outbound CALLING

ANT MARKETING

ARVATO SERVICES

Table 10: Financial Results for Arvato AG and Bertelsmann AG (im and number), Years Ending 31st December 2003 and 2004

BECOGENT

Table 11: Financial Results for beCogent Ltd (£m, number, % and £), Years Ending 30th June 2002-2004

Broadsystem

Table 12: Financial Results for Broadsystem Ltd (£m, number, % and £), Years Ending 30th June 2002-2004

ClientLogic

Table 13: Financial Results for ClientLogic (UK) Ltd (£m, £, % and number), Years Ending 31st December 2001-2003

CPM United Kingdom

Table 14: Financial Results for CPM United Kingdom Ltd (£m, number, % and £), Years Ending 31st December 2002-2004

CJ Garland

Table 15: Financial Results for CJ Garland & Co Ltd (£m, number, % and £), Years Ending 31st October 2002-2004

Harte-Hanks

Table 16: Financial Results for Harte-Hanks UK Ltd (£m, number, % and £), Years Ending 31st December 2001-2003

Inkfish Call Centres

Table 17: Financial Results for Inkfish Call Centres Ltd (£m, number, % and £), Years Ending 30th June 2002 and 2003 and 31st March 2004

Table 18: Financial Results for Domestic & General Group PLC (£m, number, % and £), Years Ending 30th June 2003 and 31st March 2004 and 2005

ION Group

Table 19: Financial Results for Ion Group Ltd (£m, number, % and £), Years Ending 31st March 2003 and 2004 and 31st December 2004

iSky Europe

Table 20: Financial Results for iSky Europe PLC (£m, number, % and £), Years Ending 31st December 2001-2003

The Listening Company

Table 21: Financial Results for The Listening Company Ltd (£m, number, % and £), Years Ending 31st October 2002-2004

MM TEleperformance

Table 22: Financial Results for MM Teleperformance Ltd (£m, number, % and £), Years Ending 30th June 2002 and 2003 and 31st December 2004

Pell & Bales

Table 23: Financial Results for Pell & Bales Ltd (£m, number, % and £), Years Ending 31st March 2002-2004

Promotional Logistics (PROLOG CONNECT)

Table 24: Financial Results for Promotional Logistics Ltd (£m, £, % and number), Years Ending 30th June 2003 and 31st December 2003 and 2004

Response Handling

Table 25: Financial Results for Response Handling Ltd (£m, number, % and £), Years Ending 31st January 2003-2005

Key Points

7. Contact Centre Services: The Communications Root

OVERVIEW

BT

Table 26: Financial Results for BT Group PLC (£m, number, % and £), Years Ending 31st March 2003-2005

Cable and Wireless

Table 27: Financial Results for Cable and Wireless PLC (£m, number, % and £), Years Ending 31st March 2003-2005

Convergys

Sitel

Table 28: Financial Results for Sitel UK Ltd (£m, number, % and £), Years Ending 31st December 2001-2003

Key Points

8. Contact Centre Services: The Systems and Software Root

OVERVIEW

Acxiom

Table 29: Financial Results for Acxiom Ltd (£m, number, % and £), Years Ending 31st March 2002-2004

ASPECT SOFTWARE (FORMERLY Concerto Software)

Table 30: Financial Results for Concerto Software (UK) Ltd (£m, number, % and £), Years Ending 31st December 2000-2002

Business Systems (UK)

Table 31: Financial Results for Business Systems (UK) Ltd (£m, number, % and £), Years Ending 31st December 2002-2004

Cincom Systems

Table 32: Financial Results for Cincom Systems (UK) Ltd (£m, number, % and £), Years Ending 30th September 2002-2004

Citel TEchnologies

Table 33: Financial Results for Citel Technologies Ltd (£m, number, % and £), Years Ending 31st March 2001-2003

The Merchants Group

Table 34: Financial Results for The Merchants Group Ltd (£m, number, % and £), Years Ending 30th September 2002-2004

Table 35: Financial Results for Dimension Data Holdings PLC ($m, number, % and $), Years Ending 30th September 2002-2004

Mitel Networks

Table 36: Financial Results for Mitel Networks Ltd (£m, number, % and £), Years Ending 28th April 2002, 27th April 2003 and 25th April 2004

Nice Systems

Plantronics

Table 37: Financial Results for Plantronics Ltd (£m, number, % and £), Years Ending 31st March 2002 and 2003 and 3rd April 2004

Witness Systems

Table 38: Financial Results for Blue Pumpkin Software UK Ltd (£m, number, % and £), Years Ending 31st December 2002 and 31st March 2004 and 2005

Key Points

9. Promotion and Consulting

Advanstar Sells Contact Centre Interests

CMP Media a Major Force

Consultants' Pervasive Influence

Key Points

10. An International Perspective

ContaCT Centres aid Globalisation

India Remains the Offshore Hub

Emerging Centres Elsewhere

European Dimension

Key Points

11. PEST Analysis

PoliticAL FACTORS

Privacy Legislation Has Minor Impact

VAT Complications

Campaigning for Contact Centres

Economic factors

Battening Down the Hatches

The Likely Impact on Call Centres is Considerable

Social factors

TEChnological faCTors

Hot Topics

Hot Potential

Key Points

12. Consumer Dynamics

OVERVIEW

Marching Orders for Cold Calling

Customers Flock to Block Telemarketing Calls

Defects in Customer Service

Tips for Contact Centre Managers

GOING BACKWARDS SINCE 2000

Changes in Attitudes to Call Centres Between 2000 and 2005

Table 39: Attitudes to Call Centres (% of respondents agreeing), November 2000, February 2002, May 2003, June 2004 and August 2005

Deteriorating Perceptions of Call Centres

Table 40: Perceptions of Call Centres (% of respondents agreeing), February 2002, May 2003, June 2004 and August 2005

Automated Systems a Waste of Time for Customers

Table 41: Experience of Time Being Wasted by Automated Telephone Answering Systems (% of respondents agreeing), November 2000, February 2002, May 2003, June 2004 and August 2005

That Vital Personal Touch

Table 42: Preferences for Personal Service When Contacting Organisations (% of respondents agreeing), November 2000, February 2002, May 2003, June 2004 and August 2005

Demand for Real People, Not Automation

Table 43: Preferences for Contact With `Real People' Rather Than Automation (% of respondents agreeing), November 2000, February 2002, May 2003, June 2004 and August 2005

Call Centres are a Barrier

Table 44: Perceptions of Call Centres as a Barrier (% of respondents agreeing), November 2000, February 2002, May 2003, June 2004 and August 2005

The Internet Rolls On

Table 45: Preferences for Contacting Organisations via the Internet Instead of Telephoning (% of respondents agreeing), November 2000, February 2002, May 2003, June 2004 and August 2005

Call Centres in 2005

Public Prefer Real People to Automation

Table 46: Preferences for Speaking to `Real People' and Experiences of Having Time Wasted by Automated Systems (% of respondents agreeing), August 2005

Helpfulness of Staff: More Deterioration Than Improvement

Table 47: Perceptions of Organisations as Remote from Customers and of Helpfulness of Staff (% of respondents agreeing), August 2005

Problems of Understanding and Identity

Table 48: Ability to Understand Call Centre Staff and Views on Foreign Staff Adopting `UK' Identities (% of respondents agreeing), August 2005

Threats to Customer Loyalty

Table 49: Perceptions That Organisations Benefit Most From Call Centres or That Call Centres Can Reduce Customer Loyalty (% of respondents agreeing), August 2005

Agents Fairly Polite but too Persistent on the Telephone — While Online Communications Gather Momentum

Table 50: Perceptions of Call Centre Job Satisfaction and Politeness and Persistence of Staff, and Preference for Online Communications (% of respondents agreeing), August 2005

Key Points

13. The Future

THE End of Cold CallING

Consolidation

Priorities

Cheap but Maybe not so Cheerful

Virtual and Feigned Reality

Forecasts

Table 51: Estimates and Forecasts for Call/Contact Centres in the UK (number of centres, workstations and agents), 2004-2010

Figure 5: Estimated and Forecast Number of Call/Contact Centres in the UK, 2004-2010

Figure 6: Estimated and Forecast Number of Call/Contact Centre Workstations in the UK, 2004-2010

Figure 7: Estimated and Forecast Number of Call/Contact Centre Agents in the UK, 2004-2010

Key Points

14. Glossary

INTRODUCTION

General Terms

Call/Contact Centre TERMS

15. Consumer Confidence

METHODOLOGY

THE WILLINGNESS TO BORROW

Table A: The Average Amount Consumers Are Willing to Borrow in Order to Purchase Expensive Items at Current and Constant November 2004 Prices (£ and £bn), November 2004, February 2005, May 2005, August 2005 and November 2005

The Desire to Borrow Stays Strong

Table B: The Number of Adults Willing to Borrow in Order to Purchase Expensive Items (000 and %), November 2004, February 2005, May 2005, August 2005 and November 2005

THE WILLINGNESS TO SPEND FROM SAVINGS

Table C: The Average Amount Consumers Are Willing to Spend from Savings in Order to Purchase Expensive Items at Current and Constant November 2004 Prices (£ and £bn), November 2004, February 2005, May 2005, August 2005 and November 2005

Consumers Increasingly Cautious

Table D: The Average Amounts Adults are Confident Spending to Purchase Expensive Items (£ and %), November 2004, February 2005, May 2005, August 2005 and November 2005

16. Further Sources

Associations

Publications

General Sources

Government Publications

Other Sources

Bonnier Information Sources

Ordering and More Information

Price and Delivery Options

MindBranch has been the leading provider of industry and investment research from more than 550 independent research firms since 1992. With over 90,000 market research reports, MindBranch is your trusted source of competitive business intelligence.