Contact Centres Market Assessment 2007: Industry Report

Contact Centres Market Assessment 2007

Product Type: Market Research Report
Published by: Key Note Publications Ltd
Published: April 2007
Product Code: R310-1424

Description

Employment in contact centres continues to grow. Key Note estimates that, in 2007, the number of people working in front-line customer contact is 862,070. Staff turnover in contact centres is high overall, but is generally lowest in contact centres serving the public sector. Pay in contact centres rose significantly between 2003 and 2007, especially for managers, and a career ladder, supported by training, has developed.

Large purpose-built contact centres are located mainly in areas qualifying for Selective Finance for Investment in the least affluent parts of the UK, such as north east England, Northern Ireland and large areas of Scotland and Wales. Contact centres for the public sector, often outsourced to private-sector companies, were a major trend in 2005 and 2006 that continued into 2007.

The global business-process outsourcing market slowed down in 2006, amid concerns over security and infrastructure reliability, although IT outsourcing continued to expand rapidly.

The global consulting groups have a large but declining influence on the contact-centre industry's buying habits, because technology firms such as BT Group PLC have strengthened their own consultancy elements and can argue that they bring benefits of technical knowledge that the broad-spectrum consultancies do not possess quite so obviously. For consultants such as Convergys that specialise in contact centres, the future may be in integrating contact centres into overarching customer-relationship and business-processing programmes.

Indian outsourcing companies have opened contact centres in the UK to counter the threat of repatriation of work from India, but the country still remains the global offshore hub. However, barriers to future expansion in India include insufficient infrastructure, rapidly rising wages that reduce competitiveness and concerns about data security. China could replace India as the leading outsourcing destination by 2017. The Philippines is growing fast as an outsourcing centre, although difficulties include a growing scarcity of fluent English speakers. Some work that had been relocated to the Philippines has been repatriated because of poor customer service. South Africa, with a large number of English speakers, is a fast-growing location for contact centres serving English-speaking countries.

Offshoring has branched into multi-shoring — the location of separate processes where there are the greatest short- or medium-term competitive advantages. Repatriation to the UK of the activities most important for brand values is part of the multi-shoring trend. Expansion within the UK could be faster were it not for shortages of multi-lingual staff, and of workers with up-to-date IT skills. Taxpayers are likely to scrutinise more closely government contracts placed with outsourcers, including contact-centre operators.

The principal contact-centre businesses in the UK in terms of turnover are Vertex Data Science Ltd and Ventura (a trading name of Club 24 Ltd). CPM United Kingdom Ltd, ClientLogic (UK) Ltd, MM Teleperformance Ltd, Response Handling Ltd, Telecom Service Centres Ltd, Sitel UK Ltd, LBM Holdings Ltd and CJ Garland & Co Ltd account for the rest of the top ten. US private-equity investors acquired Vertex Data Science in 2007, and consequently, only one of the largest five contact-centre businesses in the UK, Ventura, is UK owned.

The 2008 contact centre will want voice over Internet protocol (VoIP) and Internet protocol (IP) telephony, automated call distribution, automated and intelligent voice self-service menus, callback systems, converged applications and interactive voice response (IVR). Microsoft's entry into the customer-relationship management (CRM) sector signals tougher competition for long-established specialist suppliers, but also indicates that Microsoft expects the contact-centre business to expand. In addition, private-equity investors' interest in contact centres indicates their expectations of future growth.

Key Note forecasts that more than a million people will have jobs in UK contact centres by 2012. The customer-contact industry will be crucial to both employment and prosperity. To an increasing extent, centres will be composed of linked hubs of varying sizes, often with home workers linked in.

Table of Contents

Executive Summary
1. Introduction
THE TOPIC
OBJECTIVES
METHODOLOGY: Original Research; Problems in the Research Process
DEFINITION
2. Strategic Overview
RISING EMPLOYMENT: `Fuzzy' Classifications; Table 1: Employment in Call Centres and Customer Care in the UK (000), Second Quarters 2001-2006
CONTACT CENTRE NUMBERS: The DTI and Key Note: Reconciling Different Estimates; Table 2: Contact Centres and Agent Positions in the UK (actual number and 000 of workstations), 1999-2007; Figure 1: Number of Contact Centres in the UK, 1999-2007; Most Centres are Small; Table 3: Contact Centres in the UK by Size by Number of Workstations (number of centres and %), 2004-2006; Geographical Distribution
OUTSOURCING AND E-MAIL
MAJOR PLAYERS IN CUSTOMER CONTACT: By Turnover; Table 4: Leading Contact-Centre Companies in the UK by Turnover, Pre-Tax Profit and Employees (£m and number), 2004/2005/2006; By Profit-to-Sales Ratio; Table 5: UK Contact-Centre Companies Ranked by Profit-to-Sales Ratio (%), 2004/2005/2006; By Average Employee Remuneration; Table 6: UK Contact-Centre Companies Ranked by Average Employee Remuneration (£), 2004/2005/2006; By Sales per Employee; Table 7: UK Contact-Centre Companies Ranked by Sales per Employee (£), 2004/2005/2006
KEY POINTS
3. Work in Call and Contact Centres
APPROACHING A MILLION WORKERS
MANAGERS' PAY RISING FAST
HOME WORKING — BENEFITS AND BARRIERS
BUILDING A TRAINING LADDER
LINGUISTICALLY CHALLENGED
KEY POINTS
4. Contact-Centre Specialists: The In-House Strand
INTRODUCTION
VERTEX DATA SCIENCE LTD: Profitability; Table 8: Financial Results for Vertex Data Science Ltd (£000, number, % and £), Years Ending 31st March 2004-2006
VENTURA: Profitability; Table 9: Financial Results for Club 24 Ltd (£000, number, % and £), Years Ending 31st January 2004-2006; Table 10: Financial Results for Next PLC (£000, number, % and £), Years Ending 31st January 2004, 29th January 2005 and 28th January 2006
THE CAPITA GROUP PLC: Profitability; Table 11: Financial Results for The Capita Group PLC (£000, number, % and £), Years Ending 31st December 2003-2005
KEY POINTS
5. Contact-Centre Specialists: The Telemarketing Strand
MOVING AWAY FROM OUTBOUND
CPM UNITED KINGDOM LTD: Profitability; Table 12: Financial Results for CPM United Kingdom Ltd (£000, number, % and £), Years Ending 31st December 2003-2005
CLIENTLOGIC (UK) Ltd: Profitability; Table 13: Financial Results for ClientLogic (UK) Ltd (£000, number, % and £), Years Ending 31st December 2003-2005
TELECOM SERVICE CENTRES LTD: Profitability; Table 14: Financial Results for Telecom Service Centres Ltd (£000, number, % and £), Years Ending 31st August 2004-2006
MM TELEPERFORMANCE LTD: Profitability; Table 15: Financial Results for MM Teleperformance Ltd (£000, number, % and £), Years Ending 30th June 2003 and 31st December 2004 and 2005
RESPONSE HANDLING LTD: Profitability; Table 16: Financial Results for Response Handling Ltd (£000, number, % and £), Years Ending 31st January 2004-2006
LBM HOLDINGS LTD: Profitability; Table 17: Financial Results for LBM Holdings Ltd (£000, number, % and £), Years Ending 31st May 2005-2006
CJ GARLAND & CO LTD: Profitability; Table 18: Financial Results for CJ Garland & Co Ltd (£000, number, % and £), Years Ending 31st October 2003-2005
PROMOTIONAL LOGISTICS LTD: Profitability; Table 19: Financial Results for Promotional Logistics Ltd (£000, number, % and £), Years Ending 31st December 2003-2005
INKFISH CALL CENTRES LTD: Profitability; Table 20: Financial Results for Inkfish Call Centres Ltd (£000, number, % and £), Years Ending 31st March 2004-2006
THE LISTENING COMPANY LTD: Profitability; Table 21: Financial Results for The Listening Company Ltd (£000, number, % and £), Years Ending 31st October 2004-2006
BECOGENT LTD: Profitability; Table 22: Financial Results for beCogent Ltd (£000, number, % and £), Years Ending 30th June 2003-2005
BROADSYSTEM LTD: Profitability; Table 23: Financial Results for Broadsystem Ltd (£000, number, % and £), Years Ending 30th June 2004-2006
MOONRIVER GROUP LTD: Profitability; Table 24: Financial Results for MoonRiver Group Ltd (£000, number, % and £), Years Ending 31st December 2003-2005; Table 25: Financial Results for Arvato Loyalty Services Ltd (£000, number, % and £), Years Ending 31st March 2004 and 31st December 2004 and 2005
SPARK RESPONSE LTD: Profitability; Table 26: Financial Results for Spark Response Ltd (£000, number, % and £), Years Ending 30th June 2003-2005
ANT MARKETING: Profitability
PELL & BALES LTD: Profitability; Table 27: Financial Results for Pell & Bales Ltd (£000, number, % and £), Years Ending 31st March 2004-2006
ARVATO SERVICES LTD: Profitability; Table 28: Financial Results for Arvato Services Ltd (£000, number, % and £), Year Ending 31st December 2005
TELEGEN UK LTD: Profitability; Table 29: Financial Results for Telegen UK Ltd (£000, number, % and £), Years Ending 31st January 2003 and 30th June 2004 and 2005
TRG EUROPE PLC: Profitability; Table 30: Financial Results for TRG Europe PLC (£000, number, % and £), Years Ending 31st December 2003-2005
KEY POINTS
6. Contact-Centre Specialists: The Telecommunications, Systems and Software Strand
INTRODUCTION
SITEL UK LTD: Profitability; Table 31: Financial Results for Sitel UK Ltd (£000, number, % and £), Years Ending 31st December 2002-2004; Table 32: Financial Results for Sitel Europe Ltd (£000, number, % and £), Years Ending 31st December 2002-2004
THE MERCHANTS GROUP LTD: Profitability; Table 33: Financial Results for The Merchants Group Ltd (£000, number, % and £), Years Ending 30th September 2003-2005; Table 34: Financial Results for Dimension Data Holdings PLC ($000, number, % and $), Years Ending 30th September 2004-2006
ACXIOM LTD: Profitability; Table 35: Financial Results for Acxiom Ltd (£000, number, % and £), Years Ending 31st March 2003-2005
KINGSTON COMMUNICATIONS CONTACT CENTRES LTD: Profitability; Table 36: Financial Results for Kingston Communications Contact Centres Ltd (£000, number, % and £), Years Ending 31st March 2004-2006
EXAMPLES OF KEY INTERNATIONAL OUTSOURCERS: BT Group PLC; Profitability; Table 37: Financial Results for BT Group PLC (£000, number, % and £), Years Ending 31st March 2004-2006; Convergys Corporation; Profitability; Electronic Data Systems Corporation
EXAMPLES OF COMPANIES SIGNIFICANT IN CONTACT-CENTRE DEVELOPMENT: Avaya Inc; Profitability; Blue Pumpkin Software UK Ltd; Profitability; Table 38: Financial Results for Blue Pumpkin Software UK Ltd (£000, number, % and £), Years Ending 31st December 2002 and 31st March 2004 and 2005; Business Systems (UK) Ltd; Profitability; Table 39: Financial Results for Business Systems (UK) Ltd (£000, number, % and £), Years Ending 31st December 2003-2005; Cable & Wireless PLC; Profitability; Table 40: Financial Results for Cable & Wireless PLC (£000, number, % and £), Years Ending 31st March 2004-2006; Cincom Systems (UK) Ltd; Profitability; Table 41: Financial Results for Cincom Systems (UK) Ltd (£000, number, % and £), Years Ending 30th September 2003-2005; Citel Technologies Ltd; Profitability; Table 42: Financial Results for Citel Technologies Ltd (£000, number, % and £), Years Ending 31st March 2004-2006; Concerto Software (UK) Ltd; Profitability; Table 43: Financial Results for Concerto Software (UK) Ltd (£000, number, % and £), Years Ending 31st December 2002-2004; Mitel Networks Ltd; Profitability; Table 44: Financial Results for Mitel Networks Ltd (£000, number, % and £), Years Ending 27th April 2003, 25th April 2004 and 24th April 2005; Nice Systems Ltd; Profitability; Plantronics Ltd; Profitability; Table 45: Financial Results for Plantronics Ltd (£000, number, % and £), Years Ending 31st March 2002 and 2003 and 3rd April 2004; Virgin Media Group
KEY POINTS
7. Promotion and Consulting: ExhibitionS; Questex Media Group Inc; SharedInsights US; Tarsus Group
CMP
CONTACT CENTRES WITHIN A LARGER TECHNOLOGY SECTOR
CONSULTANTS ARE STILL INFLUENTIAL, BUT THEIR ROLE IS UNDER PRESSURE
KEY POINTS
8. An International Perspective
CONTACT-CENTRE OFFSHORING SLOWS DOWN
INDIA STILL THE OFFSHORE HUB
SCOURING THE WORLD FOR LOWER COSTS: Eastern Europe; Egypt; Tunisia and Morocco; The Philippines; South Africa; Latin America
KEY POINTS
9. PEST Analysis
POLITICAL AND ECONOMIC FACTORS
SOCIAL FACTORS
TECHNOLOGICAL FACTORS: Compatibility and Convergence; Speech Recognition; E-mail: The New Frontier; Microsoft
KEY POINTS
10. Consumer Dynamics
INTRODUCTION
GREATER SATISFACTION WITH CONTACT-CENTRE STAFF: "When I am Connected to a Call Centre I Find Staff More Helpful Than They Were a Year Ago"; Table 46: Call-Centre Staff are More Helpful Than They Were a Year Ago (% of respondents), 2007; "When I am Connected to a Call Centre I Find Staff Less Helpful Than They Were a Year Ago"; Table 47: Call-Centre Staff are Less Helpful Than They Were a Year Ago (% of respondents), 2007
MUCH MORE POLITE: "Call-Centre Staff are Always Polite to Me"; Table 48: Agreement that Call-Centre Staff are Always Polite (% of respondents), 2007
CUSTOMERS DEMAND CHOICE OF COMMUNICATION CHANNELS: "I Like to be able to Communicate with an Organisation Any Way I Choose; For Example, by Visiting in Person, Writing a Letter, Telephone Call, E-Mail or Clicking Through from a Website"; Table 49: Preference for Selecting the Method of Communication Used to Contact an Organisation (% of respondents), 2007
PEOPLE WANT LOCAL BRANCHES: Table 50: Preference for Speaking to Staff in a Local Office (% of respondents), 2000 and 2002-2005; "I Prefer to Deal with Organisations That Have Local Branches"; Table 51: Preference for Dealing with Organisations That Have Local Branches (% of respondents), 2007
INTERNET POLARISATION: Table 52: Attitudes Towards Contacting Organisations Over the Internet (% of respondents), 2000 and 2002-2005; "I Prefer to Contact Organisations Over the Internet"; Table 53: Preference for Contacting Organisations Over the Internet (% of respondents), 2007
THUMBS DOWN FOR AUTOMATED ANSWERING SERVICES: Table 54: Attitudes Towards Automated Answering Services (% of respondents), 2000 and 2002-2005; "When I Telephone an Organisation I Would Rather Speak to a Real Person than to an Automated Answering Service"; Table 55: Preference for Speaking to a Real Person than an Automated Answering Service (% of respondents), 2007
AUTOMATED RESPONSE WASTES TIME: Table 56: Agreement that Automated Answering Services Waste Time (% of respondents), 2000 and 2002-2005; "I Waste Time Waiting for Automated Answering Telephone Systems to Connect Me to the Correct Department"; Table 57: Automated Answering Systems Waste Time (% of respondents), 2007
AUTOMATED ANSWERING: LESS USER-FRIENDLY OVERALL: "Automated Answering Services are More User-Friendly Than They Were a Year Ago"; Table 58: Agreement that Automated Answering Services are More User-Friendly (% of respondents), 2007
AUTOMATED ANSWERING IS TOO SLOW: "Automated Answering Services are Faster Than They Were a Year Ago"; Table 59: Automated Answering Services are Faster Than a Year Ago (% of respondents), 2007
CONFLICT BETWEEN COST AND SERVICE: "Call Centres Enable Organisations to Cut Costs"; Table 60: Agreement that Call Centres Allow Organisations to Cut Costs (% of respondents), 2007
CONTACT CENTRES BENEFIT ORGANISATIONS MORE THAN CUSTOMERS: "Organisations Benefit from Call Centres More Than Customers Do"; Table 61: Agreement that Organisations Benefit More from Call Centres Than Do Customers (% of respondents), 2007
UNDERSTANDING CAN STILL BE WEAK: "Sometimes I Find Call-Centre Staff Difficult to Understand"; Table 62: Difficulties in Understanding Call-Centre Staff (% of respondents), 2007
ALWAYS ABLE TO UNDERSTAND STAFF: "When Call-Centre Staff Talk to Me, I Can Always Understand What They are Saying"; Table 63: Always Able to Understand Call-Centre Staff (% of respondents), 2007
TELESALES APPLYING LESS PRESSURE: "Telephone Sales People Often Make Me Feel Under Pressure"; Table 64: Pressure from Telesales People (% of respondents), 2007
KEY POINTS
11. The Future
PERMISSION MARKETING
MULTI-SHORING
TECHNOLOGY FOR MULTI-CHANNELS
MICROSOFT'S EXPANSION
GROWTH COULD BE FASTER IF WORKERS WERE MORE HIGHLY SKILLED: Table 65: The Forecast Contact-Centre Industry (number), 2007-2012; Figure 2: The Forecast Number of Call-/Contact-Centre Agents, 2007-2012
KEY POINTS
13. Consumer Confidence
METHODOLOGY
KEY FINDINGS THIS QUARTER
THE WILLINGNESS TO BORROW: Confidence Improves; 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), February 2006-2007; Willingness to Borrow Slips Slightly; Table B: The Number of Adults Willing to Borrow in Order to Purchase Expensive Items (000 and %), February 2006-2007
SPENDING FROM SAVINGS: Slight Increase in Spending 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), February 2006-2007; Saving Grows in Relative Importance; Table D: The Average Amounts Adults Are Confident Spending to Purchase Expensive Items (£ and %), February 2006-2007
14. Further Sources: Associations; Publications; General Sources; Government Sources; Other Sources; Bisnode Sources

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