UK Outsourced Contact Centres: market insight

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Published: March 2013
Pages: 44
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Description

About this report

NB this is an old report which we have not updated in the last couple of years. Let us know if you would be interested in a new version.

This report reviews the UK contact, or call, centre industry. It quantifies the outsourced contact centre market size and historical growth rates while reviewing key factors behind these figures and exploring drivers of profitability.

It also analyses drivers of industry growth – including relevant macroeconomic indicators and factors which determine volume and price for contact centres – setting out historical trends and forecasts.

Why is it useful?

The contact centre industry is relatively young. It grew rapidly over the past couple of decades but has been impacted by recent, less certain, economic conditions. Its working practices have continued to fall under scrutiny.

We believe that, in order for those involved in the contact centre market to make the best decisions in this complex and changing environment, they need to have access to the best information and understanding of the trends and drivers. The aim of this report is to provide this.

It is intended for contact centre and business process outsourcing companies themselves as well as investors, banks, analysts, consultants and other parties with interests in the sector.

What are the sources and methodology?

This UK call centre market report is based on
– Publicly available data including company annual reports, websites, press releases and government statistics
– Interviews with senior-level contacts in the market
– In-depth analysis of the macroeconomic environment and other relevant market drivers

Information from these sources has been synthesised and presented clearly and concisely with extensive use of charts and tables to illuminate points and support conclusions.

Report Highlights

Market growth and drivers
The call, or contact, centre industry is a major employer in the UK, accounting for over 5% of total employment in several regions and making the country a leader internationally
The total value of the outsourced contact centre industry is believed to be in excess of £2.5bn with almost 50,000 seats.
Growth was led by two sectors: financial services and telecoms. Both rolled-out new offerings and business models on a large scale during the 1990s and 2000s to take advantage of its capabilities. But having been rapid up to late 2008, growth stalled during the downturn.
The decision to outsource can be driven by factors including a new venture or geographical operation, desire to upgrade to new technology without the capital cost, need to accommodate fluctuating call volume, to improve service levels or cope with shortages of workers or physical space.

Key industry issues
Offshoring of contact centres has been credited with savings of 25-40% compared to UK operation. However, offshoring has not proved popular with callers.
Given reports of poor service, some organisations (eg NatWest) have used their UK-based contact centres to marketing advantage and several large organisations, such as Santander and E.ON, re-opened contact centres in the UK. In recent months, this flow of companies bringing call centre operations back from offshore locations such as India has continued. Examples from late 2012 include Play.com, Advanced Payment Solutions and Virgin Holidays.
We expect others to follow as high wage inflation in India has narrowed cost differentials while new cloud computing technology gives more flexibility for different parts of a contact centre to be in different locations. In particular this makes it easier to design solutions which put the voice elements of a contact centre in the UK, to give better cultural alignment with callers, while having other functions, such as webchat or email, in lower-cost locations.

Competitive landscape
The UK contact centre market remains relatively fragmented with at least nine players having sales of more than £40m.
The leading players, such as Capita, Vertex, Teleperformance, Arvato and Serco, are now part of larger groups which have extensive operations either internationally or in other business process outsourcing service areas.
Two acquisitions of leading UK operators profiled in the report in the last couple of weeks continued this pattern:
– HEROtsc, which had been bought by Hero Group, the Indian conglomerate, as part of its then strategy to build a global customer management business, was sold to Webhelp Group, which is based in France and operates contact centres across Europe.
– LBM, which had undergone a successful turnaround under private equity ownership, was bought by Stream Global Services, the international customer management group based in the US.

Outlook
While conditions remain challenging given the uncertain economic recovery factors such as the recent acquisitions, development of new technology and evidence of public sector outsourcing going ahead give cause for optimism and this is reflected in our contact centre market forecasts.

Contents

The outsourced contact centre market - 6
Contact centre market definition
Patterns and drivers of outsourcing
In-house vs outsourced
BPO
Local operation vs offshoring

Working environment - 13
Contact centre metrics and priorities
Staff turnover
Job quality
Other recent trends

Contact centre market size and growth - 17
Contact centre market size & growth
Performance of the leading contact centre providers

Contact centre market drivers - 23
Discussion of contact centre market drivers
Contact centre market drivers and their impact

Competitive landscape - 27
Leading operators
Comparisons between leading operators
Mergers and acquisitions
Profiles of the main providers

Forecasts - 43
Key drivers forecast
Market forecast

Appendices - 48
List of abbreviations
About Apex Insight

List of figures
(UK Call Centres Market Report)

1. Number of people working in call centres per '000 population
2. UK call centres segmented by industry
3. Relationship between contact centre job quality and staff turnover
4. UK outsourced contact centre market size / £m
5. UK outsourced contact centres : numbers of seats and % change from previous year
6. UK outsourced contact centres : average revenue per seat / £'000, % change from previous year
7. Leading operators revenue trend / £m
8. Leading operators gross profit and margin trends / £m, %
9. Leading operators pre-tax profit and margin trends / £m, %
10. Employee numbers ('000) and revenue per employee (£'000) for leading operators
11. UK GDP in current prices (money GDP), inflation (GDP deflator) and real GDP / % annual changes
12. UK Inflation: Consumer price index and GDP deflator / % annual change
13. UK population growth: historical and forecast / millions
14. UK GDP in current prices (money GDP), inflation (GDP deflator), population and real GDP per head / % annual changes
15. Total UK employment and call centre seats / % annual change
16. Consumer price inflation and call centre price increases / % annual change
17. Revenue of leading operators (most recent year) / £m
18. Revenue growth for leading operators (2006-10 unless stated) / % CAGR
19. Gross and pre-tax margins for leading operators (most recent year) / %
20. Revenue per employee for leading operators (most recent year) / £'000
21. Vertex Data Science summary financials
22. Capita Customer Management Ltd summary financials
23. Teleperformance UK summary financials
24. Arvato UK & Ireland summary financials
25. Serco Listening Company summary financials
26. Sitel UK summary financials
27. Firstsource Solutions UK summary financials
28. Webhelp TSC summary financials
29. LBM Direct Marketing summary financials
30. Response summary financials
31. Bss summary financials
32. UK GDP in current prices (money GDP), inflation (GDP deflator) and real GDP / % annual changes. Historical and OBR Autumn 2011 forecast
33. UK Consumer Price Index and GDP deflator / % annual change. Historical and OBR Autumn 2011 forecast
34. Forecast total UK employment and outsourced call centre seats / % annual change
35. Consumer price inflation and call centre price increases / % annual change
36. UK outsourced contact centre market forecast / £m

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