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.
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.
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.
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.