Phone and away

Consumers think that when they call an 0800 freephone number they are talking to someone who works full-time for the company they want to talk to. In fact, they are doing no such thing. Phone an IBM helpline, for example, and the telephonist answering on IBM’s behalf is probably sitting next to someone who is at that moment answering questions about Honda.

Even fewer people realise that when they are chatting to someone who they presume is in England, it is just as likely that the 0800 number has been answered in Amsterdam or Ireland.

In fact, Paul Church, marketing manager of telemarketing consultancy Merit Direct – which has established a subsidiary company, The Call Centre, to deal exclusively with such outsourcing – says: “We have dedicated teams of operators working exclusively on specific accounts, who are so highly trained in the client’s business that they are known as ‘virtual employees’.”

This is the reality of the ever expanding word of call centres – a business concept that the Financial Times recently termed “the death of geography.”

In an economy where not much is growing, the market for so-called outsourced facilities management across Europe is expected to increase by 30 per cent over the next five years.

In this country, the call centre industry is estimated to be worth over 10bn and to employ about 800,000 people. BT figures shows that, in business-to-business terms, 4.5 billion calls were received during 1994 and 2.6 billion calls were made.

But outsourcing call centres is not the only route to establishing a direct telephone link with your customers. Many companies have decided to set up their call centres in-house, preferring to keep a firm grip on the control and growth of what they see as a new department within their company.

There are advantages and disadvantages to both systems – but it would seem that the deciding factor about whether to outsource or stay in-house has much to do with the nature of the company’s core business.

Strategy and marketing manager for BT Call Centres, Dave Jackson, believes that companies that outsource their call centres do so because they understand that customer care is not their core business nor do they want it to be.

“When Apple decided to outsource its call centre to BT it was at a time when the company was losing market share and urgently needed to get back to what it is good at – manufacturing computer software and hardware. Apple is not a service company but it needed a customer service strategy in place across Europe so it could get back to basics,” says Jackson.

BT Call Centres not only operates a pan-European call centre for Apple, it also purchased the sites which house the call centre, and hired and trained all the staff.

NatWest Bank took its 380m contract to BT Call Centres for similar reasons. The bank discovered it had about 1,000 people within the company just providing customer communications in an organisation that was essentially about financial services. Jackson claims it is cheaper for NatWest to outsource the service than continue keeping up a department of so many people.

Probably the most obvious examples of how not to propititiate core business on the altar of customer care are companies like Burger King and KFC. Both set up care lines and then annoyed thousands of callers by neither answering the phones nor really knowing how to handle customer enquiries.

Both the fast-food operators realised their mistake and asked BT Call Centres to set up a dedicated centre to handle calls.

But Jackson believes outsourcing is not without its problems and would not recommend it as a route for everyone.

“If you set up your own call centre, you can usually do it quite quickly by buying in the best technology, adapting it and keeping it under your control. Training up your own staff also means they are much more part of the company culture than a team of call handlers who are employed by another company,” says Jackson.

But if hiring the services of an outside company is not cheap, then starting your own call centre can cost an initial outlay of about 2m and running costs of up to 250,000 a year. At least when you outsource the business, you are dealing with a known cost environment. Anything can go wrong trying to create a call centre in-house.

Nick Velissarides, marketing manager at Mercury Communications TeleBusiness, says putting call centre work out to a bureau is essentially a rental service which many companies are forced to turn to because they are restrained by high start-up costs.

“The call centre business can also be very seasonal. If you are going to invest millions of pounds in a system, you have got to be convinced you will get regular use out of it,” he says.

Velissarides, who says the Telebusiness prospect bank is four times larger than it was this time last year, also points out that setting up a call centre in-house sometimes involves an enormous culture shift within the company.

“Getting existing staff used to dealing even with headsets can be difficult. Also, a classic call centre system allows management access to a lot of information like how many calls an individual is taking and how long they are spending on each call. This can allow for a big brother approach and really rocks the boat internally. Some companies are just not prepared to go through that,” he says.

Vauxhall Motors recently appointed The Decisions Group to handle its 600,000 inbound customer enquiry contract for the next three years. Vauxhall direct marketing manager Paul Harrison says the call handling could not have been handled any other way.

He disputes the assertion that outsourcing inevitably increases the decision-making process and says that working within a large organisation means that internal divisions have to be briefed and the decision process can be as long.

“In terms of providing quality and cost-efficient handling of our 0800 responses, the best thing we could do was hand it to an expert and dedicated facility. Even if we had an in-house facility, we would still have to outsource during major DRTV campaigns. It is much easier to have the expertise in one place,” says Harrison.

Facilities director at Ogilvy & Mather Teleservices, Fraser Watson, says the capital expenditure and cost of running a call centre is one of the main reasons that companies outsource.

“Setting up a call centre is not cheap. You have the ongoing soft costs, the training and keeping of people, but also the cost of maintaining the systems. As a company you need a lot of backup to keep it all going,” says Watson.

But not everyone outsources – and not always because they cannot afford to do so.

Utilities is one area that has enormous potential growth for call centres and Welsh Water has spent the past 18 months setting up its own in-house call centre.

Business communications analyst at Welsh Water, Tim Gilbert, says the main reason the utility was kept in house was to keep control of the pace of growth and development.

Welsh Water decided to set up a call centre in January last year when it discovered that it had a number of mini call centres for different customer areas and saw the economy of rationalising operations and accounts enquiries into one call centre.

Welsh Water brought in consultants to set up the system and train the staff and now has a call centre with more than 80 call handlers.

Says Gilbert: “We thought there was a gamble involved in hiring an outside company to handle the calls. This way we have far better control over what is going on.”

However, on balance it appears that clients are more likely to go with the external solution than the internal one.

Glenn Hurley, sales and marketing director of The Decisions Group, points out that those companies who are now in a post-recessionary stage and are loath to take on high-budget overheads are the same ones preferring to outsource call centre management:

“The general business philosophy now is to keep things lean and mean, and outsourcing fits well into that logic,” says Hurley.

He claims that the growth in the call centre industry is what has been mainly responsible for the 100 per cent growth of The Decisions Group during the last year.

Hurley says: “A lot more companies now prefer to keep the technology and staff overheads at arm’s length. The only risk is handing the management of the call centre to someone else.”

Hurley says the only reason people may be prevented from outsourcing would be their desire to control their customers properly.”

“This is all linked to security and confidentiality and some companies think that outsourcing means they will lose that control. But we deal with extremely confidential financial information and we are also linked into computers for companies on the other side of the world. I don’t believe there are any real strategic reasons why people should not outsource.”