Call centres boom

Copyright: David Lawson - The City magazine March 2000

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The lights went out just as dinner arrived at the table. No problem: light the candles and ring the electricity people. They are nice and local, and a lady called Janet said it would be sorted in a jiffy. It was, too.

 But George the engineer, sweating over an ageing fusebox, looked blank when asked to pass thanks to Janet. She lives several hundred miles away in the wilds of the North. This heroine might be just as  bemused to hear that the manger who sorted out a problem with her  bank account last month was sitting in the heart of London.

  All the hype about how the Internet will change our lives hides the fact that the humble telephone has already been through a quiet revolution. Calls are routed hundreds - sometimes thousands - of miles for even the most basic enquiries. Great barn-like structures have sprung up, packed with row upon row of agents, glued to flickering computer screens and whispering quietly into headsets.

  More than 5,000 of these call centres are scattered around the UK and as many more in the pipeline, according to the research group Datamonitor.  They are part of a management and technology revolution merging Customer Relations Management (CRM) and Computer Technology Integration (CTI). In other words, they employ computer-aided communications to analyse and serve customer needs. Banks and financial groups are leading the charge, spending more than a billion pounds a year on call centre technology, according to Datamonitor.

  But they have also made some big mistakes, according to a study by the Future Foundation for  London First. The first was to see these centres as a way of cutting costs rather than improving service,  emphasising the number of calls handled rather than customer satisfaction. This led to denunciation in the media of '21st century sweatshops' with huddled masses slaving under the eagle eyes of supervisors.

 Similarly, jobs were sent spinning out to the Provinces, where rents and salaries are lower. London Electricity was among the first to leave  when it discovered several years ago that enquiries could be handled more cheaply in Gateshead than Greenford or Greenwich. BT has electronic barns dotted around the UK, as have credit card companies, mobile phone operators and retailers. Some electrical and computer firms are even in other countries.   

  But they have learned that when 90% of costs go on people and those people don't like sweating away in barns, you stop building barns. Orange, for instance, now insists on an 'appropriately stimulating environment' including coffee shops and rest areas. Virgin has a Zen garden in its latest centre to help staff relax.

  London is set to benefit from this change of heart - particularly as the Internet grows in importance. The capital is already home to an invisible legion of around 200 call centres employing 20,000 people - more than any other European city, according to Andrew Cooke, executive director of London First Centre. They go unnoticed because the work is done by small teams in conventional, anonymous office blocks.

 The attraction is a skilled workforce, 24-hour services and proximity to financial groups leading the charge into online customer support. These are the very factors which will be crucial as companies move away from obsession with cost-saving towards better customer service, and the Internet becomes a real force.

  These operations will evolve into what the Future Foundation calls Customer Interaction Centres, which integrate telephone, fax and Internet support. These require a higher standard of skills than more routine  activities such as the billing queries handled by earlier centres.

 'Many are already providing  international support, which demands the kind of multi-lingual staff more available in London,' says Cooke. For instance, Delta Airlines consolidated 13 centres in London last year and Air France runs all its non-French operations from a refurbished Sixties office block in Wembley.

   Such skills will make call centre operators  more appreciative of  staff, says Ken Giannini of architects DEGW, who has worked on schemes for Egg, Capital One and Bank One around the country.

 'Employers could shrug off a 30% churn rate if it took only two days to train someone. It is entirely different when each support worker is skilled at babying premium customers,' adds Sam Cassels, managing director of occupancy consultants ISGC.

 Giannini believes call centres will move back into towns, although not necessarily into glossy City towers. Hundreds of high street  branches being dumped by banks would make ideal locations, he says, with personal services or cafe facilities on the ground floor and small call centres on the upper levels.

 London's attraction is not just skilled workers but the 24-hour services, good transport and lifestyle they demand, says the Future Foundation. It is also rich in ancillary skills such as technical backup for these sophisticated services and the creative industries needed to design online services.

 Nor will London suck back all the service jobs it might once have claimed. While Steve Nicol of DTZ Pieda Consulting sees attention switching away from 'tried and tested' cities  like Leeds and Glasgow, there will be a flow to medium-sized towns which offer a combination of staff numbers, lifestyle and access.

 'Anywhere over 100,000 people would be suitable for centres of 200-350 seats,' he says. The threshold size is falling because operators have learned that support can be broken down into smaller numbers.

  Orange, for instance, works in teams of around a dozen, and now realises they do not need to be in the same place for visual supervision. They can be linked in 'virtual' teams over the Internet.

  Not everyone will be able to squeeze into existing space, however. Nor should they, says Stephen Bantoft of the Cannock Group, who has pioneered development of serviced call centres in Scotland, Manchester and Yorkshire.

 'You can make conventional buildings work but it is better to start from scratch with the extra telecomms and air-conditioning designed in rather than spend money adding it later.'

 That leaves the property industry in a dilemma. As the sector fragments, many investors are unsure about what they should be offering to exploit this buoyant demand.

 Few are interested in barns, leaving them for owner-occupiers to ponder over  how they will fill this space in five years, when technology such as speech recognition wipes out half the workforce or activity moves to cheaper centres overseas. Even job-hungry local authorities are having second thoughts about these giants after considering the potential traffic generation problems, says Cassels.

 A middle tier, catering for telephone  salesforces of up to 300, seem the richest seam but Guy Marsden of call-centre specialist Highbridge Properties says even these must be designed with built-in flexibility to convert back to conventional offices if demand falls away. It also means choosing locations where offices will be in demand rather than being led astray by side issues like grants.

  Few are bold enough to build speculatively because the fast-moving technology means no-one knows what will be needed next week, let alone next year.  Demand is rising so fast that developments following Marsden's rules are unlikely to break ground before someone walks in with a bid, however. Flexibility cuts both ways, as it enables plans to be adjusted to meet the differing requirements of various operators.

  In fact, much of the confusion about call centres is because  tenants are not picking a specific type. Leading financial groups are dotted all around London in what are no more than bog-standard office blocks. In the provinces, Orange plumped for a converted factory in Darlington, a traditional office in Plymouth and a purpose-built, single-storey block in Newcastle.

 'Nine months is an eternity in the current upheaval as more tenants move into  the sector,' says one agent looking for space to service a department store group. 'We were given six to find a building and be up and running.'

  The best bet that developers can make is to create  hybrids, says David Hand, research partner at surveyors Knight Frank. These will be flexible enough to enable a huge range of fitouts and subdivision, because no-one can predict what will be required in five years - let alone a decade.

  In other words, a few barns, a lot of pseudo-office centres and the potential for regeneration of suburban office blocks fit for little else.

  Where they put them is another problem. The provinces or southern coastal towns will continue to attract  routine operations - at least until labour costs are pushed up. But there will be  a gradual move into cities with the evolution of  customer centres requiring greater skills.

  But the change may not be as simple as many of the 200 senior managers quizzed by The Future Foundation believe. Two-thirds expected to bring in the new technology within the next year, but the study showed that this could prove optimistic when so few companies currently integrate telephone and Internet operations. Call centres are still  considered as 'people and service' operations while Internet web services were geared to technology and advertising.

 The cost-cutting ethic also remains more powerful than that of adding value. Only a third of companies bothering to measure customer satisfaction with the service they receive.

  'Some dramatic changes in mindset are necessary,' says the study. But it adds that managers are 'refreshingly honest about their past mistakes'. More than 60% see the drawbacks of current call centre locations, and almost as many see more highly skilled staff as a vital factor for the future.

  This all looks gloomy for Janet, as routine call centre services will either disappear to some low-wage country or into the circuitry of a computer. But the Internet could still be her friend. While customer services may gravitate to London, the new technology will enable  customer support operations to be broken down into 'virtual teams'. They will not need to sit in the same city, let alone under the same roof, because computers have no concept of distance.

 Perhaps the next time the light go out she will be still on the line and we can finally pass on our thanks.

 Customer Management in the 21st Century  by The Future Foundation was sponsored by 7C Ltd, BT, Calcom, Callflex,  Corporation of London, EC Harris, English Partnerships, London Borough of Croydon, London First Centre, Nortel, and Whinney Mackay Lewis.

 Available from:


A recent Harvard University study showed that a 5% improvement in customer retention could increase profits by 86%, and that only 4% of those who leave a company's business are likely to return.

 Call centres are often dismissed as giant telephone exchanges, but they are far more. These are at the heart of what has been dubbed the science of  'customer relations management'. At its simplest, this means matching client needs  to services, ansd has become vital to banks and financial services groups where competition is so fierce.

 New technology is the engine driving these advances, and will become even more crucial as business connections migrate to the Internet. Datamonitor estimates that UK call centres will spend £2.5bn on CRM technology in the five years to 2003.  The technology means that basic functions such as  requesting an account balance or making a deposit can be automated,  leaving agents to provide personalized service. This helps to secure customers' loyalty.

  A host of techniques are being developed to help this function - generating a mind-numbing dictionary of jargon. 'Screen popping' , for instance, simply means that when a customer calls,  the phone number activates CRM software which pops up information on background, address, sales record, etc. jumps on the screen  rather than requiring a search through multiple databases. It will also track how the call is handled and assemble information for potential cross-selling.

  The technology is expected to move away from expecting agents' to maximise the number of calls handled , ensuring instead that customers goes away  satisfied without being bounced around between different agents.  It  is also pulling together many forms of access. In the past, the telephone or fax was  the main means of access. Datamonitor points out that  just over 11m homes in Europe have personal computers today but this will more that triple over three years and companies will need to rethink online strategies to cope with online inquiries ranging from sales to helpdesk support.  The number of Internet-enabled centres will explode from less than 30 to almost 950 in the same period, with almost 3,500 across the whole of Europe.

 But this will demand more than new technology. It requires closer integration and higher skills.  People are discovering that on-line access is pointless without  good service backup. Companies can not only lose new custom but alienate existing clients if they cannot offer quick and efficient support.

  CRM software companies are working on packages which will enable departments to  access customer records for the most recent transactions right across an organisation, regardless of the means of communication. But that means the helpdesk, marketing, sales, customer service, inventory and  data warehousing must share a single, cohesive view, which is still relatively rare

Jargon Buster

CTI - Computer Telephony Integration  - integration of computing and telephones

Call Centre  -  customer support centre,. Traditionally reliant on telephone links to agents working from computer screens to provide advice or selling services.

Customer Interaction Centre (CIC)- the next generation of customer centre, integrating telephone, fax and Internet communication.

CLI - Caller Line ID - calling number identity can kick an agent application to give extra information

Screen popping  - caller details pop onto the computer screen

Call blending  -  governing the call traffic  in and out of a customer according to set priorities

ACD - Automatic Call Distributor  - distribution and management of calls to specific areas of a call centre.

API - Application programming interface -  connection between software and agents

TAPI - Telephony Application Programming Interface

TSAPI - Telephony Server Application Programming Interface - protocols connecting telephone switches to computers.

IVR - Interactive Voice Response - automated voice recognition expected to take over many agent functions by responding to customer queries. Currently mainly used to collect information before connection with an agent.