ARTICLE: 26TH JANUARY 2007

90% of Small Offshore Call Centres to Be Bankrupt Within 2 Years

Despite their good intentions when they set up, very few of these companies will even exist 2 years from now. On the other hand, the larger outsourcers such as 247 Customer or FirstSource have quality client lists and seem to be able to expand at will. Many of the larger outsourcers are now starting to set up UK based call-centres and some are going for the initial public offerings on stock markets both here and in India. We examine the difficult situation faced by the smaller vendors and examine what they can do to counteract this inevitable challenge.

Build it and they will come?

These smaller companies tend to take on pay-per-performance telemarketing projects. 4 years ago, many of these centres were selling gas and electricity. Then, many centres went on to sell Carrier Pre-Select phone services such as HomeCall and CarPhone Warehouse. These days, many of them sell mobile phones to a fairly negative British public. Of course, these aren’t the only projects they do. Some have sold credit cards, insurances or done list cleaning programs.

A whole new industry has set up in the UK and offshore of what are termed as intermediaries. They are also commonly known as brokers or consultants. They win British based clients and then act as resellers to offshore call centres. While there are some professional companies such as Optima Direct who do add value to the process, most of them find low value clients and give the work to offshore call-centres with a hefty percentage taken off the revenue.

The problem is that most of these projects are now highly unprofitable even for the offshore model. If we take the example of mobile phones, an offshore call centre used to sell anywhere from 1 to 3 phones per agent per day. Today, this figure is closer to 0.5 phones per day. Add on to that the fact that mobile phone campaigns normally have clawbacks for things such as failed credit-checks or buyers remorse which can account for over 50% of the gross sales made. Often the offshore call centre is even required to pay for the calling data. Unfortunately, things get even worse as many of these clients then fail to pay. A recent BBC report suggested that many individuals were struggling to get their promised rebates from mobile phone retailers. This is because many retailers work on the basis that only a small percentage of people will actually take them up. When most people do take them up, the retailer cannot afford to pay their creditors including their call centres. This whole process is often made even harder when a broker or intermediary is in the middle of the deal as the more people who handle the money, the less likely it is that the call centre will receive it.

On establishing their offshore call centres, these entrepreneurs take on these projects believing that one day, they will be able to expand into higher value work and inbound projects. Even the clients and intermediaries who give them this work will often convince them that this is the case. Unfortunately, this fails to appreciate how British companies buy outsourced call centre services. The procurement process for medium to high value outsourced projects is complex particularly for offshore activity. Without a UK based business development person who has the contacts, industry expertise and knowledge of the process, the chances of these companies succeeding is almost nil. Some offshore outsourced vendors believe that they can sell higher value work through a mixture of emails and phone calls but this is not the way that British companies buy. Having spent 4 years selling offshore services for a Manila based company, I was able to close a number of sizeable projects with American companies but have never sold to a British company that I hadn’t met. In most cases, I also had a strong personal relationship with at least one of the key decision makers. Some offshore vendors turn to partnerships with British based outsourcers who effectively turn into intermediaries. With a limited number of exceptions, these will also fail. As with any international brokering process, the intermediary will act in their own best interests and not that of the offshore vendor. Some offshore vendors even turn to online forums where projects can be placed and vendors can advertise. This may be suitable for mobile phone projects but quality business will not be bought or sold in this manner. This is why callcentrepeople.com launched a service called “Fast-Track” aimed at offshore call-centres. We have been able to place quality candidates with the right mixture of experience, knowledge and contacts to take the offshore company to the next level. The business development person will normally work from home to keep costs to a minimum. This has helped companies from India, The Philippines, South Africa, The Middle East, Eastern Europe and The Caribbean to actually fulfil what they had originally intended to.

Conclusion:

If your offshore call centre wants to succeed, there are no short-cuts. British companies have been let down by many call centres and will want to be confident that you will deliver what is expected. This cannot be done remotely and is not done by occasional short visits to see them. They require constant attention and a local presence to reassure them that you are not another statistic in the bankruptcies which continue to plague the offshore world.

www.callcentrepeople.com