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In a widely anticipated move, Client Logic has announced that they have bought SITEL for $US450 Million.  In the merger of call centre outsourcers, they don't come much bigger than this.  The new combined company has global revenues of approximately $1.7 Billion and has 65,000 employees in 28 countries.

At call-centres.com, we examine the history of SITEL in the UK marketplace and how this changes the landscape for British call centre outsourcing.

THE EARLY PROBLEMS

In its 10 years in the UK call centre industry, SITEL has had many ups and downs.  It started so promising with the purchase of the country's 2 largest vendors; Stratford-Upon-Avon based Merit Direct and Kingston based The Decisions Group which together formed The Mitre Group.  The company boldly announced to the call centre world that they would combine the two vendors exquiSITELy.  SITEL believed that the trend in outsourcing would be towards global deals and that they would be able to leverage their brand across multiple regions.  Unfortunately for SITEL, this never truly developed as the majority of their clients continued to source their outsourced their operations locally.

There were other issues facing SITEL.  They quickly had to cope with the fact that the key people behind these companies had found themselves financially independent of the company with their payouts from the SITEL merger.  With the industry still in its relative infancy, there were very few people in The UK with the expertise and experience of these individuals.

After analysing their business, SITEL then proceeded to resign a large number of their smaller clients and then shortly after begged for the business back from many of them.  They then attempted to replicate their US model by restructuring the company by the industry sector of their clients.  Each sector was treated as a separate business unit dealing with industries such as travel, publishing or utilities.  Expertise was brought in from these respective industries but SITEL quickly back-tracked and reverted back to their previous model.

Then the unthinkable happened.  With struggling sales figures and The US investors pushing for quick returns, they made a large number of redundancies among their non-agent staff.  Employees of Merit and Decisions had been used to triple digit growth and the abundance of career development opportunities this brought.  With SITEL's competition rapidly expanding from both industry growth and the clients SITEL had resigned or lost, many of SITEL's most talented employees left for greener pastures.

With SITEL still operating on a number of different operating systems, they decided to implement a Siebel based platform across their UK centres.  This turned out to be a mistake and they are reported to have spent over £4Million on a system which was never used. 

Of course, it is very easy to criticise SITEL's decisions retrospectively and the above examples do paint a one-sided viewpoint on them.  SITEL were continuing to win business and their client list is and always has been a Who's Who of companies.  For most major clients, SITEL were still viewed as a premium vendor and they have always had an extensive list of satisfied clients and a large number of very competent managers.

A CHANGING MARKET

With the maturing market of the late 1990's, SITEL found themselves with some very aggressive and competent competition from a wide array of new vendors.  Companies such as Inkfish and The Listening Company who hadn't even been formed when SITEL entered the UK market were proving a force to be reckoned with. The Listening Company was formed by former Decisions executive Adrian Ingham and from a standing start had turned themselves into a world-class vendor.  SITEL also found themselves with many of their American competition increasing their presence in the British market including ICT who launched in Uxbridge and immediately employed some of SITEL's best employees from their centre in nearby Watford. 

The growth in offshoring was a help and a hindrance to SITEL's fortunes.  Most large companies were still reluctant to use unknown offshore vendors and SITEL were able to leverage their brand to win quality work for their offshore centres.  However, the explosion in offshoring seemed to give many clients the reason to squeeze margins further and SITEL's profitability was continuing to struggle.

SITEL TODAY

Under the leadership of Mark Brown, SITEL UK has turned itself round to be a major player again.  They closed 2 high-cost centres in Watford and Dublin, rebuilt the brand and won some significant new clients.  At the recent Call Centre Expo, they had the most expensive stand of all the outsourced vendors.  Cynics would say that this expressed their desperation to win new business but to many, it displayed their desire to showcase the New and Improved SITEL.  Of course, it seems an unusual move for a company to spend so much on marketing less than 2 weeks before the takeover announcement.  We can only assume that the decision to exhibit was made before the deal looked certain.  One thing for certain is that SITEL UK is now in its strongest position this Millennium but so are many of their competitors.

EXQUIsitelY MATCHED?

All in all, it seems a good deal for both companies.  It was well known that SITEL were looking to sell their business and Client Logic inherits a company with a solid client base and significant operational capacity.  The acquisition also allows for Client Logic to be viewed alongside vendors such as Convergys when pitching for the larger pieces of business. 

I remember a speech by the President of SITEL in 1996 when he admitted that the call centre outsourcers had no special inventions and that they were effectively selling a person on a phone sat behind a computer.  In such a market, turnover can quickly rise and fall and there are no guarantees that when a book of business is purchased by a rival, that the business will stay there for the long-term.  However, Client Logic have already proven themselves to be a premium vendor and with their expertise and financial banking, have the ability to truly deliver.

THE CONCLUSION

There are a lot of lessons in the history of SITEL and the major lesson for Client Logic is that growing by acquisition rather than organically can have significant issues.  However, Client Logic have already proved themselves to be a major player in the industry and with their financial backing and their overnight increased client base and management ability, the future looks rosy.  It is also true that many people mistake the competitive nature of the call centre market as being a downturn in the industry.  Nothing could be further from the truth.  The demand for quality outsourced providers has never been stronger and we all at call-centres.com wish Client Logic all the success.  It's also important to note that for all the negative publicity surrounding SITEL, both they and their predecessors have given so much to the call centre industry and without them, the market would be less dynamic than it is today.

It's difficult to judge how Client Logic's competition will view this acquisition.  For some, it may seem that there is 1 less company competing for clients.  For others (especially the large vendors), Client Logic is now a force to be reckoned with.