Just last week, an associate ruefully observed “There’s no future for UK contact centres. They can’t compete on cost; clients won’t pay”. They were specifically referring to outsourced service providers, but the root cause of their – regretful – sense of despair could apply to all sorts of contact centres:
- The cost impacts of an increasingly competitive job market and mandatory increases in living and minimum wages (incidentally, I’m assuming that no-none could object to notoriously under-valued frontline contact centre staff getting better paid, but increased costs do inevitably create commercial pressures);
- The post-Covid shifts in the employment market, the ongoing impacts of the ‘Great Resignation’ and a general raising in employees’ expectations of their roles; AND
- An often-toxic combination of increased emotional and cognitive loads for frontline staff:
- Emotional – as they deal with rising levels of customer frustration and rage, compounded by increased financial vulnerability
- Cognitive – more channels, more applications, more complex queries, more rules, more oversight
All of which serves to make a contact centre advisor job even less attractive!
As more and more contact centres roles are transitioned to relatively new offshore locations like South Africa, does this quiet ‘second wave of offshoring’ really signal the end of the mainstream, volume UK outsourced contact centre market?
What’s happening out there?
Even without a degree of informed insight, nearly all contact centre industry insiders would agree that South Africa – which for many years has been a ‘left field’ location, more talked about than utilised – has in recent years grown massively in importance and profile.
It’s over 20 years since the first wave of call centre offshoring to India, when brands first embraced the attractions of delivering customer contact activities from overseas. The long-term results were varied; some preserved successfully, some progressively switched India into a predominantly non-voice delivery location, others recanted and repatriated their contact centres (some quietly, some with a great PR fanfare). Lessons were learned – or forgotten – and the world’s a very different place from the early ‘noughties, but it does seem like we are in the midst of a ‘second wave’ of offshoring.
From CCP’s perspective many clients are choosing to outsource to South Africa, either offshoring their contact centre services for the first time or selecting the location over another other offshore sites used previously.
Of course, South Africa is far from the only newly emerging contact centre location. Certainly for the big, global BPOs, South Africa already feels a bit ‘last year’ and Egypt is the favourite location. The spread of outsourcing ambitions and capabilities – whether that’s driven by home grown entrepreneurs or global BPOs looking for the next source of untapped, inexpensive talent – across Africa is a fascinating subject. One we may return to in the near future.
Countries which feature in the growing list of CCP partners’ operational locations range from Bulgaria to Kosovo in Eastern Europe, and destinations even futher afield like Fiji and Suriname.
It’s not all about cost. But it often is …
There are many reasons and business drivers which can influence an organisation’s decision to outsource its contact centre and customer engagement efforts. These may range from a lack of technical or operational capacity; challenges with staff recruitment and retention; or an acceptance that the organisation’s points of differentiation and value lie elsewhere and that a third party is best placed to deliver contact and support services. But, of course, the decision might be primarily motivated by price. And for a client making the move from an in-house or outsourced UK contact centre to one located in, say, South Africa then they would expect savings in the region of 50%.
Life’s rarely that simple, though. Outsourcing decisions are often propelled by a variety of factors; there are obvious as well as hidden costs in outsourcing, especially at a great physical distance; and simply ‘lifting and shifting’ a contact centre operation will miss opportunities to enhance their customer experience and the tools and processes that deliver them. However, when most businesses are still adjusting to two years of inflation, raised interest rates and fragile levels of confidence, the prospect of delivering unavoidable services for as little as half the cost is compelling.
Game over for the UK?
It might look like it, but there are some good reasons to think otherwise. In fact, in some circumstances – or for some outsourced service providers – we could be on the cusp of a UK contract centre renaissance.
Here are some reasons why:
- Cost vs Value: business drivers are often cyclical. The same companies that are massively focused on cost and/or headcount reductions today, may be far more focused on customer value next year. Going offshore isn’t synonymous with lower quality interactions, but they can more difficult to sustain from afar, distant from the domestic culture;
- The ‘stability premium’: Business continuity planning isn’t just about unusual weather events, or pandemic flu preparations (remember them!?) nowadays. War, cyber threats, climate change, civil unrest and both formal and informal economic sanctions are of growing importance. Having a contact centre in the UK rather than thousands of miles away isn’t a guaranteed insulation from these factors, but it helps;
- Complexity: Analysis, gut feeling and research all demonstrate that simple or ‘transactional’ contacts are increasingly rare. Even consumer queries that are ostensibly ‘easy’ are now frequently evidence of profound underlying challenges – either fixable flaws and barriers in how brands interact with customers, or consumers’ own vulnerabilities. Addressing either requires highly skilled, brand-aligned people; AND
- Collaboration, collaboration, collaboration: As machine learning and Generative AI become integral parts of how brands’ contact centres manage and interact with customers, the need to collaborate :
- Tech with ops
- Proposition with experience
- Clients with service providers
- Advisors with AI interaction guidance and knowledge solutions will become more important. Doing so with colleagues and partners located nearby, with genuinely shared experiences, may be at a premium
Conclusion
None of these factors are guarantees that the UK outsourced contact centre industry will survive and prosper. However, one thing outsourced service providers are above anything else is resourceful and flexible, so the best of them will a find a way to differentiate and succeed.
What do you think? Is the UK outsourced contact centre industry doomed – or, not for the first time, has its demise been predicted way too soon?
Let us know. We’d love to hear your thoughts, whether you’re a client or a service provider, whether you’re based in the UK or abroad.
