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.

Competition abroad, unforeseen challenges and diversification, it’s a difficult tight rope to walk for UK BPO’s at the moment. In this article, our Partner Success Manager, David Taylor, reviews the the current state of the UK BPO landscape and how external factors are pushing UK Outsourcers to diversify and adapt to changing market conditions.
The business process outsourcing (BPO) industry in the UK has faced significant challenges in recent years, with the COVID-19 pandemic and Brexit creating much chaos, uncertainty and disruption. Over the past few months, we have unfortunately seen two sizeable UK BPO’s placed into administration – which ultimately has led to job losses and undue stress in a time where the UK is experiencing it’s highest rate of inflation since March 1993.

As part of this article, I wanted to explore the challenges facing the UK BPO market, what to expect over the next two years, and what UK BPOs can do to diversify and adapt to changing market conditions.

Challenges facing the UK BPO market:

1. The COVID-19 pandemic has had a significant impact on the BPO industry here in the UK. Many businesses have had to re-evaluate their outsourcing strategies as a result of the pandemic, with supply chains disrupted and remote work becoming the norm. This has led to a decrease in demand for some BPO services, particularly those related to office-based functions such as customer service and administrative support.
2. Brexit has also created challenges for the UK BPO market, particularly around access to talent. Many BPOs in the UK rely on skilled workers from the EU, and the uncertainty surrounding Brexit has made it more difficult to recruit and retain these workers. This has led to a shortage of skilled workers in the industry, which is expected to continue over the next few years.
3. The high rate of inflation here in the UK has caused a significant squeeze in the cost of living. Many employers have reacted to this by increasing employee wages to help with the cost of living, and right so. However, this has huge implications on a market that is run on very fine margins, hence many UK BPO’s making the difficult decision of raising customer/client facing costs.
4. In addition, the rise of automation and artificial intelligence (AI) has had an impact on the BPO industry in the UK. Many businesses are looking to automate certain tasks and processes, which has reduced the need for certain BPO services. While this has created new opportunities for BPOs that specialize in automation and AI, it has also led to increased competition in these areas.

What to expect over the next two years:

Whilst I don’t own a crystal ball, I believe there are still opportunities for growth and innovation in the UK BPO market. Here are some trends to watch for over the next two years:

1. Increased demand for automation and AI services. As businesses continue to embrace digital transformation and automation, there will be increased demand for BPO services that specialise in these areas. BPOs that can offer expertise in areas such as robotic process automation, machine learning, and AI will be well-positioned to succeed in the market.
2. Greater emphasis on flexible and remote work. Whilst this could be an article all in itself, demand for remote and flexible working will continue over the next few years, which will create new opportunities for BPOs that can offer remote support and services.
3. Focus on innovation and digital transformation. Innovation and digital transformation will be key drivers of growth in the BPO market over the next few years. Time and time again our clients are looking for partners that can take them on a journey of continuous improvement and technological innovation.

Diversifying and adapting to changing market conditions:

In order to succeed in the UK BPO market, BPOs need to be able to diversify and adapt to changing market conditions. Here are some strategies that UK BPOs can use to do this:

1. Expand into new markets. One way to diversify is to expand into new markets. BPOs can look to offer their services in new geographies, or target new industries and sectors. This can help to reduce dependence on a single market or sector, and create new opportunities for growth (as well as offering clients the same service at reduced rates).
2. Embrace automation and AI. As mentioned earlier, automation and AI are key trends in the BPO market – just look at the recent explosion of ChatGPT. BPOs that can offer expertise in these areas will be well-positioned to succeed. By embracing these technologies, BPOs can reduce costs, improve efficiency, and offer more innovative solutions to their clients.
3. Focus on customer experience. Sounds simple, right? Customer experience, something which has been forgotten about a little over recent years, is becoming increasingly important in the BPO market. BPOs that can offer exceptional customer service and support will be in high demand. This means investing in training and development for customer service teams, and using technology

So I go back to my question at the top of this article, are traditional outsourcers in the UK struggling to regain their balance? Well, I think the answer is yes (from a traditional sense), however we’ve definitely not seen the last of the UK BPO market as a whole. Many BPO’s in the UK have already woken up to what’s going on around them and have successfully diversified their business to adapt to this new environment – just look at the success of homeworking since the pandemic. However, I predict further change will be needed for some of those remaining BPO’s who have yet to fully embrace the changing UK BPO landscape.

Looking for further guidance after reading this article? Get in touch, we are here to help!