Industry news

Could the familiar contact centre setting, where hundreds of customer service agents sit at terminals wearing head sets become a thing of the past? So-called 'homeshoring' is the latest contact centre ‘hot’ topic, with experts making big claims that increased home-based work could save the UK industry substantial sums of money.

Using advanced technology and communication tools, moving jobs from the confinements of a call centre to the home seems a financially attractive solution. Analysts at research firm Datamonitor forecast global growth in the number of home-based customer service agents of 36.4% (one of the strongest expansion levels of any outsourcing market sub-segments) between 2008 and 2012. Their research suggests that home agents will number 224,000 by 2012, forming part of the mainstream customer service environment.

While in many sectors, homeworking can provide jobs for people previously excluded from employment, such as parents, carers, older workers and those with disabilities, selection of home-based agents will be based primarily on requisite technical skills, with hours of availability a secondary consideration.

But could the creation of a diverse and stable home workforce that enhances the customer experience through improved service really reduce the dependence on physical contact centre facilities?

The concept of ‘teleworking’ from home has existed for almost 20 years and although homeshoring is considered to be similar, it is a very different and more complex proposition. It requires a skilled workforce with disciplined shift patterns integrated into the operation of a virtual contact centre. Specialists need access to real-time voice and data in a secure environment to answer customer calls via skills based routing.

Despite 7.5 percent of the UK workforce working from home at least once a week (source: Office of National Statistics), very few ‘traditional’ contact centre advisors are afforded this option. Perhaps the practical realities of homeshoring prevent the idea from truly taking off.

Dale Saville, president EMEA for global customer care provider Sitel explains his reservations on the future growth of at-home agents. “Homeshoring is a buzzword at the moment, but recent data being collected in the United States indicates the likely global perspective. Some 250,000 agents are predicted to become homeshore agents in the next five years, a relatively small proportion of the three million labour force already working in contact centres. There is much talk of how homeshoring will double or treble in size over the next five years, but these statistics start from a small base.

“Homeshoring is not really a labour arbitrage opportunity or a cost solution but a service flexibility and specialisation solution. The issue of infrastructure management becomes more problematic in the homeshore environment than the contact centre arena. I believe the cost savings argument for at-home agents is not as powerful as the demand aspect which is specialised skills.”

“Even though systems and processes can be carefully placed to ensure smooth delivery of service from the home, many managers will lack confidence in their ability to ‘manage at a distance’ and some will not have faith in their staff's commitment to be as productive as they would be in a contact centre.”

With 2008 the year when the homeshoring phenomenon is predicted to take-off, business continuity managers will need to allow for the advantages and disadvantages of the homeshoring phenomenon. There are only a relatively small number of contact centre environments that would be ideally suited. Anything with financial regulation and implication cannot be performed at home due to information security concerns.

“We don’t see it becoming a large fraction of the contact centre space; it’ll be an important part but not a large part. This is primarily due to security and PCI compliance issues. I’m not sure that homeshore environments will be able to fulfil these requirements. But homeshoring has some very big advantages where unique fractural labour forces are needed within peaks and valleys of demand.

“People tout the value of the current at-home agents in terms of their education levels and retention rates and this raises the interesting issue of self-selection. Will those who opt to be a home-based call centre agent be more motivated, professional or disciplined than the average call centre job applicant and hence have lower attrition rates?

“I think that certain types of “case oriented” work will be nicely addressed by home-based agents. This type of work will typically involve more complex transactions that require research and investigation where the caller expects a longer resolution period. For example, medical claims processing needs a significant amount of data collection and analysis prior to a response versus the instantaneous response of directory assistance."

Saville concludes, “I think homeshoring will be an important, but small part of the overall customer service delivery model. It will fill specialised requirements for fractural labour to address peaks and valleys of demand and unique skill requirements that are difficult to recruit to a single call centre site. I am less sanguine about homeshoring as a cost reduction strategy.”

Capgemini has announced its ‘Business Aware Application Outsourcing’ model.The consulting, technology and outsourcing services company says that the new approach, which combines software as a service (SaaS) and Web 2.0 elements, takes application outsourcing "beyond its traditional focus as an IT cost-reduction mechanism towards a business services focus and a platform for innovation".

Now that businesses are demanding that their CIOs drive more value from their IT, with systems that are managed and evolve in line with the business that they support, application management is becoming increasingly important as it is at the intersection of IT infrastructure and business processes. Capgemini’s application outsourcing service framework ties traditional services, such as applications management, testing and modernisation, with new offerings such as ERP utility and 'mashup' applications development.

Paul Spence, head of Outsourcing Services, Capgemini, said: “Our clients want an outsourcing partner who can not only help them to contain their IT costs, but also help them to take advantage of technology developments such as SaaS and Web 2.0 to deliver more flexible and responsive IT that evolves in line with their business needs. This helps companies effectively apply emerging technologies to create opportunities for business growth, while continuing to manage IT costs."

Cleaning and maintenance company Mitie Group has reported a 21 percent rise in annual profits, citing increased customer outsourcing activity as companies struggle to cut costs.

Mitie said pretax profit for the year ended March 31 increased to £70.6 million pounds on revenues of £1.4 billion. Mitie's guidance for fiscal 2008 included an upbeat assessment of future outsourcing opportunities as the financial climate worsens.

Hart District Council has selected Capita Local Government Services in a BPO deal worth £9.6 million. The deal, lasting nine years will see Capita deliver the council’s revenues and benefits services.

Under the contract, Capita will assume responsibility for the collection and administration of revenues, council tax and housing benefits using innovative, effective technology and processes. The council hopes to save £500,000 through the deal whilst working with Capita to improve service delivery.

Viv Evans, Corporate Director of Hart District Council, said, “Local authorities across the country are continually looking to make service enhancements whilst achieving integral cost savings. As a rapidly improving district, our partnership with Capita will help us to harness the best technology, processes and people for the modernisation of our revenue and benefit service.”

23 of the Council’s employees will transfer to Capita under TUPE regulations. The combined Council and Capita team will review current processes and IT systems, working towards the development of greater choice for citizens in how they liaise with the revenue and benefits team. The Council will also consider the introduction of mobile technology for visiting Council officers.

Capita, the UK’s leading BPO provider, has unveiled plans to double its workforce in India by the end of 2008, according to its annual corporate responsibility report.

The company, which provides a range of BPO services to public and private sector organisations, said 2,600 staff would be moved offshore by the end of the year.

Capita’s report estimates the UK and Ireland BPO market to be worth an approximately £5.1bn but Ovum figures indicate it is a hugely nascent industry with the potential to reach £94.8bn per annum.

In 2007, group turnover increased by 19% to £2.07bn, with pre-tax profit rising 19% to £238m.

BT Group has handed a £175 million outsourcing deal to Tech Mahindra, a leading provider of solutions and services to the telecommunications industry. Under the contract Tech Mahindra will take over application support for the next five years.

Application support will be delivered from Tech Mahindra’s Indian ‘Centres of Excellence’ and from a new dedicated facility being set up in the UK to monitor BT’s core business processes.

Clive Selley, Managing Director, Wholesale Service Design for BT, said: “This deal links our Application Portfolio performance to our business performance. Tech Mahindra’s experience and expertise on both, the business process as well as IT Systems makes it the perfect partner for value realisation and achievement of BT’s objective to become number one in customer service. The five year period and confirmed business will enable Tech Mahindra to take a long term view on innovation and service excellence."

French IT services company Steria has reported first-quarter revenues of €438.5 million (£349.7 million), up 38.3%. Domestic revenues were down 3.8% at €129.8 million (£103.5 million), while business in the UK was also down, by 2.5% – mainly because of the non-renewal of two major contracts. Germany, however, grew by 14.4% to €58.4 million (£46.6 million).

Outsourcing and BPO revenues increased by two percent to €175.7 million, (£140 million) accounting for 40% of overall business.

Ovum said that Steria's performance during the last quarter was still being affected by the integration Xansa, which it acquired last year.

Offshore business process outsourcing (BPO) services provider WNS has announced results for the fiscal year ended March 31, 2008 and released its guidance for 2009.

Revenue for 2008 was $459.9 million, a year-on-year increase of 30.5%. However, net income for the year was $9.5 million, a decrease of 64.3% from 2007. The decrease was primarily due to a one-time impairment charge of $15.5 million in respect of goodwill and intangible assets and also costs related to the redeployment of resources associated with the bankruptcy of First Magnus Financial Corporation, said the company.

“WNS has ended fiscal 2008 on a strong note with our profitability back on track and our sales engine gaining momentum,” claimed Neeraj Bhargava, group CEO. “In spite of challenges in the mortgage area, we have accomplished 32% growth in our revenue less repair payments, expanded our global footprint, diversified our client base, delivered significant value to our clients and strengthened our industry-focused BPO businesses.

WNS also provided guidance for the fiscal year ending March 31, 2009: Revenue less repair payments is expected to be between $373 million and $378 million. Net income (excluding share-based compensation and related fringe benefit taxes, amortization and impairment of goodwill and intangible assets) is expected to be between $44.0 million and $46.0 million.

Release Consulting, an independent IT consultancy specialising in the music and entertainment industry, has finalised an agreement with Universal Music Group (UMG), one of the world's leading music companies, to service its international IT Digital Initiatives (ITDI) department.

Release was previously the in-house unit at Universal Music Group International (UMGI) in London, managing its ITDI and digital supply chain programmes. UMGI is responsible for Universal Music's businesses in the world outside North America.

The new company, based in West London, aims to offer programme and project management, business analysis, technology solutions and support services to the wider industry, whilst continuing to provide Universal Music with such services.

Will Lovegrove, managing director, Release Consulting, said, "The IT skills and business analysis expertise that have delivered good results for Universal Music Group International will be in demand from other media and entertainment companies who are facing, or will face, the same challenges that the music industry is facing today. I believe Release Consulting is well placed to help those companies with those challenges."

Rahmyn Kress, managing director, supply chain management at Universal Music Group International said, "The ITDI team under Will Lovegrove has had a successful track record in designing, constructing and supporting a number of UMGI's IT systems. Now Release Consulting will provide project management and support services, and we're pleased to have the continuity and expertise that Will and his team represent.

Lloyds TSB will offshore up to 445 UK IT positions to low cost Indian locations by the end of the year.

The deal, the details of which have not been formally announced, will see Lloyds TSB offshore 250 permanent staff and up to another 195 contractors and temporary staff from their IT function.

The decision has not gone unnoticed by unions with Unite issuing a statement stating that: ‘the decision by Lloyds TSB…is unjustified and represents a lack of faith in the IT skills of their UK workforce’.

The Union believes that the decision will affect IT workers at various UK locations including London, Manchester, Birmingham, Cardiff, Bristol, Haywards Heath, Gloucester, Andover, Edinburgh and Brighton.

John Bancroft, Unite Official said: "Unite the union is disappointed by the offshoring announcement today by LTSB to go ahead with the transfer. We do not believe that the business case for this decision has been made; we are challenging the bank to consider alternative options."