Call Centres: Offshoring vs Onshoring - UK - February 2007

Table of Contents

• Issues in the Market
• Scope of the report
• Market in Brief
• Call centres form a key part of the financial services distribution mix
• A variety of pros and cons are associated with offshore call centres
• There has been a notable drift offshore, although the tide may have turned
• Mintel' s research findings: Users and uses of call centres
• Mintel' s research findings: What frustrates callers
• Mintel' s research findings: Attitudes to overseas call centres
• Background
• The telephone has revolutionised financial services distribution
• A number of factors have facilitated this rapid development
• Penetration of telephones has now reached saturation point
  • Figure 1: Proportion of households with a telephone, UK, 1970-2006
• Mobile phone penetration has risen rapidly in the last few years
  • Figure 2: Proportion of households with a mobile phone, UK, 1997-2006
• Use of new technology is further changing the face of distribution
• Rising Internet penetration will boost online financial services
  • Figure 3: British Internet penetration at home/work/place of study or elsewhere, 2001-06
• An increase in broadband connections will also be significant
  • Figure 4: Internet connections by type, UK, 2001-06 Q1
• This growth is likely to spawn multimedia contact centres
• Technological advancements have facilitated call centre growth
• Increasing prominence of CRM has also been a boost to call centres
• The Size of the Call Centre Market
• Defining what constitutes a call centre can be difficult
• The UK call centre market continues to grow
  • Figure 5: Growth in UK call centres, by numbers of centres and agent places, 2002-06
• Financial services accounts for around a third of all agent places
  • Figure 6: Segmentation of UK call centre agent places, by market sector, 2002-06
• More than a quarter of UK call centres are based in the South East
  • Figure 7: Location of call centres in the UK, 2006
• Offshore outsourcing has been a notable trend in recent years
• The Rationale for Offshoring
• Mintel' s Call Centres Industry Survey
• Call centre location needs to be aligned with strategic goals
• Potential cost savings are usually the key driving force
• Trade comments relating to potential cost savings:
• Availability of highly skilled workers has been another advantage
• Offshore call centres can also aid operational flexibility
• Trade comment relating to operational flexibility:
• But surveys point to growing antipathy to offshore centres
• Security issues are also a cause of consumer concern
• Trade comments relating to consumer aversion to offshore call centres:
• Identifying the Onshore and Offshore Providers
• The call centre industry has witnessed a steady drift offshore
• Many financial providers have established offshore operations
• Many providers have retained exclusively UK operations...
• ...and the tide may be turning in favour of onshore centres
• There is a notable split between the onshore and offshore brigades
  • Figure 8: Selected financial services providers split according to location of call centre roles, February 2007
• Case Studies
• Aviva plc
• Barclays plc
• Esure
• Nationwide
• The Consumer -- Users and Uses of Call Centres
• Survey background
• Around 20 million consumers use the phone for their finances
  • Figure 9: Channels used to manage day-to-day finances, November 2006
• Implications
• Consumers have adopted a multi-channel approach
  • Figure 10: Channel usage combinations, November 2006
• Implications
• ABs are prolific users of the phone for managing their finances
  • Figure 11: Channels used to manage day-to-day finances, by gender, age, socio-economic group, lifestage and Special Groups, November 2006
• Implications
• High earners are keen to utilise both the phone and Internet
  • Figure 12: Channels used to manage day-to-day finances, by working status, income, TV region and ACORN group, November 2006
• Implications
• Internet users and broadsheet readers are keen on remote channels
  • Figure 13: Channels used to manage day-to-day finances, by technology usage, newspaper readership, commercial TV viewing and supermarket usage, November 2006
• The phone is now used for a wide variety of financial tasks
  • Figure 14: Financial tasks conducted via the telephone, November 2006
• Implications
• Men are more likely than women to buy products via the phone
  • Figure 15: Financial tasks conducted via the telephone, by gender, November 2006
• Implications
• The 35-44s use the phone for a wide range of financial tasks
  • Figure 16: Financial tasks conducted via the telephone, by age group, November 2006
• Implications
• ABs are the most likely to arrange products via the phone
  • Figure 17: Financial tasks conducted via the telephone, by socio-economic group, November 2006
• Implications
• A fifth of phone users carry out five or more financial tasks
  • Figure 18: Number of financial tasks conducted via the telephone, November 2006
• Implications
• 35-44-year-old phone users perform the most tasks
  • Figure 19: Number of financial tasks conducted via the telephone, by gender, age and socio-economic group, November 2006
• A general enquiry is the most common activity for the single-task group
  • Figure 20: Repertoire of financial tasks conducted via the telephone, November 2006
• The Consumer -- What Frustrates Callers
• Time spent on hold is the most common source of frustration
  • Figure 21: Consumers' frustrations when using financial call centres, November 2006
• Implications
• The 45-54s and ABs are the most frustrated call centre users
  • Figure 22: Consumers' frustrations when using financial call centres, by gender, age and socio-economic group, November 2006
• Sales messages are most likely to annoy the ABC1 55+ group
  • Figure 23: Consumers' frustrations when using financial call centres, by gender, age and socio-economic group, November 2006
• Implications
• Communication problems are more likely to irritate high earners
  • Figure 24: Consumers' frustrations when using financial call centres, by lifestage, working status, income and TV region, November 2006
• Third age consumers harbour many call centre frustrations
  • Figure 25: Consumers' frustrations when using financial call centres, by lifestage, working status, income and TV region, November 2006
• The Consumer -- Attitudes to Overseas Call Centres
• Most consumers would rather not use overseas call centres
  • Figure 26: ' I would rather not speak to someone in a call centre which is based overseas' , November 2006
• Implications
• Over-45s, C2s and women are more likely to criticise offshore agents
  • Figure 27: ' I would rather not speak to someone in a call centre which is based overseas' , by gender, age, socio-economic group and lifestage, November 2006
• Urban Prosperity group is the most tolerant of overseas agents
  • Figure 28: ' I would rather not speak to someone in a call centre which is based overseas' , by TV region, ACORN group and newspaper readership, November 2006
• The potential for account misunderstandings is a major concern
  • Figure 29: ' I would worry that an overseas-based call centre could lead to a misunderstanding with my account' , November 2006
• Implications
• This fear of a mix-up permeates the entire consumer base
  • Figure 30: ' I would worry that an overseas-based call centre could lead to a misunderstanding with my account' , by gender, age, socio-economic group and lifestage, November 2006
• Scottish consumers are most likely to fear a potential error
  • Figure 31: ' I would worry that an overseas-based call centre could lead to a misunderstanding with my account' , by TV region, ACORN group and newspaper readership, November 2006
• Security fears also make consumers wary of overseas call centres
  • Figure 32: ' I would worry that my information is less secure with providers who use overseas call centres' , November 2006
• Implications
• Older consumers are more likely to feel anxious about security
  • Figure 33: ' I would worry that my information is less secure with providers who use overseas call centres' , by gender, age, socio-economic group and lifestage, November 2006
• Consumers in Anglia/Midlands tend to worry about security
  • Figure 34: ' I would worry that my information is less secure with providers who use overseas call centres' , by TV region, ACORN group and newspaper readership, November 2006
• Most people prefer companies that only have UK call centres
  • Figure 35: ' I would rather deal with companies that only have call centres based in the UK' , November 2006
• Implications
• Support for UK call centres is strong across all segments
  • Figure 36: ' I would rather deal with companies that only have call centres based in the UK' , by gender, age, socio-economic group and lifestage, November 2006
• There was strong support in Yorkshire/North East and Scotland
  • Figure 37: ' I would rather deal with companies that only have call centres based in the UK' , by TV region, ACORN group and newspaper readership, November 2006
• Cheaper products would only win over a minority of consumers
  • Figure 38: ' I would be happy for my provider to use an overseas call centre if it meant I received cheaper products and better rates' , November 2006
• Implications
• Young adults may be swayed by the lure of better rates
  • Figure 39: ' I would be happy for my provider to use an overseas call centre if it meant I received cheaper products and better rates' , by gender, age, socio-economic group and lifestage, November 2006
• A majority in the Urban Prosperity group would take cheaper products
  • Figure 40: ' I would be happy for my provider to use an overseas call centre if it meant I received cheaper products and better rates' , by TV region, ACORN group and newspaper readership, November 2006
• Better service standards could provide the key to success
  • Figure 41: ' I do not mind where a call centre is based as long as I receive a good service' , November 2006
• Implications
• ABs typically care more about service than call centre location
  • Figure 42: ' I do not mind where a call centre is based as long as I receive a good service' , by gender, age, socio-economic group and lifestage, November 2006
• Most broadsheet readers could be won over by good service
  • Figure 43: ' I do not mind where a call centre is based as long as I receive a good service' , by TV region, ACORN group and newspaper readership, November 2006
• Dissecting the sample according to attitudes to call centres
  • Figure 44: Typologies based upon attitudes to overseas call centres, by gender, age, socio-economic group and TV region, November 2006
• The Future -- Offshore or Onshore?
• What does Mintel' s research tell us?
• The offshore brigade should not necessarily lose heart
• But onshore providers appear to have a clear opportunity to exploit