Not so long ago the call centre industry in the UK employed over one million people and was a major contributor to the GDP, listed in the top five industries by the Department of Employment in 1998. How things have changed. In the space of 12 years, the rise of outsourcing and off-shoring has transformed the economic landscape in the UK to the point where the average cost of a contact centre seat – agent, technology and facility – is £22 per hour. Compare this with what you will pay in India or the Philippines – around £9 per hour – and you can see how the gap has grown and grown as competition has pushed prices downwards.
But price isn’t everything, or is it? In an industry where suppliers of call centre services repeatedly espouse the importance of customer experience, brand values and quality, there is a gulf emerging between companies who will not compromise on the softer issues and those who believe that a little collateral damage on customer satisfaction is a price worth paying for hard, tangible savings.
The impact of shared services and on-demand IT
Housing providers haven’t missed out on the market changes; several large associations have outsourced their customer service centres, either at a technology level or to include processes and people. But for the majority of the sector, finding value from such a move, either in cost savings or efficiencies, has been more difficult. But then along came two game-changing advances which when combined are expected to change the operating efficiencies of housing providers forever; these are shared services contact centres and on-demand technology. These two business tools deliver some mouth-watering savings without jeopardising customer experience.
However before we go any further, I have gripe I need to get off my back. Housing Technology has been writing about cloud computing for some time. In fact, pretty much any IT vendor nowadays will connect up several dots to tell you how their solution or product exploits the opportunities of on-demand technology, linked to cloud computing and unified communications. This random technology join-the-dots approach to technology has to stop. The truth is each of these technology areas has its own unique benefits and business reasons for applying them. Let’s not be bamboozled with reams of techno-speak about how combining A with B and C with D is going to be a panacea – it’s not. The business benefits from technology need to be counted area by area, otherwise it just becomes too complicated to justify and runs the risk of missing some basic measures of success, such as cost, efficiency or growth.
Learning from the high street
Right, whinge over and back to the script. Let’s look at shared services. Back in the 1980s, several of the supermarket chains got together to see how they could continue to deliver increased value for money (at a time when their cost bases were increasing dramatically due to wage inflation and higher premises costs). One area they identified as so generic that it hardly added any competitive advantage was HR management; each supermarket had almost exactly the same processes and requirements when it came to specifying and sourcing their shelf stackers and check-out staff. They agreed to set up shared services centre in which they would share the costs for operating, cutting the cost per supermarket by 17-25 per cent.
Shared services are now coming to contact centres. We completed a deal last year with a major airline, based on us providing them with an outsourced service which we would then together sell as a shared service to other airlines in their alliance club. The business case was compelling; first they would save 15 per cent through outsourcing to a professional outsourcer and then over a period of five years, the cost of their operation would reduce to zero as they shared in the income generated from the shared services operation. Compelling stuff and hopefully not too hard to see how this model might apply in the housing sector.
Scaling with demand
And what of the on-demand technology? One of the quick wins we introduced for our airline customer was an on-demand version of their telephony and technology platform which means they can scale the number of call centre seats up or down in line with customer call volumes.
When you adopt on-demand technology, you basically lose the need to employ technology experts, tie up capital in equipment which is out of date the day after its deployed and avoid getting stuck in a technology dead-end. In our view, it’s simply the most cost-effective way to ensure you always have the latest and greatest as well as having operating costs which scale up and down as you do.
It’s hard to quantify the financial benefits for all housing providers but as an example, based on a headcount range of 25-50 people in customer services, our experience indicates that you could expect to save between £250,000 to £500,000 per year.
The other often unforeseen upsides are marked improvements in efficiency, productivity and customer experience. This is because shared services centres develop a best-practice approach more akin to a commercial outsourcer. And before you leap to the conclusion that this sounds like a back-door way of outsourcing and off-shoring, it isn’t. Shared services centres can be virtualised and made to work in any location. Sure, they work better when they are under one roof, but that’s by no means a must-have requirement.
I started this article by lamenting the decline of the UK call centre industry. In fact, I think that if we adopt some of the principles of shared services along with some of the benefits of on-demand technology, we could see a real resurgence in the next few years. It will take vision, commitment and a small amount of faith, but aren’t these qualities that have made the UK the world’s leading provider of excellent customer service in the past?
People may be turning off the lights in call centres, but at the same time we should be turning on lights in shared services centres.
Paul Scott is the director for global consulting at Merchants.