Call Centres: Offshoring vs Onshoring - UK - February 2007

ISSUES IN THE MARKET
Scope of the report
INSIGHTS AND OPPORTUNITIES
An aversion to overseas call centres creates opportunity for some
Communication and security issues need to be addressed
Offshore providers need to demonstrate service improvements
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
FAST FORWARD TRENDS
Trend 1: Stop being so English
Definition
Context
Market touchpoints/implications
Trend 2: Our Friends Electric
Definition
Context
Market touchpoints/implications
Trend 3: I Want it All and I Want it NOW!
Definition
Context
Market touchpoints/implications
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