Reuben Singh, CEO of alldayPA and VC investments company Isher Capital warns that the industry will see costs rise by over £440 million when the minimum wage rise takes effect from 1st April this year.
Smaller UK contact centres need to “evolve or fail”, according to one of the sector’s leading players. Manchester based allldaypa, the leading contact centre for the SME industry, reports that businesses face a ‘perfect storm’ of market conditions that will cause the profit margins of smaller operators to be wiped out.
Commenting further Singh says: “I support the increase in the minimum wage. Failing to prepare for it however, means smaller UK-based call centres are now sleepwalking to disaster by not considering these additional costs, alongside the need to invest to modernize and evolve to future-proof their businesses.
Contact centres are being challenged to form new strategies to meet the evolving requirements of customers or face losing out to either off-shore or larger firms.
“The phone remains the most important communication tools for businesses, the rise of digital has only heightened the need for a professional, personal and proactive communication, which is so crucial for business partnerships. The digital age has meant the opportunities for strong growth in this industry lie in multi-channel services, incorporating functions such as webchat and social media interactions into already existing strategies. The budget needed for this modernisation and training to deliver these offerings to customers is significant.
“With depleting margins already hitting the smaller call centres, they are going to fall even further behind.”
For this reason, alldayPA backed by Isher Capital is seeking to make acquisitions, having assembled a fund around £20m to buy regional contact centres or related businesses, to drive managerial and back office efficiencies using its tried and tested operating strategy.
The group is aiming to drive revenue from nearly £30m to £100m. Created by a network of eight to 10 contact centres spread nationwide; safeguarding jobs and growing the headcount of the current portfolio of companies from 500 to 2,000.
Commenting on the plan, Singh says: “The aim of each acquisition will be to preserve local jobs, building a nationwide network of contact centres with the back-up and resources or a major player. We will create the right blend of local identity with our best practice systems and training.”
“Our plans in the market place are fluid and we have not implemented any specific time lines for making the acquisitions. My family and I have been investing and running call centres for nearly 20 years, we believe in maintaining our family values as we continue to grow our family business nationwide.”
With 4% of UK workers employed in the call centre industry, this storm is putting one million UK jobs in jeopardy. This is particularly acute for Scotland and the North East of England where as much as 6% of the working population rely on the sector.
Despite these pressures, Singh believes that there is a strong demand for more regional contact centres, making it critical that they overcome the need for lower margins and higher investments.
Singh says: “Local regional suppliers allow businesses to oversee operations and ensure customer service standards are being maintained throughout, increasing the connection and empathy they have with customers.”
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