The telemarketing industry in the UK is undergoing enormous
transformation. A number of firms are merging with US corporations in a
bid to tap into the global market. Ken Gofton examines this
international phenomenon and finds out how the sector is placed to
The Mitre Group may not be a well-known name outside the specialised
world of direct marketing. As a holding company, it has tended to keep
itself in the background. But its three subsidiaries - Merit Direct, The
Decisions Group and The Call Centre - have emerged as the dominant force
in UK telemarketing, with a combined turnover of pounds 30m last year.
By September, however, the privately-owned Mitre Group is expected to
merge with one of the leading US telemarketing giants, Sitel - a
publicly-quoted corporation with a turnover of dollars 128m. And if that
is a startling development for the UK industry to swallow, listen to
Andrew Whiteman, a director at one of Mitre’s leading competitors, The
‘I think you will soon not recognise the business of outsourced
servicing of customers by telephone,’ he declares. ‘It will be
transformed in a-year-to-18-months, so many things are happening.’
Merchants, based in Milton Keynes and like The Call Centre and Decisions
Group working from a brand new facility, has talked of floating on the
Stock Market. But it, too, is a potential takeover target. ‘Will we
become part of a bigger group? That’s the million-dollar question. We
are a very attractive organisation to people wishing to create
groupings,’ says Whiteman.
It remains to be seen how accurate Whiteman’s dramatic forecasts are. He
is certainly right to say that a lot is happening.
Within the past month London-based telecoms specialist The Aspen
Consultancy, has become part of a similar US operation, the Technology
Solutions Corporation. Aspen, says managing director Peter Massey, works
with a number of blue-chip clients, from Hewlett-Packard and American
Express to British Airways and the Co-operative Bank. The volume of work
it gets from US clients moving into Europe is growing. Massey says the
reason for doing the deal is that TSC can reach these clients in the US
Matrixx Marketing, a subsidiary of Cincinnati Bell, claims to be the
world’s biggest telemarketing provider - a claim which is disputed by
others, however. It boasts 6000 workstations and 10,000 operators
worldwide. In 1990 it acquired two French companies and now runs its
pan-European operation from a 425-workstation call centre outside Paris.
Matrixx opened in Newcastle-upon-Tyne in 1993. UK industry sources say
it was initially a dedicated resource for Procter & Gamble. Paris-based
director Robert Ashcroft insists its operations are wider than that, and
are about to be expanded: ‘Originally, Newcastle provided a ‘top-end’
business-to-business service. Shortly it will undergo further expansion
into the more traditional areas of consumer telemarketing, both inbound
Stream is another US corporation, with branches in Munich, Amsterdam,
France and the UK. It is not a pure telemarketer but a major reseller of
computer hardware and software. Its services include customer support,
warehousing and fulfilment. If these take it into competition with
telemarketing bureaus it is happy to pitch against them, claims Linda
Delgardo, manager of its Londonderry facility.
Several different factors are tangled together in this and all play a
For instance, the telephone culture is spreading. To take a local
example, 75% of the UK population regularly use Freefone and low-cost
Melanie Howard, one of the UK’s leading authorities on telephone
culture, and soon to leave her post as a Henley Centre director to set
up a new think-tank, says the number of such calls made by individuals
is likely to double by the year 2000, to an annual average of 40.
The culture is much more advanced in the US, where 80% of packs carry a
customer care-line number. Convinced of the benefits, US corporations
want to export that approach to their subsidiaries in Europe and Asia.
That may mean pressing their US bureaus to expand overseas.
‘American interest in Europe is dynamic, and that is working towards the
internationalisation of telemarketing,’ says Howard Sandom, BT’s head of
telemarketing communications. ‘A lot of US companies treat Europe as one
country anyway, and it is quite a natural thing for them to set up one
European call centre.
‘Just round the corner is the universal Freefone concept. Possibly by
the spring of next year, if you are a global brand you will be able to
have one care-line number around the world.’
Then there is the question of deregulation, technology developments and
surplus capacity, all of which tend to make international
telecommunications much cheaper. One of the buzz expressions in the US
is currently ‘black fibre’, a reference to the fact that it makes sense
when laying telephone cables under the oceans these days to put in a lot
more capacity than is needed in the short term. But that, in turn, means
over-capacity and lower prices.
Such developments pose a problem for telemarketing companies. With call
costs coming down, where a bureau is located becomes less of an issue.
Should they invest in big call centres, working round the clock on
international business? Or should they follow the traditional pattern of
siting bureaus in individual countries?
Mitre’s Decisions Group illustrates the first option. Along with its
sister agency Merit Communications in Brussels, it won the on-line call
centre contract for Microsoft Windows 95, covering Europe, Africa, the
Middle East and Asia Pacific.
Similarly, The Merchants Group used to have subsidiaries on the
Continent, but now centralises everything. From its Milton Keynes call
centre it runs a technical support programme on colour printers for
Tektronix across 34 countries, including Eastern Europe and the Middle
East. It also works for Hewlett-Packard across Europe, in English,
French and German.
Leading French telemarketer Teleperformance has adopted the opposite
philosophy. By the end of this year it will have 21 offices in Europe,
including nine in France alone, and one in Brussels with 65 operators
working for the EC. It also has five operations in North America and a
similar number around the Pacific Rim.
‘This gives us the flexibility to provide what the clients want,’ says
Bibi Bajwa, joint managing director of its UK subsidiary, BPS
Teleperformance in Birmingham. ‘Some clients want pan-European call
centres, working in several languages. Yet we are currently working with
another who categorically wants local activity in every market. Our
approach is that, whatever configuration they choose, we can service
Size gives credibility to any industry, especially when dealing with
international corporations. Telemarketing has grown with astonishing
speed into a multi-million pound industry. But Martin Shields, managing
director of Mitre subsidiary Merit Direct, points out that however
advanced the technology, it is personal chemistry that makes the
‘I’m not sure telemarketing is the right term any more. Teleservicing
might be nearer the mark,’ says Shields. ‘But while the industry has
certainly grown up in recent years, its ability to meet client needs is
not down to money or the technology, but people. Our ability to attract
the right sort of people is the factor that will enable us to move the