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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 advance

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

advance



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

Merchants Group.



‘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

before Aspen.



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

and outbound.’



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

part.



For instance, the telephone culture is spreading. To take a local

example, 75% of the UK population regularly use Freefone and low-cost

numbers.



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

it.’



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

industry tick.



‘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

business forward.’



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