Entering the European market for contact centre services

What is the most interesting channel for you?

Your most common and most promising market entry channels are European service providers, consultants/matchmakers, and direct sales. Another option is to work with a local sales office.

Selecting a channel depends on your type of company, the nature of your product or service, your target market and the available resources for market entry. You must understand that, regardless of the channel you choose, your own marketing and promotion is a vital part of your market entry strategy, for which you are responsible.

European service provider

Most contact centre service providers from developing countries find a European service provider either directly or by working together with a matchmaker and/or a sales representative. According to industry experts, subcontracting for European service providers is the most realistic market entry channel.

A European service provider that is similar to your company would be your most suitable contractor. Ideally, this contact centre service provider should offer similar contact centre solutions to yours and be active in similar industries. This can also be a chain of contact centre service providers that has offices in different countries.

The relationship between a European service provider and a subcontracted supplier is mostly characterised by:

• Trust;
• Interdependence;
• A structured relationship (functions, tasks, communication and procedures);
• Potentially limited marketing visibility and market access opportunities for the subcontracted supplier.

Within subcontracting, build-operate-transfer and virtual call centre constructions could also offer opportunities. In a build-operate-transfer construction, a service provider (this might be an offshore service provider) sets up, or ’builds’, a contact centre for a client, tailored to that client’s specific needs. When the contact centre is operational and running successfully, it is transferred to the client. Virtual call centres consist of agents in various locations across the world, who often work from home. This solution saves costs and offers 24/7 availability.

You can find a European service provider to partner up with either directly or by working together with a matchmaker and/or a sales representative. Because many European companies prefer to deal with a local contact person, an intermediary is a good option.

Consultant/matchmaker

A consultant/matchmaker is a person or a company with a large number of relevant contacts in a specific market segment or industry. As an intermediary, they are a door opener, not an agent to make cold calls or send cold emails. Always properly inform your consultant/matchmaker about your company. They speak with many potential customers and are often involved in creating long lists of potential outsourcing providers. The more information they have about your company and the better they understand your capabilities, the more they can spread the word about you.

If you work with a consultant/matchmaker:

• The consultant/matchmaker makes appointments with prospects for you;
• The presentation and sales process remains in your own hands;
• You pay a retainer + success fee (which can be expensive);
• The consultant/matchmaker usually has multiple clients;
• You need to set clear expectations and objectives to measure their performance.

A retainer + success fee construction can be expensive. While the success fee depends on what the intermediary has delivered, you have to pay the retainer (usually a fixed monthly payment) regardless of their performance. Together, they should provide a strong motivation for the intermediary to deliver: the retainer should be high enough to cover some of the costs but low enough to encourage delivery. A properly drafted contract, by a lawyer, is a must!

You also need to determine an exit strategy in the contract, with a clearly defined period after which the contract can be terminated without any further consequences. This period is usually not longer than 3 or 4 months, after which the contract will be evaluated and can be terminated or prolonged. For this period, there should be clearly defined delivery expectations and targets for the consultant/matchmaker (such as the number of relevant contacts, meetings and leads). You could also negotiate a trial period.

Direct sales and online marketplaces

You can also try to sell your contact centre services directly to European end users. Many European companies are looking for cost reduction and delivery capacity, which developing countries can often provide. This is one of your unique selling points.

Direct sales require experience in the European market. This strategy is most suitable for relatively large providers that want to target large European end users. Your best bet is to focus on a small, underserved niche market. For most suppliers from developing countries, however, it is very challenging to sell contact centre services directly. Sometimes, they work together to make a direct sales offer. Having one or more existing customers in Europe will help, as references are a must when you want to enter this market through direct sales.

3. What competition do you face on the European contact centre services outsourcing market?

Which countries are you competing with?

India, Malaysia, Indonesia, the Philippines, Egypt, Poland and Bulgaria can be considered your strongest competition.

In general, European companies prefer to outsource services to providers within the same country (also known as homesourcing, or simply as outsourcing). When they do outsource to companies abroad, they generally prefer nearshore locations, because of proximity, language, cultural similarities, and the minimal time difference. For more information on nearshoring versus offshoring, see our study on the European demand for business process outsourcing.

The Global Services Location Index (GSLI) ranks the competitiveness of ITO/BPO destinations based on 4 categories: financial attractiveness, people skills and availability, business environment and digital resonance.  

India

India continues to lead the Global Services Location Index for contact centre services, mainly due to the country’s unique combination of low-cost services, excellent English language skills and large talent pool. This attractive profile makes India a particularly strong contender on the contact centre services outsourcing market.

Malaysia

Malaysia ranks 3rd in the GSLI, this is mainly due to its relatively highly educated work force, the size of the work force and the English language skills. They also have a relatively high score in digital resonance.

Indonesia

Indonesia is one place behind Malaysia (4th), but for different reasons. The workforce in Indonesia is a little less educated, the English-speaking skills are a little lower too, but they also have a large work force and are a slightly cheaper outsourcing destination. The main challenges for Indonesian contact centre service providers are internet infrastructure and language qualities.

Philippines

The Philippines is an important destination for contact centre services, it ranks 9th in the GSLI. It is the most financially attractive destination of the six highlighted countries (together with India). However, their digital resonance score is among the lowest. The Philippines are reaping the benefits of being a solid contact centre outsourcing destination because of the low costs and the large English-speaking workforce.

Egypt

Egypt ranks 15th in the GSLI. Their ranking went up significantly, mainly due to their government’s ‘Digital Egypt’ initiative. Also the English language skills have significantly improved in the past 10 years, where countries like India have hardly made any progress in that area. This makes Egypt a country to keep an eye on in the upcoming years.

European competition

In the outsourcing sector, competition from other European countries has always been strong. Especially from Central and Eastern European (CEE) countries and more recently also from the Baltic countries. Two important competitive countries from Europe for the Contact Centre industry are Poland and Bulgaria.

Poland saw a 10-point increase, primarily due to its financial attractiveness and start-up activities. They also remain important for the European contact centre industry because of their cultural and linguistic similarities. Poland is the highest scoring country from the CEE region (14th). Poland is an important contact centre outsourcing location for European companies, as the industry is maturing and can offer good-quality services.

Bulgaria is another high scoring country from the CEE region (17th). Bulgaria continues to be able to offer good language skills combined with relatively low wages. In the future, jobs demanding a higher degree of creativity and skills offer opportunities for these nearshore countries.

To fill the language gap, many Bulgarian companies hire residents (quite often students) from other European countries. This also applies to the other companies from the CEE region.

Which companies are you competing with?

Examples of call centre service providers are:

GPG

GPG, Global Phoning Group, is an Eastern European company with offices in Moldova and Ukraine. It provides multilingual contact centre services, as well as other BPO and knowledge process (KPO) solutions. The company operates in 25 countries, offering more than 10 languages and professional domain knowledge of key industries such as retail, financial services, telecommunications and energy. GPG’s agents are available 24/7, and the company claims it has a cost reduction of up to 70%.

Cortex

Another nearshore contact centre provider is Cortex, based in Czechia. Cortex offers international call centre services, employing native speakers in 7 languages. The company differentiates itself on its commitment to CSR, describing its sustainably designed building. It also pays extra attention to offering an inclusive workplace, meaning it offers equal opportunities for all employees, regardless of their nationality, gender, family status and physical disposition.

SA Commercial

SA Commercial is an award-winning BPO company from South Africa with a strong CSR profile. It offers a training programme for young people. Its clear and easy-to-navigate website lists the company’s certifications, as well as its social media channels. The homepage includes a quote from the local Minister of Finance and Economic Opportunities, thanking SA Commercial for its assistance during the COVID-19 crisis. This is a good way to communicate that the company has demonstrated reliability and resilience during the pandemic.

Which products are you competing with?

In contact centre outsourcing services, the product is the service. This means that the real question here is: what makes one service provider different from another? The answer is: available capacity, references, language skills, flexibility, reliability, communication, quality management, security infrastructure, vertical and/or horizontal market focus and niche market orientation, among other things.

Automation is both a threat and an opportunity

Automation is the main substitute for contact centre outsourcing services. The search for automation is expected to grow, so the threat of automation will increase. Opportunities exist if you can combine your services with some level of automation. Other substitutes for service providers are:

• In-house departments;
• Captive centres;
• Backsourcing (moving outsourced services back home, often driven by automation).

4. What are the prices for contact centre services outsourcing?

When trying to make a sale in Europe, it is important to offer the right price. The outsourcing market is a buyer’s market, driven by demand. Buyers set the conditions, as they can choose from a wide range of service providers worldwide offering similar services. As more countries are promoting outsourcing, this gives buyers even more options in outsourcing destinations and providers. At the same time, as long as the costs and risks of switching providers are high, this somewhat reduces the power of buyers who are already engaged with service providers.

A 2022 survey by the Call Centre Management Association revealed that most contact centres in Europe are raising the salaries in their contact centres by between 5 to 10%. But they are also debating whether that is enough to keep the employees on board. Finding and keeping the right people is one of the biggest problems in the contact centre industry.

The sector values the output much more than in the early days of contact centre services outsourcing. This is because of the growth in e-commerce, tracking of customer satisfaction and customer experience and retention rates (see also the Market Analysis part of this study), and companies are willing to pay more for that valuable output.

In contact centre services, the most used pricing models are full-time equivalent-based (FTE – generally 8 hours per day, 5 days per week), transaction-based and outcome-based pricing. Since contact centre services are a very diverse business, you must look at the exact services you want to develop a price for if you want to determine the average prices.

This study was carried out on behalf of CBI by Globally Cool B.V. in collaboration with Laszlo Klucs.

Please review our market information disclaimer.