Sykes flying flag for Scots call centres in tough market

THE call-centre industry in Scotland has been dealt a series of blows by India’s rocketing success as an off-shore call-centre location. Cheap labour and a well-educated English-speaking workforce has tempted many companies into outsourcing work there.

So it’s great to hear a local call-centre success story, one which has built on its strengths of a multilingual workforce and adding value by in-house fulfilment.

Sykes Enterprises is actually a major global organisation with headquarters in Florida. But its northern European operations are run from Edinburgh. The group has an HQ on Corstorphine Road with 150 staff, and a call centre on Calder Road with about 500 employees, supported from Galashiels in the Scottish Borders, where 140 people are based.

Sykes in the UK started with a print manufacturer in Galashiels called Macqueen. Macqueen decided to branch out in the mid-1990s into a fulfilment centre, with clients including a major software maker.

A call centre was added, and at the end of 1997 Macqueen was purchased by Sykes, which was on an acquisition trail across Europe.

And why does its business in Scotland work? Not because it’s a cheap location.

The draw, says Colin Mitchell, general manager for Northern Europe and South Africa, is languages.

Sykes’ call-centre operatives speak 16 languages between them in the northern European region alone, including Russian and Turkish. The majority are foreign, rather than English speakers with second languages. Generally, they have come to Edinburgh to go to university.

About 65 per cent of Sykes’ business at its call centres in the Capital is in a language other than English, although that can shift ten or 15 per cent in a given year. And its multilingual workforce helps it to bid for major European contracts. This is why Sykes ended up in Edinburgh, explains Mr Mitchell.

"The main reason that we locate in a particular place is because a client demands it or drives us to do so, and it was no different in Edinburgh seven or eight years ago. The client demanded some skills, we knew those skills were best got in Edinburgh, and hence we set up here."

Sykes’ business is to provide life-cycle support for products such as mobile phones and digital cameras. If you live in Madrid and your phone battery stops working you might well call the manufacturer’s helpline to find out what to do - and end up speaking to one of Sykes’ Spanish agents in Edinburgh.

Sykes’ trump card is that it can offer the same phone manufacturer the same service for most of its customers across Europe (and often globally).

After a Sykes employee has spoken with a customer, the Galashiels fulfilment centre often comes into play.

Mr Mitchell explains: "On the call-centre side, we can take an order for a camera or a mobile phone, or an accessory such as a cable or memory card and we will fulfil that from Galashiels."

For example, if it is a camera a customer has returned with a problem, Sykes will "check that it works, or send it back for repair, or destroy it after a certain amount of time".

"What we try to do is to provide life-cycle support for a product in the marketplace. Our objective is that, as the products continually change in the marketplace, we continually reduce the cost of the life-cycle support of that product."

The fulfilment facility is one that most other call centres lack and which enables Sykes to offer something extra to potential clients. And this is essential, as competition is fierce.

Mr Mitchell adds: "We have four or five active competitors that work in the same space as us and they will continue to offer across the range that we offer, but we’re the only company who do it with our own in-house fulfilment solutions." Nonetheless, Sykes is often up against some major players. One is Convergis.

Convergis is a multi-billion-dollar company, says Mr Mitchell, whereas Sykes is not. "We don’t even touch the billion. We’re about $500 million. We’ve got something like 17,000 employees as opposed to 60,000."

But companies such as Teletech and Stream are much more in Sykes’ space for every job.

These competitors have operations in the UK - Teletech has offices in Glasgow and Stream in London.

There are also multilingual rivals in Scotland, but nothing to cause Sykes much concern, as Mr Mitchell explains: "When we started up, the only other call centre was IBM in Greenock, and now there’s a pharmaceutical company in Livingston, there’s a couple of smaller sites up in Fife. But they’re not anything like as large as us, and their clients tend to be local rather than global."

He says that they are in competition for languages but that Sykes tends to not have too much of a problem attracting staff. Employees can expect to earn slightly more than they could do on a single language facility.

Sykes also uses employee referral schemes that reward people for bringing in somebody else to come and work for the firm.

Depending on need at the time, it may be that Sykes offers people extra incentives to bring in French, or German, or whatever language is currently most in demand.

"It’s still less expensive for us to encourage that than to go to a recruiter," adds Mr Mitchell. "And generally people stay longer as well because they’ve talked to someone a lot more in depth about the job that they’re coming to, rather than coming through a recruitment agency."

Sykes also markets for staff across Europe to come to Edinburgh. "We do actually get ourselves out of here and try to encourage people to come.

"On some occasions, when we’ve had a particularly tight project to run, we’ll offer incentives for these people to come over."

So recruitment doesn’t generally pose a problem for Sykes. Where, then, do the challenges lie?

The answer, it would seem, is in trying to maintain stability when much of the business is built on the shifting sands of the consumer technology sector. Products such as cameras, phones, laptops and PCs, which Sykes traditionally supports, are becoming almost disposable, says Mr Mitchell.

"It may be that five people per 100 who own cameras call now, but as the life cycles of these products shorten only one in 100 may call. So to be paying five or six hundred people in Edinburgh, we’ve got to keep on shifting the product portfolio."

Sykes’ strategy is to manoeuvre gradually into low-tech consumer products such as washing and hygiene products, where the market is more steady.

"We have a job to maintain a profit margin while we shift our product risk, so we support a number of consumer products.

"If we can move that to maybe another ten per cent next year then again we can increase the amount of people we train and we make sure that we make our profit."

Mr Mitchell can envisage some expansion of the company in Edinburgh, but doesn’t think it likely that staff numbers will rise over about 800 from the current 650.

When Sykes wins a new client that win will usually require them to take on between 30 to 50 employees. Over a period of five or six years that could potentially grow with their business to around 200-300 people.

"The purpose of my job," says Mr Mitchell. "Is to safeguard jobs, provide quality, provide innovative solutions for clients, continually change those innovative solutions and understand their business very carefully."