The Coming Call Centre Boom in Asia.
By Niels Kjellerup, Senior Partner, Resource International April 1999.
Note: This article is based on personal observations over the last six months spent mainly in China (Hong Kong) and is based on my discussions with vendors, clients and government officials. This article does not encompass Japan.
Background: The current economic recession in Asia is resulting in major restructuring in most organisations, commercial as well as governmental, all with the purpose of increasing productivity, i.e. better market coverage & support at less cost. The similarity to the 1987-91 recession in the USA is noticeable. It was the restructure of corporate America which lead to the current Call Centre boom, in fact prior to 1990 the term Call Center didnt exist.
Major differences : In the USA, Europe & Australia to a lesser degree, there existed a well developed service culture and understanding of how the Value-Add of Service helps take cost out of Sales and Marketing (Tarp research into customer behaviour from 1978 & update study of 1984). Asia, however, ( with the noted exception of Japan) never migrated to a Service Culture and when the recession hit was still in the Industrial Wave of producing products. This Moving-of-boxes outlook is still prevalent everywhere apart from the Hospitality Industry, where International Hotel chains & Airlines have had some cosmetic impact. Asia never had a large Direct Catalogue Industry using the phone as a sales channel and with the Internet becoming the preferred direct channel, probably never will.
It would therefore be a major mistake to assume, that the Call Center Industry will develop along the lines we have seen in the USA and the rest of the Western World.
The Vendor driven Call Center boom in Asia : For the past 3 years all the major Vendors have been active especially in Singapore, Philippines, Korea, Hong Kong & Taiwan helping Telecoms, Banks, Credit Card & Insurance Companies plus Airlines & Hotels build state of the art call centers. Today however with this market segment fulfilled everyone is holding their breath waiting for the Boom in consumer based service centers? Surprise .. with No-service culture here its hard, near impossible, to get any ROI (return on investment) for such expenditure. Instead some of the major vendors (primarily computer companies) are engaging in a new model for Outsourcing. Financing & building call centers and contracting Government Agencies to handle public access calls for a 3-5 year period. This development model is currently favoured in Singapore, (Malaysia) & Korea. Other vendors are scaling down operations in Asia and simply migrating to selling CTI solutions for existing installations.
Conclusion : The boom in customer service centres hasnt materialised.
Looking for the real Call Center Boom:
Just like the USA in the 80ies, the driver will not be technology but the need of companies to improve productivity in the sales area. Better market coverage, fewer field sales people, alternative distribution channels, using order taking to up-sell and cross-sell. These are the areas where it will make business sense to invest and build Customer Sales Centers.
In other words OUT-bound will be the real driver here. And as a natural consequence In-bound order taking centers will grow as soon as customers realise that such centers can take time out of the sales-process.
(Note: For those of you not familiar with the research from The Wholesale, Distribution & Education Foundation Washington DC showing that business-to-business customers in the US prefer In-house sales people to field sales by a margin of 6-1, this study conducted every 5th year by Arthur Anderson, Chicago is an eye opener. I dont know if its available on the Internet, so pls dont E-mail me for it).
A look at Asia country by country :
Japan : The culture here is so different from the rest of Asia, and I only know that the Call Center Industry has grown in leaps & bounds with completely different drivers.
Singapore & Malaysia : Currently very little growth in Call Centers. New Service Center being established for the Ministry of Education primarily on the new Outsource Model. Vendors tell me that everything is price focussed and not based on any Value-Add strategy.
Indonesia & Vietnam : Activity very limited driven by Telecoms.
Thailand : Recovering rapidly probable growth area for Financial Industries, Telecoms & hospitality. Especially now that GE Capital is expected to enter the market.
Philippines : Small but very active Call Center Industry with growth in all sectors. Only country with a customer service culture.
Korea : Showing signs of Industrial and Financial recovery. The key here will be how the 5 dominant Conglomerates restructure their sales processes.
Taiwan : Vibrant, new call centers going up every week. Lacking in service culture but good growth rate.
Hong Kong : Moderate call center growth, manufacturers taking up Sales/order centers, Telecom deregulation drives need for Sales-support centres. Revenue rather than cost focus makes HK a growth area compared with Singapore.
Mainland China: Change is quick. Currently 2 call center service bureaus, one in Peking and one in Shanghai are struggling. However the economic drivers for Out-bound Sales centers exist and will take off in both Canton- & Shanghai-areas.
In summary : China is the place to be, not Mainland but Hong Kong & Taiwan, which will be the beachhead for the Mainland growth. Singapore is saturated with call centers and not expected to grow at all, except for regional customer centers operated by US International companies attracted by the financial packages offered by the Singapore Government. Watch out for GE Capital setting up specialised sales centers to support its drive into the Asian region in the financial services area.
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