Czech Republic - the future call centre of Europe

04-03-2004

The Czech Republic is the fastest growing market for call centres in Europe at an annual rate of 20 percent. With advanced telecommunications networks, highly educated labour force, and good geographical location in the heart of Europe, the Czech market seems to have a great potential for the call-centre business.

In all developed countries, the share of services in GDP has been growing. The structure of the Czech economy has been changing in this way, too. At the same time, there has been a rapid development of telecommunication networks. One of the areas of that have benefited from it are phone-based services - call centres, which are used either for customer support or telemarketing.

In the Czech Republic, the number of call centres has been increasing rapidly, either as standalone business for other firms to outsource, or part of companies' own customer relations systems. Some foreign companies have also moved their international call centres to the Czech Republic. The main reasons include a cheap and highly skilled labour force and the geographical location of the country. At present, there are 300 outsourced call centres in the Czech Republic and the figure is expected to increase to about 800 by 2007, which implies the creation of 10-15,000 new jobs.

Mr. Fred Cote is the president of the international division of Stratasoft, a premier global provider of advanced software for call centres. I spoke to Mr. Cote about the latest trends concerning the call-centre business in the Czech Republic.

"The volume of call centres is increasing quite rapidly here. Europe in general is seeing an increase in the call centre business of 17 percent annually. It includes both call-centre outsourcers and internal call centres. Specifically, the fastest growing market in Europe is the Czech Republic."

Do Czech firms tend to outsource or use their own call centres?

Fred Cote, president of the international division of Stratasoft (right)Fred Cote, president of the international division of Stratasoft (right) Traditionally, they have outsourced in the past but I believe as new technologies are emerging in the marketplace, it gives them the opportunity, at a reasonable cost, to be able to have that internally, so that perhaps Czech firms can do some of their own telemarketing work themselves. Likewise, the outsourcers in the Czech Republic are seeing an increase in volume coming from companies throughout Eastern Europe, even Western Europe that are outsourcing work that they used to outsource traditionally, say, to German firms. They are finding the Czech Republic a very attractive place to outsource work right now."

Does that mean that the Czech Republic could become a call centre of Europe? Worldwide, there is a trend to outsource these services to countries like India. Do you think the services could move on further east or will they stay in the Czech Republic for some time?

"I think that the days of India receiving a lot of this outsourcing is starting to slow down. Small pockets are being created in different countries and different niches but I really think the Czech Republic - it is my opinion - will probably become a well-known force for call centre market in all of Europe. That should last, at least based on the other countries I have seen around the world, that should last for good four, five years. Then they may move on to another country. But the reality is that, I think, there is a lot of factors that contribute to the Czech Republic's success. One of them is, of course, a cheaper labour pool, which is very important to attract outsourced business, another one is educated labour force, which is very appealing to companies willing to outsource, and which is probably why companies like DHL and Dell decided to make installations here. Likewise, the telecom facilities in the Czech Republic are becoming heavily upgraded and becoming incredibly reliable, which makes it a more attractive solution compared to other countries which cannot offer that sort of stability. And lastly, it is the location and proximity to the rest of Europe. That makes Prague and surrounding towns very attractive."

You have mentioned DHL and Dell which moved their call centres to the Czech Republic. What other big players do you envisage moving to the Czech Republic?

"Again, based on the facilities of language and so forth, I think we are going to see companies such as airlines looking for outsourced reservation services, which of course taps on the hospitality market for national and international hotel chains which can host centres for reservations here as well. I think we are going to see it grow over a variety of industries - any industry that touches the consumer market, this would be an ideal location for.

"Two other factors are affecting what is going on in the industry. One is May 1, when the Czech Republic enters the EU. That is very positive in creating reciprocity agreements with other countries to facilitate the ability to have work here on behalf of other countries. And also, something that is ongoing - the deregulation of the telecom industry. That will push down the cost of doing work over the telephone and using a telephone network, as well as increase bandwidth for call centres. This will lower the cost, the threshold entry to the call centre market, making it more affordable for companies.

"One specific factor that I have experienced over time, is when you compare all the media by which firms can contact their customers - telemarketing is one, in other words, over the phone, another one is print ads, or TV for example. All of those are very expensive. The lowest cost per conversation is over the telephone. Really, when you think about it, people are watching TV all over the place or reading the magazines in various places. When you are in contact with somebody over the telephone, it is the most intimate conversation you can have with somebody and you have their undivided attention. So, when you factor that, that you have a captive audience and that the cost to make that transaction with someone is so low, it makes it a win-win situation, which is why it is a multi-billion-dollar industry around the world."

But this needs an active approach of the customer. In the TV and print, it is one-way communication, here you need the customer to be in active contact and I think many people detest being called by phone. Is this an aspect?

"It certainly is. I must say I don't like sometimes those phone calls either. The reality ion the market and what I have seen everywhere in the world, there is a tactful way to make those phone calls, a very polite way that is not abusive at somebody's liberties. It is an incredible business even on the outbound, an incredible business that for some reasons still responds very well, there are still customer transactions or surveys. Not everything is a sales call. Sometimes, it is merely a survey and people are very willing to share that kind of information. You will probably notice it over time to become very popular in political campaigns as people are seeking election for different offices - that is a huge market around the world for call-centre work."

Due to the fast growth of the call centre segment in the Czech Republic, Stratasoft has chosen the country as a model for future expansion in Central and Eastern Europe, offering a localised version of its all-in-one software solution.

04-03-2004

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