The mergers and acquisitions frenzy has come to the contact center operator (CCO) industry, all in the name of great customer service. In January 2015 Alorica acquired West's contact center outsourcing business. A month later, Capita purchased Avocis, a European firm, to increase its footprint in Germany, Austria, and Switzerland. Then in March of that year, HGS acquired a majority stake in Colibrium to strenthen its position in the healthcare market. In June 2016, Alorica purchased Expert Global Solutions (EGS), adding 40,000 employees, 70 locations, and $1.1 billion in revenue to its already dominant industry position. Then in July, Synnex, a subsidiary of Concentrix, acquired Minacs, strengthening its position as a top-10 global provider.
Strategically executed M&A continued through 2016 as large contact center operators aimed to grow market share and expand into new geographies and service lines. Newly consolidated titans enlarged their real estate portfolios, and with this came the renewed need to carefully consider location strategy, space optimization, and portfolio management.
With consolidation like this comes contact center closures paired with technology investments, as JLL discovered in the 2017 JLL Contact Center Outlook report. On the winning end of this activity are the customers craving multichannel, tech-savvy service, as well as locations that make sense for new workforce and technological requirements.
As consumer and client preferences evolve in the digital age, traditional contact centers are being forced to adapt to the changing tides. To embrace this change, many contact center solutions providers have expanded non-voice offerings to now include communication methods via social media, email, online chat, SMS texting, and other unique channels. Though automation and multichannel deliveries meet some consumer demand for high-quality customized service and analytics, buyers of CCO solutions are increasingly focused on U.S.-based onshore delivery to fill that gap.
Eliminating redundancies and maximizing cost-effectiveness in real estate holdings through space improvements and modernization coincide with increased employee demand for more flexible and dynamic work environments. To accomplish this, contact center providers and service buyers should carefully consider labor, site availability, and market saturation in existing and prospective markets to make educated decisions when contemplating portfolio changes after a merger or acquisition.
Ready-to-go contact center options are transforming the industry.
Both users and third-party providers consider many factors when making real estate decisions. One option, plug-and-play space, provides convenient, efficient, move-in ready centers for operators while minimizing transitional downtime. These opportunities are traditionally located in vacant buildings with furniture and generators already in place, plus ample parking. The average site measures 77,250 square feet, enough space to house 491 seats. An average of 6.5 parking spaces per 1,000 square feet of floor space is also common. Plug-and-play spaces also cater to the "live, work, play" employee base with amenities, gyms, and restaurants nearby.
As onshoring contact center jobs back to the United States becomes more popular, operators will attempt to reduce real estate operating costs to offset higher labor costs by concentrating their labor across fewer facilities. This is already occurring with third-party providers and in-house services alike. In the majority of U.S. markets, open customer service representative (CSR) positions heavily outnumber the actual volume of qualified CSR candidates, creating a labor gap in some markets. As a result, competition for skilled labor is higher than ever, and it's placing upward pressure both on wages and employee expectations for modern workspaces and promotion and incentive opportunities. Many of these markets do not have the population growth to offset the growing demand for CSRs.
Where are contact centers opening and closing?
Shuffling, prioritizing, and reallocating real estate portfolios is playing a larger role as the volume of M&A grows. The United States is at the forefront of high-quality products and services and is experiencing the largest growth in contact center operations focused on high-quality offerings.
To confirm this trend, contact center contracts are seeing a greater shift in allocation to U.S.-based employees; 53 percent of all contract agreements signed in 2015 designated at least 25 percent of the associated workers as onshore, up 18 percent from 2010 figures. This significant shift of contact center users desiring quality will continue to cement the United States as the predominant player in the CCO industry. The growth toward onshore operations will be ubiquitous for corporate users and third-party providers alike.
Kyle Harding is senior vice president of the Integrated Portfolio Services Group at JLL, a global commercial real estate services and investment management firm.