Call Centre giants set for scrap heap

Copyright: David Lawson Property Week Jan 2000

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There is nothing like the image of futuristic sweatshops for driving your average media pundit into a frenzy. Orwell is back, according to some of the guff filling the newsless chasm over a long Millennial holiday. Forget comfy predictions about working from  home in the 21st century; in the new future, Big Brother will have us lined up before computer screens in massive barns.

 This image of the call centre was obsolete before it hit the page. There are certainly big buildings  coming out of the ground; Jeremy Brookes of GVA Grimley is still bubbling about the 60,000 sq m (650,000 sq ft) he found for Cable & Wireless in Swansea. But even would  accept that this could be the dying throes of a short-lived dinosaur.

  Operators have learned very quickly that when 90% of your costs are staff-based and those staff don't like working in barns, you stop building barns. The future is distinctly Orange. This telecom company insists on an 'appropriately stimulating environment' for staff and split its operations into three  locations around the UK rather than crowd into one,  says Mike Henry of King Sturge..

 That does not mean  C&W was wrong. The decision  fitted the thinking for a giant operation at that time. But  massed bums on seats are now being displaced  by newer technology, different working methods and concern for staff turnover.

 'Call centres are evolving into  customer centres, where a mix of email, automated services and help lines require a higher class of skills,' says Ken Giannini of DEGW, who has worked on schemes for Egg, Capital One and the new Bank One development in Cardiff.

 That means better-trained staff. Location will no longer be dominated by lucrative regional grants and cheap sites but access to the right workers -  and the ability to keep them. 'Employers could shrug off a 30% churn rate if it took only two days to train someone. It is entirely different when each support worker is skilled at babying premium customers,' says says Sam Cassels, managing director of occupancy consultants ISGC.

  That means easy access, good facilities and comfortable premises - all the factors which are second nature for high quality offices. But the back-office economics do not add up to expensive business parks and glossy city-centre towers. Steve Nicol of DTZ Pieda Consulting sees attention switching away from 'tried and tested' cities  like Leeds and Glasgow to medium-sized towns which offer a combination of staff numbers, lifestyle and access.

 'Anywhere over 100,000 people would be suitable for centres of 200-350 seats,' he says. The threshold size is falling because operators have learned that support can be broken down into smaller numbers.

  Orange, for instance, works in teams of around a dozen, and now realises they do not need to be in the same place for visual supervision. They can be linked in 'virtual' teams over the Internet.

  Giannini believes call centres will move back into town centres. Hundreds of high street  branches being dumped by banks would make ideal locations, with personal services or cafe facilities on the ground floor and small call centres on the upper levels.

  This comes as no surprise to Andrew Cooke of London First, who says  the capital already has more call centres tucked away in conventional offices that the rest of the country put together. In the last year alone, he has helped almost a dozen firms set up in space as small as 5,000 sq ft around the suburbs.

  'Firms are attracted by the quality of the labour force,' he says. 'And the rents are equivalent places in the regions.'

  Many are providing  support operations for the whole of Europe, and require language skills. Delta Airlines consolidated 13 centres in London last year and Air France runs all its non-French operations from a refurbished Sixties office block in Wembley.

  Not everyone will be able to squeeze into existing space, however. Nor should they, says Stephen Bantoft of the Cannock Group, who has pioneered development of serviced call centres in Scotland, Manchester and Yorkshire.

 'You can make conventional buildings work but it is better to start from scratch with the extra telecomms and air-conditioning designed in rather than spend money adding it later.'

 That leaves the industry in a dilemma. As the sector fragments, many investors are unsure about what they should be offering to exploit this buoyant demand.

 Few are interested in barns, leaving them for owner-occupiers to ponder over  how they will fill this space in five years, when technology such as speech recognition wipes out half the workforce or activity moves to cheaper centres overseas. Even job-hungry local authorities are having second thoughts about these giants after considering the potential traffic generation problems, says Cassels.

 A middle tier, catering for telephone  salesforces of up to 300, seem the richest seam but Guy Marsden of call-centre specialist Highbridge Properties says even these must be designed with built-in flexibility to convert back to conventional offices if demand falls away. It also means choosing locations where offices will be in demand rather than being led astray by side issues like grants.

  Few are bold enough to build speculatively, although Henry  hopes to  kick-start a scheme in Plymouth. Demand is rising so fast that developments following Marsden's rules are unlikely to break ground before someone walks in with a bid, however. Flexibility cuts both ways, as it enables plans to be adjusted to meet the differing requirements of various operators.

  In fact, much of the confusion about call centres is because  tenants are not picking a specific type. Orange plumped for a converted factory in Darlington, a traditional office in Plymouth and a purpose-built, single-storey block in Newcastle.

 'Nine months is an eternity in the current upheaval as more tenants move into  the sector,' says one agent looking for space to service a department store group. 'We were given six to find a building and be up and running.'

  The best bet developers can make is to create  hybrids, says David Hand, research partner at Knight Frank. These will be flexible enough to enable a huge range of fitouts and subdivision, because no-one can predict what will be required in five years - let alone a decade.

  In other words, a few barns, a lot of pseudo-office centres and the potential for regeneration of suburban office blocks fit for little else.

  Locations? The provinces or southern coastal towns will continue to attract  routine operations - at least until labour costs are pushed up. But there will be  a gradual move into cities with the evolution of  customer centres requiring greater skills.

  The only sweat in prospect appears to be that running down the faces of developers and investors trying to pick the right options. But that does not make for exciting headlines.