C O M X O White Paper
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- Branden Hunt
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2 A CLEAR CASE FOR OUTSOURCING SWITCHBOARD IN LONDON PROFESSIONAL SERVICE FIRMS EXECUTIVE SUMMARY Creating exceptional first impressions are important for professional services organisations. They can be the difference between converting telephone enquiries into fee paying customers. The challenge faced is that delivering excellence consistently 24 hours a day, 365 days a year is operationally complex and expensive. This paper examines the true costs of delivering high quality switchboard services inhouse and explores why many firms are looking to specialist switchboard providers to reduce costs and improve their operational processes saw many firms strengthen their business support functions by improving operating models, increasing the effectiveness of their people, processes and systems and improving the way they engage with fee earners.business process outsourcing remains a viable solution for many firms, with areas currently outsourced ranging from IT user support to payroll to reception. Whilst legal process outsourcing remains in its infancy for the sector, we expect this to grow in importance in the coming years. PWC report on Legal 2014 APPROACH In order to benchmark the potential cost savings of outsourcing, this white paper addresses the true costs involved in running a switchboard in-house, taking a City of London based professional service firm as a model. The prime function of a switchboard operator is to ensure the seamless navigation of a caller into an organisation. An experienced switchboard operators job requires a knowledge of the business, the people, IT and telephone systems and data bases. The remit often extends to service desk functions such as taxi booking, conference call and room booking, diary management, message taking and escalation. 2
3 We also consider the amount of time an employee devotes to undertaking their primary role; in other words the amount of time they spend doing what they are paid to do, which is adding value by carrying out their role as a switchboard operator. To discover this we analysed the time lost to sick leave, training, maternity leave, time wasted and inefficiencies. We calculate an employee s value as the required benchmark against which the costs of outsourcing can be compared. We also consider the additional cost savings that can be made by downsizing office space as well as avoiding costly investment in ever changing communications technology. THE TRUE COST OF EMPLOYING A SWITCHBOARD OPERATOR 25,000 2,351 1,538 ANNUAL BASE SALARY + National Pension Insurance Contribution BASIC SALARY COSTS 28,889 Salary Typical salaries for switchboard jobs in London range from around 20,000 to 28,000 (Guardian Jobs). For a leading law firm, the salary an experienced operator is able to command will be at the higher end of the scale. For the purposes of this white paper we will assume a salary of 25,000. The basic salary is only a marginal part of the real cost of an employee. We need to add the employer s contribution to National Insurance at a cost of 2,351 and pension contributions of 1,538 to give a total basic salary cost of 28,889. Basic Salary Costs: 28,889 Recruitment Costs For any business, recruitment of new employees is costly and the same applies for qualified switchboard operators. According to research carried out by Oxford Economics in 2014 reported in HR Review, recruiting a member of staff costs a little over 30,600. Job Advert + Interview Process = + RECRUITMENT COSTS 30,600 On-the-job Training to Effectiveness 5,400 25,200 = = per employee source: This breaks down into two areas: the cost of covering the work until the new employee gets up to speed and the cost of going through the recruitment process. Typically it takes a new worker around 38 weeks before they are fully trained and effective with an associated cost of around 25,200. The recruitment costs, which include agency fees, advertising and management time spent interviewing candidates, comes to around 5,400. The Employee Attrition report produced by Reed Consulting shows that in the UK the average length of job tenure is under 3 years with larger companies being able to retain employees the longest. According to Robert Half employee turnover in the UK has increased significantly over recent years; the national average in 2013 was 35%, while in London and the South East it was 58%; the main reasons for leaving are financial and lack of job satisfaction. On the basis that switchboard operator jobs in the City of London are well remunerated and levels of job satisfaction are high, we will take an optimistic view and assume that a switchboard employee will stay in their job for three years, giving an annual cost of recruitment of 10,200 per employee per annum. Recruitment Costs: 10,200 3
4 Training & Development The cost of initial training is included in the recruitment costs reported, but there are likely to be ongoing costs associated with in-house training such as: 300 x 4 DAYS 4LOST TRAINING & DEVELOPMENT COSTS 1, Hospitality training normally provided by the HR or the switchboard team leader 2. System training on call management and/or various booking software 3. Data security awareness training that is typically run by the IT department through virtual learning portals 4. Emergency Procedures (Business Continuity/Disaster Recovery) training 5. First Aid training that is run in-house by bringing in trained professionals or at a hired training facility Given that there are so many aspects of the business a key switchboard operator needs to be kept up to speed with, we will assume that he or she attends four one day courses a year at a cost of 300 and four days of lost work. Training & Development Costs: 1, hours p.a. Management Overheads While the management overheads per employee will depend on many factors, the results of a survey carried out by Leadership IQ suggests that it is considered to be good practice for managers to spend six hours a week with each employee. Over the course of a year this equates to around 260 management hours at an estimated 30 per hour. Management Overhead Costs: 7,800 Equipment Costs Switchboard staff require a computer, high specification telecoms equipment, a desk, chair and office supplies. As technology is developing at a rapid pace, telecoms and computing equipment has to be maintained, updated and upgraded frequently. Part of the cost of consumables are charged directly to the P&L account, and part will be charged as depreciation. A reasonable allowance for these would be an additional marginal cost of 1,500 a year. Equipment Costs: 1,500 Software Licenses We need to account for licensed software such as Cisco and Microsoft products as well as other room booking, transport and diary management software. A basic Microsoft product like Office 365 which is essential for integrated business wide communication costs 7.80 per user/month while a call management software license can cost up to 150. Software Costs: m2 per UK employee = 7,307 p.a. Office Space Office space is another important cost that needs to be accounted for. According to the 2013 IPD Index, the average space per full time employee in the UK was 10.5 square meters. Due to rising rents, rates and maintenance costs, London saw the largest rise in cost of rental space to 7,307 per annum for a full time employee. Office Space Costs: 7,307 4
5 Actual Annual Costs Summing up these figures we find that the true cost of employing a switchboard operator equates to 57,196. Annual costs per switchboard worker Salary 25,000 Employers National Insurance 2,351 Pension contributions 1,538 Recruitment costs 10,200 Training costs 1,200 Management overheads 7,800 Equipment costs 1,500 Software licenses 300+ Office Cost 7,307 TOTAL 57,196 THE TRUE VALUE ADDED BY A SWITCHBOARD OPERATOR Working Days Typically people are employed to work for 260 days a year. Out of this they can expect to have around 28 days statutory leave each year and enjoy eight Bank Holidays. This gives a total of 224 working days. Training days account for four of these reducing the total to 220 working days. Annual Leave & Public Holidays: 36 DAYS Training Days: 4 DAYS Hangover Watching a sporting event Don t like their job Interview for a new job Other 26% 26% Reasons for Sick Leave 8% 8% 32% Sick Leave Everyone is susceptible to the occasional winter chill and other infections, and it isn t unknown for London office workers to pull the occasional sickie, in other words taking a day off sick when they are not really ill. According to PWC, a third of British workers have done so; 32% because they had a hangover, 8% in order to watch a sporting event, 26% because they don t like their job, and 26% in order to attend an interview for a new job. Research carried out by Pricewaterhouse Cooper revealed that UK workers take 8 sick days per year on average. The impact of sickness on Switchboard is emphasised as it delivers a key front line service and requires specific knowledge and technical skills. Experience indicates that short term temporary staff from outside a business are ineffective and affect quality. Sick Leave: 8 DAYS 5
6 4% SPL 64% ALL SWITCHBOARD OPERATORS IN THE UK SHARED PARENTAL LEAVE 10 DAYS Shared Parental Leave The new rules on shared parental leave (SPL), which used to be called maternity and paternity leave, will have an impact on the workplace. An analysis of these new and complex rules has been published by Financial Director. While only 4% of men are expected to take up their SPL allowance in 2015, numbers are expected to rise considerably in the next few years. The National Careers Service reports that women account for 64% of all switchboard operators in the UK. Given that the switchboard operator position has a high female to male ratio, maternity leave is of particular importance. As per statutory regulations on maternity, employees can receive up to 52 weeks of maternity leave and up to 39 weeks of paid parental leave. Shared Parental Leave: 10 DAYS TOP TIMEWASTING ACTIVITIES Presonal business 7% Socialising 23% 45% 25% Other Surfing the internet Unproductive Time A survey conducted by Salary.com provides an insight into how British employees spend their working days. The report shows that 64% of workers visit non-work related websites during working hours. The median time spent doing so is two to five hours a week; and much of that is spent on social media and scanning job advertisements. Another research on how UK workers spend their time was published in 2014 by MyHRtoolkit. It suggests that 50% of work time is unproductive. This seems excessive and rather unlikely that a top London professional service firm would work in that way, but we should factor this into the potential cost of inefficient working and time wasting. Taking an optimistic view, we will assume that only 40% of work time is wasted. Unproductive Time: 81 DAYS Actual Working Days Aggregating these figures we can see that over a year an employee contributes value added work of 121 days. Days of Productive Work Contracted Days 260 Productive Days 47% Annual Leave -28 Public Holidays -8 Training Days -4 31% Sick Leave -8 Parental Leave -10 Unproductive Time (40%) -81 TOTAL 121 Unproductive Time Parental Leave 4% Sick Leave 3% Training Days 2% Public Holidays 3% Annual Leave 11% 6
7 TRUE DAILY COST AND BENCHMARK The true daily cost of the switchboard worker is the actual cost divided by the productive days worked, which is 57,196 / 121 which equates to for a 9am 5pm working day. This is a benchmark against which the cost of outsourcing can be compared. 473 SERVICE GAINS BY OUTSOURCING What is the cost of a lost call to a professional service firm? There are stories about the out-of-hours call that delivered a million pounds in revenue. Recent data does provide an insight into the cost of lost business when the customer fails to get through when calling into the switchboard. Research by BT Group has shown that customers typically try reaching a business a maximum of 2 times before giving up and take their business elsewhere. BT Group estimates that the average value of the lost sales is approximately 1,200 per lost call. IAN WALKER, Telecoms Manager at Simmons & Simmons: We acquired a very significant client who originally called another law firm. When they failed to answer we were second on their list; ComXo handled the call and we won the business. A recent survey revealed that 75 % of customers surveyed worldwide expressed that they would do business with a company based on a great call experience, and 50 % say the last time they stopped doing business with a company was partly or wholly due to poor customer service at their first point of contact. CONCLUSION In this white paper we have shown that the true cost of employing a qualified switchboard operator in London, who can deliver the high standards of service required from 9am to 5pm is 473 a day. This is almost five times as expensive as the nominal cost of 96 a day when considering just the contracted hours and salary. By outsourcing switchboard to ComXo, a professional services firm will acquire a specifically trained resource that they do not have to spend time and money recruiting and training. They will also benefit from 24/7 availability and the potential to access additional capabilities and expertise including languages, the latest communications technology, bespoke development plans, scalability, high quality and dedicated account management. 7
8 OUTSOURCED SWITCHBOARD EQUATES TO: Reduction in costs Consistent highest quality customer service Improved operational efficiencies to enhance revenue growth AREAS IN WHICH SAVINGS WILL BE MOST PROMINENT: No training required Lower management overheads Lower investment in technology Office space saving 8
9 WHY OUTSOURCE YOUR SWITCHBOARD TO COMXO With over 25 years of experience in supporting the professional service sector we understand our client s needs and wants for a switchboard function. We have seen city firms growing more complex and their workforces becoming more mobile. We know that to maintain the competitive edge they need to be able to provide a consistent, high quality 24 hour service to clients and staff alike. By outsourcing this service to ComXo, we guarantee a pleasant phone journey into your organisation, ensuring a seamless navigation to the right person, time and time again. With ComXo, you don t run the risk of missing calls that could potentially generate new business. Our call quality has been recognised by independent call analysts at Genesis Communications as being of the highest standards. ComXo has repeatedly been awarded The Genesis Award of Excellence Platinum Award in recognition of its best in class standards in telephony skills for response time, call greeting & call handling. We will help you to adopt more efficient ways of managing your switchboard operation. Outsourcing is the best way to rationalise costs of expanding operational complexity for many businesses and ComXo is the best service provider to partner with. CHRIS PRITCHARD, UK Payments More than a service provider, we see the ComXo team as our business partners taking an active interest in helping us succeed. ABOUT COMXO Since its inception in 1989 ComXo has been a leading provider of 21st Century Switchboard and Business Concierge services to the professional service sector. At the heart of ComXo is its expertise in providing switchboard solutions to Top 100 law firms across the City of London, known for its outstanding quality of service, and multi lingual, global solutions that protects an organisations brand and enable its people. 9
10 REFERENCES Switchboard Operator Central London, Recruitment, Employee Attrition, Staff Turnover, Optimal Hours to be with the Boss, Blue Chip Office Index, Holiday Entitlement, Press Room, New Parental Leave, Switchboard Operator, Maternity Leave, Time Wasting, Wasting Time at Work, The Cost of a Lost Business Call,
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