April 1999

The Two-Year Trend Toward Sweden In International Call Center Site Selection

BY MAGNUS MOLITEUS, INVEST IN SWEDEN AGENCY

Sweden, with its strong industrial base and stable economy, is now recognized as a northern European location of choice for expanding international teleservice agencies. In the past two years, four premier U.S.-based call centers have independently chosen Sweden as a base for their Scandinavian operations. Their collective decision provides strong evidence of the favorable business climate and expansive market in the country, and is confirmed by independent analysts such as U.K.-based Datamonitor.

These U.S.-based call centers have joined call centers from distinguished firms such as DHL, the international air courier (which won the French Teleperformance Grand Prix award for the best European call center of 1998); Teleperformance, one of the world's largest telephone-marketing networks; and American Express.

The move to Sweden also provides evidence of the growing trend toward regionalization. More and more companies are finding that one pan-European call center cannot service the diverse cultures and languages in Europe. Instead, these companies now operate distinct call centers for each of Europe's most important regions. Sweden, the focal point of Scandinavia and its 24 million consumers, is a logical location for a northern European call center.

Hewlett-Packard
Hewlett-Packard exemplifies the trend toward regionalization. The company recently signed an agreement to move technical support for its series of hand-held computers to V�xj�, Sweden. Previously managed from Amsterdam for the entire European market, technical backup and end-user assistance has now been divided regionally with the Scandinavian center in V�xj�. Hewlett-Packard is currently recruiting for the new center, which opened in February 1999.

"Sweden offers high labor quality and low operating costs. It will be easy to find well-educated and highly motivated call center agents," said Hewlett-Packard's Scandinavian production manager, Jonas Lundeg�rd. The operation in V�xj� will be handled by Nordic Support AB.

Convergys Corporation
In September 1998, Cincinnati-based Convergys, a 30,000-employee call center service agency formed from a merger of CBIS and MATRIXX Marketing, acquired Exit Marketing AB, a provider of outsourced customer management in Sweden.

In August, Convergys established a call center operation in Linkoping, Sweden. Convergys' decision followed a comprehensive site-selection process. The center has 35 seats plus management and back-office functions, and is expected to more than double in size within a year. It is Convergys' fifth international call center (after Canada, Britain, France and Belgium) and serves the Scandinavian market -- Norway, Sweden, Finland and Denmark. It has the capability to access the Baltics as well, at the customer's request. The Linkoping location, which provides inbound and outbound services, has already secured a contract with Compaq and continues to negotiate with several other clients.

Keith Finnigan, who coordinated the call center project for Convergys, said, "The multilingual population, high level of technological awareness and skilled labor force all combine to make Linkoping an ideal site to serve the entire Scandinavian region."

Sykes
Sykes Enterprises, Inc., an information technology and call center service agency based in Tampa, Florida, expanded its current facility in Sveg in northern Sweden into a new 324-seat technical call support center -- servicing mostly international computer manufacturers and software publishers.

In August, the Swedish Minister of Industry, Anders Sundstrom, inaugurated Sykes' call center facility in Sveg. The seven-month construction period was funded by $2.75 million in investments. The new, expanded facility serves as Sykes' Scandinavian headquarters.

John H. Sykes, president and CEO of Sykes, said, "We originally opened our center in Sveg with 70 seats, but the region's constantly expanding technology has resulted in a rapidly climbing demand for support."

Sykes' new center in Sweden includes the latest telephony, switching, servicing and call monitoring software. It supplements 10 call centers in the United States and 10 other international locations.

SITEL
SITEL Corporation, an Omaha, Nebraska-based telemarketing company which has served firms such as Chrysler, IBM, Microsoft and General Motors, is continuing to expand its call center in Sweden. Svanberg & Co., an Orebro-based telemarketer now known as SITEL Nordic, was acquired by SITEL in July 1997. It is ideally suited for operations in Sweden due to the geographic location, style of business management, technology and level of customer service, according to Tony F. Mary, president of SITEL, Europe.

SITEL Nordic has doubled the number of its call center agents to more than 200 persons. This expansion demonstrates the growing market for call centers in Sweden.

Analysis Of Location Decisions
According to the U.K. market analyst firm, Datamonitor (see Call Center Outsourcing in Europe, February 1998), Sweden will achieve a 150 percent growth rate in the call center service agency market and a 64 percent increase in the total call center market between 1997 and 2002. In addition, the proportion of outsourced operations will increase relative to in-house. Service agencies will benefit since Sweden has the largest ratio of Fortune 500 companies in the European Union, with firms such as Ericsson, Ikea and Volvo.

Datamonitor points out that Sweden is one of the three most developed markets in Europe, where the trend toward outsourcing is particularly prevalent. Datamonitor's study notes that technology and telecoms will drive call center growth in Sweden, "which historically adopts technologies (such as the Internet) rapidly and on a large scale." These fields require outsourced, technical help-desk operations.

Call centers are less expensive to operate in Sweden than in its major competitors. Sweden's total hourly labor cost is 11 percent less than that of The Netherlands and one-third less than the total cost in Germany. Office space in Stockholm costs less than the European average. Interest rates are only five percent; inflation is below one percent.

Finally, there is a favorable government climate to maintain Sweden's advantage. The corporate tax rate, 28 percent, is among the lowest in the European Union. The telecommunications industry was deregulated in 1993 (unlike almost all other European countries). Telia, the country's largest telecommunications company, provides one of the lowest phone costs in the world.

With more than 30 years of international experience in the pharmaceutical and health care industries, Magnus Moliteus joined Invest in Sweden Agency (ISA), a government organization that serves companies interested in locating in Sweden, in December 1995. Previously, Moliteus served as president of Pharmacia U.S., Inc., a holding company for Pharmacia's operations in the U.S. In his 30 years there, he helped establish Pharmacia's subsidiary in Japan and incorporated Pharmacia's French company. Moliteus has served as the chair of both the Swedish-American Chamber of Commerce and the international committee for the Health Industry Manufactories Association (HIMA) in Washington, D.C.