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Serco agrees significant new BPO contract with leading UK retailer

Published: 9 May 2012

Serco Group plc (Serco), the international service company, announces that it has reached an agreement and expects to sign today a significant new Business Process Outsourcing (BPO) contract to provide and enhance the efficiency of customer contact services for Shop Direct Group (Shop Direct), the UK's leading online and home shopping retailer. The ten-year contract will start on 1 July 2012 and has a total estimated value to Serco of approximately £430m.

Under the contract, Serco will assume responsibility for managing customer contact across Shop Direct's brands. The partnership will work together to significantly enhance service levels and efficiency through the investment in the latest technology, such as web chat and mobile digital services, which are designed to seamlessly integrate online and mobile into customer contact management.

Changing customer shopping, contact and servicing patterns have led to a major shift in channel preference. These changes, together with the need to increase efficiency, led Shop Direct to undertake a complete review of its customer service needs, the result of which was the appointment of Serco to provide its future customer contact programme. This draws and substantially builds on the successful contract that The Listening Company currently has with Shop Direct, where consistently high levels of performance have been achieved.

The contract represents a significant further step forward for Serco's recently formed Global Services business, which combines the capabilities from Intelenet and The Listening Company as well as the additional scale advantage from Serco's other BPO operations. Our proposal includes a blend of on-shore and off-shore service provision. Around 1,800 contact centre and administration employees will transfer to Serco.

The proposed service provision transitions in stages over the first two years of the contract's operation. The timing of costs associated with implementing transitional arrangements are expected to drive an additional working capital out flow for Serco estimated in total at approximately £25m over the initial two years.

Mark Newton-Jones, Group Chief Executive of Shop Direct, said: "The ways in which customers are shopping with us, contacting us and servicing their accounts have changed rapidly, driven by revolutionary advances in digital and interactive technology. We have chosen to work with Serco as they are an acknowledged leader in this field. Serco's expertise, coupled with their investment in technological innovation, will ensure that we have a customer contact programme that is flexible and adaptable for the increasingly online and mobile world that we live in."

Christopher Hyman, Chief Executive of Serco Group, added: "Today's announcement with a major organisation such as Shop Direct is testament to the significant development of our Global BPO strategy. Serco will bring its substantial skills and capabilities in contact service delivery to Shop Direct, further improving the customer experience through investment in technological innovation and increased efficiency. Our selection for this contract clearly demonstrates the strength and success of our customer contact scale and expertise. It is also a major advance for Serco in the retail and financial services markets and builds on the back of our recent wins with Freemans Grattan Holdings and Ideal Shopping."

A consultation period regarding the TUPE transfer will begin shortly with the individuals affected by these proposals and their trade union and management representatives. The TUPE transfer date is 1 July 2012.