Skills shortage? No problem!

Thursday, 16 August 2007
The tighter the labour market, the more it pleases Daniel Turner. It only extends the competitive advantage of his Unity4 virtual call centre. By MIKE PRESTON.

Daniel Turner may be the only business owner in Australia who can honestly say the skills shortage is his friend. In fact, Turner says, it is the source of key competitive advantage for Unity4, his Sydney-based home call-centre and software development business.

“Over the last few days we won a $100,000 project with a large pharmaceutical company because the incumbent provider couldn’t find the staff to do it and we could; they literally just couldn’t find the bodies,” Turner says. “The tighter it gets, the bigger the advantage we have in the marketplace.”

Unity4 is, for the most part, a call centre operator, but with a difference – its frontline call staff work from home. Employees login from home to what is effectively a virtual call centre, allowing calls to be made and monitored as if they are being made from a conventional physical call centre.

Turner says this means Unity4 is able to offer a level of flexibility in terms of work hours and locations that allows them to tap into a pool of employees that are inaccessible to many of its competitors.

“It is really the sea-change and tree-change people who we tend to hire – people who want a life change, often because they have kids, sometimes an illness or they just don’t want to work in the city,” Turner says.

The upshot, he says, is that Unity4 is better able to attract staff and retain staff, with an annual churn rate of just 4% – an unheard of rate in an industry where staff retention is a huge issue.

The remote agent model also helps Unity4 keeps overheads low, helping it compete with the overseas call centres that have proliferated in recent years.

“If we can keep costs down it makes it more viable for companies to decide they will have their calls coming from Dubbo or Tennant Creek instead of India or the Philippines,” Turner says.

These advantages have enabled Turner and his co-founder, Matthew Fox, to build Unity4 from a skin and bones operation run out of his spare room in 2000 to a business with revenue likely to exceed $10 million in 2007-08.

Although Unity4 is now in a strong position, there have been plenty of bumps along the way. When the business started, Turner says, his biggest challenge was persuading both potential employees and potential staff that a remote agent call centre model, at that time non-existent in Australia, was all above board.

“At that time it was such a novel idea, we would tell people that they would work from home and they thought it was pyramid selling or something dodgy and clients were worried about proper quality control and monitoring, so it was very difficult to get credibility,” Turner says.

The problem wasn’t solved until Unity4 landed there first big corporate client, multinational pharmaceutical company Roche. The big break came when a former colleague of Turner’s, who worked for an advertising agency that worked in the pharmaceutical sector, was able to set up an opportunity for Turner to pitch to Roche.

“That was the first client where we really cracked open the champagne,” Turner says. “With Roche on board we had credibility in the sector that we were able to leverage to get another global player, GlaxoSmithKline, and we went from there.”

Landing those first big corporate fish meant Unity4 was profitable from the outset, but staying cash flow positive continued to be a delicate balancing act for the first two years, with the constant risk that the loss of one or two big clients could send the business over the edge.

“One week when I was in the US we lost 30% of revenue in one go, when a client dropped one of their products and then a large research project for a major financial institution fell through. I was left lying awake in cheap hotels with jet lag worrying about how to get back that 30%,” Turner says. ”It was very tough in the early days. Cash flow was very tight and making sure we had enough to make payroll and avoid trading while insolvent was a huge stress.”

By early 2003, however, Unity4 was able to the string together four or five big clients and the $2 million-plus revenue flow it needed to consolidate the business and look at further options for growth.

Seeing increased competition on the horizon – industry giants TeleTech and UCMS have now started offering similar home based call services – Unity4 moved to turn the software it had developed for its in-house remote call operations into a service it could offer clients.

A little over 12 months ago Unity4 brought its Rapport customer management software service to market. Customers are able to purchase a licence to access the online software, which then allows them to set up home-based call centres to suit their own needs.

Turner acknowledges this could cannibalise the older call centre arm of the Unity4 business, although they won’t license the software to direct competitors in the call centre outsourcing space.

This year Unity4 will draw close to $1 million in fees from the software service, but Turner clearly sees it making a bigger contribution to the businesses fortunes in the years ahead.

Overseas growth will also be high on the agenda over the next five years. Untiy4 is already placing calls into New Zealand, the UK and US from Australia, with an office in San Francisco likely to go online before Christmas this year.
And at the end of the rainbow?
A pot of gold, of course, in the form of a stockmarket listing.

“In five years I’d like to see us with turnover over in excess of $40 million and listed. I see it as the natural next step for the business and a financial tool to help fund global expansion,” says Turner, who stresses he plans to continue to be involved in the business for the long term.

In the meantime, however, he says he is enjoying running the business, even taking a perverse pleasure in the arrival of direct competitors. “The realisation has spread that this is a good way to run a call centre, and that’s fine, we’re happy being the cool kids in town.”

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