A Gem of a business

28 May 2003

There are not too many three-year-old companies around that can claim to have actually expanded during the dog days of the economic downturn. Gem is one of them. Chief technology officer Kieran McGowan has been the architect of the technical infrastructure that has had to expand to meet the needs of the growing business.

The Belfast-based contact centre has been something of a phenomenon since it was established in February 2000 by five entrepreneurs and technology professionals led by Owen Lamont, the former head of NTL Ireland who is now Gem’s chairman and chief executive. The company how has 400 employees and a blue-chip customer base that includes Amazon.com, BT, MSN, Royal Bank of Scotland and Computer Sciences Corporation.

As McGowan relates, Gem provides an interesting case study in how to enter a competitive marketplace. All contact centre start-ups are faced with one fundamental decision: what size of business to go after. Low-cost countries such as Malaysia and India have taken a firm grip on large customer service contracts – 100 seats and up – leaving companies like Gem to target mid and lower tier customers which require 10 to 30 contact centre agents to manage their customer relations.

Gem has a 350-seat contact centre in Belfast as well as a small 25-seat facility in Derry, to take advantage of an excellent pool of linguists in the North’s second city and offer one of its key customers with the security of a second facility.

While the company always intended to provide a multi-channel service – so defining itself as a contact centre rather than a pure telephone-based call centre – it initially decided to focus exclusively on email. “It was niche, it was something different and it was growing 100pc every six months,” recalls McGowan, who travelled the world with Shell before he decided to return to his native city to co-found Gem.

This exclusive email focus allowed Gem to gain a foothold in the market, establish a customer base and build a solid reputation. These days, as well as handling queries and customer transactions by email, Gem also supports voice, text message and web chat. Also known as instant messaging, web chat has been a revelation in terms of the cost efficiencies it can lead to, especially when used for technical support. “We can actually talk people through reinstalling or bug-fixing their application. For a while our agents were able to handle five simultaneous chat sessions as each customer goes away and tries out recommendations. From a cost viewpoint it’s phenomenal. The customer reduces their annual costs by over 60pc – that’s a couple of million of pounds they were saving by using this new technology,” McGowan points out.

From the beginning Gem had a sales team in the US to tap into the huge market potential there. The strategy reaped dividends when, in July 2001, Gem signed a three-year deal to provide customer support to Amazon.com’s online shopping mall, which in the US covers a range of items as well as the books and CDs which we’re more used to seeing on Amazon.co.uk. Given its strong early focus on the US market, it’s not surprising that foreign-based, primarily US companies account for 80pc of Gem’s revenues.

McGowan notes that companies in the UK and Ireland are following their US counterparts in that they are more likely to consider outsourcing their customer service function. “People realise the costs involved in doing it themselves – the staff recruitment and training, the capital cost of the equipment and the flexibility needed to be able to ramp up and down with demand. We’re able to take all that on and give service level guarantees associated with that.”

The cost benefits of outsourcing are a big part of its appeal – the estimates range from 30 to 40pc or over the lifetime of a contract – but McGowan prefers to emphasise the ‘added value’ that an innovative Irish-based company can bring to a customer. “Ireland has always had this reputation for good service and that’s something that we can actually leverage with our clients and prospects.”

Having established itself as a contact centre, Gem is now looking to use its skills and expertise to develop a consultancy arm, which is aimed mainly at the Irish market. “Based on the experience we’ve built up we can help companies with their processes and the structuring of their call centres,” says McGowan. “A company could be looking for the best way to handle customers, make them feel valued and maximise sales per customer. We’ve done this for Boots and Lastminute.com and it’s something we feel we can now offer the local market.”

By Brian Skelly