Shop Direct hires Serco to run its customer services

LONDON (Reuters) - British retailer Shop Direct said it had handed outsourcing firm Serco (SRP.L) a 430 million pound contract to run its customer services, in a deal which could lead to job losses and work being sent offshore to South Africa and India.

Shop Direct, whose brands include Littlewoods, Very.com and Woolworths.co.uk, on Wednesday said it had hired Serco to increase efficiencies after a review highlighted declining call volumes to its contact centres, as shoppers choose to order online and get in touch via social media instead.

"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," Shop Direct Chief Executive Mark Newton-Jones said.

"Unfortunately, this will mean a need for far fewer people to be directly involved in customer contact in the future."

British firm Serco, which runs services from London's light rail to prisons and air traffic control centres around the world, will manage customer contact services and invest in technology across Shop Direct's brands over the next 10 years.

As part of the contract Serco proposes to close two of Shop Direct's four UK contact centres, with sites in Worcester and Preston - home to 1,000 staff in total - earmarked to go. The group said it was also proposing to deliver some of the work offshore to South Africa and India.

In a statement Shop Direct said its Worcester and Preston sites would stay open for at least another year and that more discussions must take place before a final decision is made on the proposals.

(Reporting by Neil Maidment; Editing by Rhys Jones)