Pact pushes Sitel stock up

Company will handle contacts for GM's OnStar system

Customer service

January 22, 2000|By Mara H. Gottfried | Mara H. Gottfried,CONTRIBUTING WRITER

Sitel Corp. saw its shares rise more than 20 percent yesterday after the Baltimore-based company said it had signed a contract to handle customer contacts for General Motors Corp.'s OnStar system.

Sitel will service the OnStar account from a 750-person workstation it will build in Charlotte, N.C.

Sitel provides telephone and Internet-based customer service support in more than 75 customer contact centers worldwide.

OnStar, a subsidiary of General Motors, operates an in-vehicle safety, security and information system that links drivers to OnStar operators.

Jim Jacobson, Sitel director of investor relations, declined to reveal the specific length of the contract, but indicated that it was less than five years.

Neither company made public the financial terms of the agreement.

John P. Larson, an analyst at B. T. Ziegler and Co., an investment banking and brokerage firm in Milwaukee, said the contract is significant for Sitel.

"The fact that this is a multiyear contract with GM would imply that this is a very nice piece of business," said Larson. "In terms of relative perspective, this is not their biggest agreement, but it's not small either." Shares of Sitel gained $1.375 yesterday to close at $8.125 on the New York Stock Exchange.

The OnStar contract is the second Sitel has signed with GM in the past year.

In February, Sitel won a five-year deal to provide customer service for GM's North American Vehicle Sales, Service and Marketing Group.

Jacobson said Sitel does not expect the Charlotte center to be at its capacity until year's end. He said Sitel may hire up to 800 employees for the OnStar center, which will operate 24 hours a day, 365 days a year.

Sitel will be responsible for training and managing employees to handle the customer service calls. The center will open in April with from 200 to 250 employees.

"This agreement is very important for Sitel," Jacobson said. "If you stop and think about how much time people spend in their automobiles, you see that here is a whole new market for customer service. It's live interaction with a human that will allow people to keep both hands on the wheel while getting assistance."

Drivers who subscribe to an OnStar plan can push a button in their car to be connected with a customer service operator.

Geri Lama, an OnStar spokeswoman, said the Charlotte customer service center is necessary because OnStar aims to increase its customer base this year. OnStar has a customer service center in Troy, Mich., where it is headquartered.

OnStar hardware is sold through car dealerships for about $700. The system is compatible with some Buick, Cadillac, Chevrolet, GMC, Oldsmobile, Pontiac and Saab models.

Subscribers pay from $199 to $399 per year, depending on the plan they chose. OnStar's services include stolen-vehicle tracking, emergency services, remote door unlock, roadside assistance and concierge services, such as offering directions and arranging restaurant reservations.

Lama said OnStar expects to generate more customers because the system will be factory-installed in some cars this year.

But Larson said whether OnStar attracts a larger customer base, and how soon, will have an impact on how fast Sitel staffs the Charlotte center.

"If it takes longer for OnStar to receive the targeted penetration they are anticipating, that will have some impact on how fast this contract ramps up," Larson said. "But the door swings both ways."

Sitel has contracts to take customer service calls for companies such as America Online Inc., Compaq Computer Corp., Hewlett-Packard Co. and Hughes Network Systems.

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