Call Centre Pre-Fesibility

Call Centre In/Out bound -- Pre-Feasibility Study
PRE-FEASIBILITY STUDY
CALL CENTER
AQEEL 1
Table of Contents
1. EXECUTIVE SUMMARY...........................................................................................................3
2. BRIEF DESCRIPTION OF PROJECT & PRODUCT........................................................................4
2.1 Installed and Operational Capacities..................................................................................4
3. GEOGRAPHICAL POTENTIAL FOR INVESTMENT......................................................................5
4. POTENTIAL TARGET CUSTOMERS / MARKETS........................................................................5
5. PROJECT COST SUMMARY......................................................................................................5
5.1 Project Economics...............................................................................................................6
5.2 Project Financing................................................................................................................6
5.3 Project Cost.........................................................................................................................7
5.4 Space Requirement.............................................................................................................7
5.5 Machinery and Equipment Requirement...........................................................................8
5.6 Furniture & Fixtures Requirement......................................................................................8
5.7 Office Equipment Requirement..........................................................................................9
5.8 Human Resource Requirement...........................................................................................9
5.9 Utilities and Other Costs.....................................................................................................9
5.10 Revenue Generation.........................................................................................................10
6. ANNEXURES.........................................................................................................................11
6.1 Income Statement............................................................................................................11
6.2 Balance Sheet...................................................................................................................12
6.3 Cash Flow Statement........................................................................................................13
6.4 Net Present Value, IRR and Payback.................................................................................14
7. KEY ASSUMPTIONS..............................................................................................................15
7.1 Operating Cost Assumptions.............................................................................................15
7.2 Revenue Assumption........................................................................................................15
7.3 Financial Assumptions......................................................................................................15
1. EXECUTIVE SUMMARY
Call Centre is an IT enabled service that links customers with representative of

customer services to address the particular queries. This business has great
potential across the globe, as large corporations are emphasizing to outsource
different functional responsibilities to reduce their operational costs. The typical
services include bookings, reservations, financials and insurance, etc. In this
mechanism customer calls are routed to the overseas call enter destinations, where
trained operators respond to the inquiries of the customers. The availability of the
well-educated English speaking youth makes Pakistan an ideal choice for call
centers business.
Total project cost is estimated at Rs.2.3 million with capital investment of Rs.1.3
million and working capital Rs.1 million. Given the cost assumptions IRR, Payback
and Net Present Value are 74%, 1.4 years and Rs. 8.84 million respectively. The
project will provide employment opportunities to 15 people directly including owner
as CEO. The legal status of this project is proposed as ‘Sole Proprietorship’.
2. BRIEF DESCRIPTION OF PROJECT & PRODUCT
A call center is an IT enabled physical environment dedicated to servicing and

interacting with customers. It is comprised of agents whose primary dedicated function
is to handle inbound and outbound customers queries through telephonic conversation.
Call center is dependent on computer based equipment that aggregates incoming calls,
distributes them over a group of customer’s service representatives (CSRs) and queues
the calls when necessary. The access to call centers is through specific phone
numbers. We are offering help line and sales services to AT&T and Direct TV
throughout the USA. The customer calls are routed to the call center through VoIP
(Voice over Internet Protocol) technology to overseas destination where trained
operators respond to the inquiries of the customers.
In order to set-up a Call Center, we established a high bandwidth internet connection

from a renowned service provider. We are going to establish this call center in a location
that ensure high visibility and easy access to call center representatives, especially
English speaking youth.
2.1 Installed and Operational Capacities
We are establishing a call center based on an installed capacity to in house 10

operators a day. Initial operational capacity will be 80% (i.e. 8 operators per day) with
an annual growth of 5%. Maximum capacity utilization of the project is assumed at
100%. Installed and operational capacities of the proposed unit are provided below.
Table 1: Installed and Operational Capacities

Description Installed Capacity Operational Capacity @
80% (Year1)
Seating Capacity 10 8
3. GEOGRAPHICAL POTENTIAL FOR INVESTMENT
Lahore is the main hubs of education varsities in Pakistan. Availability of well-educated,

proficient in English speaking personnel and other required infrastructure i.e. internet
and telephone facilities distinct this city from the rest of the country. Therefore, we are
going to establish a call center ideally in this city.
4. POTENTIAL TARGET CUSTOMERS / MARKETS
The potential target customers will be;
 Telemarketing companies
 Companies with high customer interaction i.e. service providers like banks & hotels.
 Large companies with high volume of inbound calls like Cable TV, Electricity and
gas connections for overseas, airline booking and hotels booking for domestic and
overseas, help lines for insurance companies & mobile.
 Marketing Companies, etc.
5. PROJECT COST SUMMARY
A detailed financial model has been developed to analyze the commercial viability of
Call Center. Various cost and revenue related assumptions along with results of the
analysis are outlined in this section.
The projected Income Statement, Cash Flow Statement and Balance Sheet are also
attached as annexure.
5.1 Project Economics
All the figures in this financial model have been calculated for estimated revenue of Rs.
7.8 million in the year one. The capacity utilization during year one is worked out at
80% with an increase of 10% in subsequent years up to the maximum capacity
utilization of 100%.
The following table shows internal rate of return, payback period and net present value
of the proposed venture
Table 2: Project Economics
Project Economics Details

Internal Rate of Return 74%
Payback period (Years) 1.4%
Net Present Value (NPV) 8,843,754
5.2 Project Financing
Following table provides details of the equity required and variables related to bank
loan:
Table 3: Project Financing

Description Details
Total Equity (56.52%) 1,300,000
Bank Loan (43.48%) 1,000,000
Markup to the Borrower (%age 3%
per annum)
Tenure of the Loan (Years) 8 Years
5.3 Project Cost
Following fixed and working capital requirements have been identified for operations of
the proposed business.
Table 4: Project Cost

Description Amount (Rs.)
Capital Cost
Machinery & equipment 250,000
Furniture & fixtures 640,000
Office equipment 720,000
Pre-operating costs 100,000
Training costs -
Total Capital Costs 1,710,000
Working Capital 590,000
Total Investment 2,300,000
5.4 Space Requirement
The space requirement for the Call center is estimated considering various facilities
including administration office, call center hall, reception area etc. Keeping in view the
above mentioned requirements, we have acquired a building of 1,000 sq. ft. on rent.
The Details of space requirement related to land and building is given below:
Table 5: Space Requirement

Description Area Required (Sqf)
Call Centre Hall 600
Admin/Manager Office 150
Kitchen 100
Washroom 100
Reception 50
Total 1,000
The monthly rent for the building is taken at Rs. 40,000/- month.
5.5 Machinery and Equipment Requirement
Machinery and equipment for the project are stated below:
Table 6: Machinery & Equipment Requirement

Description Quantit Unit Cost Total Cost
y (Rs.) (Rs.)
Telco Grade Server (VoIP - PRI Based 1 100,000 100,000
Server)
Manageable Network Switch (48 Port) 1 50,000 50,000
Cable, Cable termination and Switch 50,000 50,000
Misc. Equipment 50,000 50,000
Total Machinery & Equipment 250,000
5.6 Furniture & Fixtures Requirement
Details of the furniture and fixture required for the project are given below
Table 7: Furniture & Fixture Requirement

y (Rs.) (Rs.)
Workstations (for staff) 10 10,000 100,000
Table - Floor Manager 1 15,000 15,000
Executive Chair - Floor Manager 2 10,000 20,000
Visitor Chairs 3 5,000 15,000
Executive Chairs for Staff 10 7,000 70,000
File Racks 3 5,000 15,000
Air Conditioners (1.0 ton) 2 70,000 140,000
Renovation Cost 250 1,000 200,000
UPS 1 65,000 65,000
Total Furniture & Fixtures 640,000
5.7 Office Equipment Requirement

Following office equipment will be required for the proposed Call center.
Table 8: Office Equipment Requirement

y (Rs.) (Rs.)
Laptops 12 50,000 600,000
Headsets 10 5,000 50,000
Printer 1 15,000 15,000
Scanner 1 15,000 15,000
Security Cameras 4 10,000 40,000
Total Office Equipment 720,000
5.8 Human Resource Requirement
In order to run operations smoothly, details of human resources required along with
number of employees and monthly salaries are recommended as under
Table 10: Human Resource Requirement
Description No of Employee Monthly Salary

Call Centre Manager 1 50,000
Accountant 1 25,000
Office Boy 1 20,000
Call Centre Agent 10 21,500
Total 13
5.9 Utilities and Other Costs
An essential cost to be borne by the project is the cost of electricity. The electricity
expenses are estimated to be around Rs. 0.6 million per annum.
5.10 Revenue
Generation
Based on the capacity utilization of 80%, sales revenue during the first year of
operations is estimated in below table.
Table 11: Revenue Generation – Year 1

Description Operational Service Charges Annual Sales
Capacity 80% 1st Per Seat Per Month Revenue (Rs.)
Year (Rs.)
Seating Capacity 8 81,250 7,800,000
6. ANNEXURES
6.1 Income Statement
Income Statement
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Revenue 7,800,000 8,190,000 8,599,500 9,029,475 9,480,949 9,954,996 10,452,746 10,975,383 11,524,152 12,100,360
Cost of Sale
CRM Software & Server 960,000 960,000 960,000 960,000 960,000 960,000 960,000 960,000 960,000 960,000
Direct Labor 3,000,000 3,300,000 3,630,000 3,993,000 4,392,300 4,831,530 5,314,683 5,314,683 5,846,151 6,430,766
Machinery Maintenance - - - - - - - - - -
Direct Electricity 600,000 600,000 600,000 600,000 600,000 600,000 600,000 600,000 600,000 600,000
Generator Charges - - - - - - - - - -
Total Cost of Sale 4,560,000 4,860,000 5,190,000 5,553,000 5,952,300 6,391,530 6,874,683 6,874,683 7,406,151 7,990,766
Gross Profit 3,240,000 3,330,000 3,409,500 3,476,475 3,528,649 3,563,466 3,578,063 4,100,700 4,118,001 4,109,594
General administration & selling expenses
Administration benefits expense 720,000 720,000 720,000 792,000 792,000 792,000 871,200 871,200 871,200 871,200
Building rental Expenses 480,000 504,000 529,200 555,660 583,443 612,615 643,246 675,408 709,179 744,638
Water expenses 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000
Travelling expenses 42,000 42,000 42,000 42,000 42,000 42,000 42,000 42,000 42,000 42,000
Communication expenses 78,000 78,000 78,000 78,000 78,000 78,000 78,000 78,000 78,000 78,000
Office expenses 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000
Promotional expenses - - - - - - - - - -
Insurance expenses - - - - - - - - - -
Progessional fee 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000
Despreciation expenses 161,000 144,900 130,410 117,369 105,632 95,069 85,562 77,006 69,305 62,375
Amortization of pre-operating costs 5,000 4,750 4,513 4,287 4,073 3,869 3,675 3,492 3,317 3,151
Amortization of legal, licensing, and training costs - - - - - - - - - -
Subtotal 1,736,000 1,743,650 1,754,123 1,839,316 1,855,148 1,873,553 1,973,683 1,997,106 2,023,001 2,051,363
Earnings Before Interes t & Taxes 1,504,000 1,586,350 1,655,378 1,637,159 1,673,501 1,689,913 1,604,380 2,103,595 2,095,000 2,058,230
Interest expense on long term debt (Project Loan) 15,000 28,339 24,966 21,492 17,914 14,229 10,433 6,523 1,248
Interest expense on long term debt (Working Capital Loan - - - - - - - - - -
Subtotal 15,000 28,339 24,966 21,492 17,914 14,229 10,433 6,523 1,248 -
Earnings Before Taxes 1,489,000 1,558,011 1,630,412 1,615,667 1,655,587 1,675,685 1,593,947 2,097,072 2,093,752 2,058,230
6.2 Balance Sheet

Income Statement
Revenue 7,800,000 8,190,000 8,599,500 9,029,475 9,480,949 9,954,996 10,452,746 10,975,383 11,524,152 12,100,360
Cost of Sale
Direct Labor 3,000,000 3,300,000 3,630,000 3,993,000 4,392,300 4,831,530 5,314,683 5,314,683 5,846,151 6,430,766
Gross Profit 3,240,000 3,330,000 3,409,500 3,476,475 3,528,649 3,563,466 3,578,063 4,100,700 4,118,001 4,109,594
Water expenses 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000
Office expenses 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000
Subtotal 1,736,000 1,743,650 1,754,123 1,839,316 1,855,148 1,873,553 1,973,683 1,997,106 2,023,001 2,051,363
Subtotal 15,000 28,339 24,966 21,492 17,914 14,229 10,433 6,523 1,248 -
Income Tax (Min 1.25% on Turnover) 97,500 102,375 107,494 112,868 118,512 124,437 130,659 137,192 144,052 151,255
NET PROFIT/(LOSS) AFTER TA 1,391,500 1,455,636 1,522,918 1,502,799 1,537,075 1,551,247 1,463,288 1,959,879 1,949,700 1,906,976
6.3 Cash Flow Statement

Income Statement
Revenue 7,800,000 8,190,000 8,599,500 9,029,475 9,480,949 9,954,996 10,452,746 10,975,383 11,524,152 12,100,360
Cost of Sale
Direct Labor 3,000,000 3,300,000 3,630,000 3,993,000 4,392,300 4,831,530 5,314,683 5,314,683 5,846,151 6,430,766
Gross Profit 3,240,000 3,330,000 3,409,500 3,476,475 3,528,649 3,563,466 3,578,063 4,100,700 4,118,001 4,109,594
Water expenses 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000
Office expenses 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000
Subtotal 1,736,000 1,743,650 1,754,123 1,839,316 1,855,148 1,873,553 1,973,683 1,997,106 2,023,001 2,051,363
Subtotal 15,000 28,339 24,966 21,492 17,914 14,229 10,433 6,523 1,248 -
Income Tax (Min 1.25% on Turnover) 97,500 102,375 107,494 112,868 118,512 124,437 130,659 137,192 144,052 151,255
NET PROFIT/(LOSS) AFTER TA 1,391,500 1,455,636 1,522,918 1,502,799 1,537,075 1,551,247 1,463,288 1,959,879 1,949,700 1,906,976
6.4 Net Present Value, IRR and Payback
Income Statement
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
Revenue 7,800,000 8,190,000 8,599,500 9,029,475 9,480,949 9,954,996 10,452,746
Cost of Sale
CRM Software & Server 960,000 960,000 960,000 960,000 960,000 960,000 960,000
Direct Labor 3,000,000 3,300,000 3,630,000 3,993,000 4,392,300 4,831,530 5,314,683
Machinery Maintenance - - - - - - -
7. KEY ASSUMPTIONS
7.1 Operating Cost Assumptions
Description Details
Administration Benefit Expenses 5%
Office Expenses 5%
Communication Expenses 5%
Professional Fee 5%
Depreciation Method Declining Balance
Depreciation Rate Equipment 10%
Furniture 10%
Office equipment 10%
Pre-operating Cost 5%
Inflation Growth Rate 10%
Electricity Price Growth Rate ---
Salaries Growth Rate 10%
7.2 Revenue Assumption

Description Details
Growth in Sales Price 5%
Days Operational / Year 365
Maximum Operational Capacity (Per Year) 10
Operational Capacity in First Year 80%
Percentage Increase in operational Capacity every Year 10%
Maximum Capacity utilization 100%
7.3 Financial Assumptions

Description Details
Total Equity (56.52%) 1,300,000
Bank Loan (43.48%) 1,000,000
Markup to the Borrower (%age 3%
per annum)
Tenure of the Loan (Years) 8 Years

Call Centre Pre-Fesibility

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Call Centre Pre-Fesibility

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Call Centre In/Out bound -- Pre-Feasibility Study

Call Centre is an IT enabled service that links customers with representative of

2. BRIEF DESCRIPTION OF PROJECT & PRODUCT

A call center is an IT enabled physical environment dedicated to servicing and

In order to set-up a Call Center, we established a high bandwidth internet connection

2.1 Installed and Operational Capacities

We are establishing a call center based on an installed capacity to in house 10

Table 1: Installed and Operational Capacities

3. GEOGRAPHICAL POTENTIAL FOR INVESTMENT

Lahore is the main hubs of education varsities in Pakistan. Availability of well-educated,

4. POTENTIAL TARGET CUSTOMERS / MARKETS

The potential target customers will be;

5. PROJECT COST SUMMARY

5.1 Project Economics

Table 2: Project Economics

Project Economics Details

5.2 Project Financing

Table 3: Project Financing

5.3 Project Cost

Table 4: Project Cost

5.4 Space Requirement

Table 5: Space Requirement

5.5 Machinery and Equipment Requirement

Machinery and equipment for the project are stated below:

Table 6: Machinery & Equipment Requirement

5.6 Furniture & Fixtures Requirement

Table 7: Furniture & Fixture Requirement

5.7 Office Equipment Requirement

Table 8: Office Equipment Requirement

5.8 Human Resource Requirement

Table 10: Human Resource Requirement

Description No of Employee Monthly Salary

5.9 Utilities and Other Costs

Table 11: Revenue Generation – Year 1

6.2 Balance Sheet

6.3 Cash Flow Statement

6.4 Net Present Value, IRR and Payback

7.2 Revenue Assumption

7.3 Financial Assumptions

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