Troubled tech marketing agency SCi on 'knife-edge'

Collapse of telemarketing outfit sparks claims that cold-calling techniques no longer work in tech industry

Tech marketing agency SCi Sales Group has been forced to lay off most of its staff, sparking renewed claims telemarketing in the tech industry is in terminal decline.

The Hammersmith-based firm - whose clients include Oracle and Trend Micro - called in accountancy firm AST Green Accountants on Friday to help it restructure its operations after running out of cash.

Most of SCi's 25 to 30 staff were made redundant on Friday or over the weekend, AST Green's Andrew Green confirmed to CRN.

SCi's underlying cashflow issues were exacerbated by a recent bad debt, as well as a big contract loss, Green said.

"We will be running the business for the next four to five weeks," he added.

"Probably all staff will be made redundant. At the end of that period, either we will start building it back up from there or it will go into liquidation. It is on a knife-edge as to which way it will go."

All 18 to 20 staff who came in on Friday were told to clear their desks, Green confirmed. Brendan O'Flaherty, who ran SCi since it was founded in 2002, now lists himself as the firm's "former" CEO on LinkedIn.

The view that the tech industry is moving away from traditional forms of marketing such as telemarketing and email is becoming more pervasive, with a Microsoft executive commenting on the topic earlier this year.

The wider telemarketing industry is also coming under more scrutiny, with SCi itself involved in the political discussion around new EU regulations requiring customers to opt in for direct marketing back in 2012.

Alisha Dattani, founder of tech marketing agency FXMA (pictured), claimed agencies offering just traditional call centre and telemarketing services are losing out to those that can provide an integrated approach encompassing social media and content marketing.

"That old-fashioned approach just doesn't work, and I suspect there will be more casualties in this area," she said.

"The same thing happened to Xact [a telemarketing agency which ceased trading earlier this year] and the fact is, telemarketing just doesn't work in isolation. We started off that way but had a business model shift 18 months ago, which has worked for us."

Dattani said SCi disbanded its international activities about a month ago and that FXMA picked up about seven affected staff.

Olivier Choron, who heads up tech marketing agency purechannels and social media platform purechannelapps, agreed that marketing techniques that can influence buyers earlier in the sales cycle, such as social media marketing, are in the ascendancy.

"Telemarketing doesn't seem to be a very healthy space to be in," he said.

"I'm not saying that social media will replace telemarketing. But it's new and interesting and it works and maybe that's why telemarketing and cold calling are not as effective as they once were."

Green said he had hopes SCi can continue trading in some form.

"As a business it was solvent but unfortunately because of the cashflow issues it couldn't afford to continue paying salaries," he said. "After four or five weeks we will see if we can move it forward as an ongoing business. It's a case of making sure we get money in quickly and asking creditors to extend the period in which they pay."