Locations That Want You | Destination Call Center

United States. Where there used to be definite areas within the US that were call center-friendly, these days there’s no real reason why one area is better than another. At this point in the booming economy, few areas are so depressed that they can supply a steady stream of workers at low cost. But for sheer volume, the south and southwest seem to attracting the most centers.

Cities like Las Vegas and Phoenix have surged in population, and in the number of new call centers taking up residence there (or in the surrounding suburbs). There are few good studies that show where call centers actually are; instead, they tend to show where centers could be, focusing on relative cost between regions. So I tend to rely on anecdotal evidence to tell me which areas are more “popular.” It’s important, then, to keep in mind that most companies that run call centers don’t call a lot of attention to their centers. The industry has an imprecise sense of where the centers are clustered.

There are clusters in the Midwest and upper tier of states, through Iowa and Nebraska, South Dakota and Kansas. The states in this region have historically worked hard to attract centers with incentives and on-the-ground assistance getting facilities open and running.

The move to the Sunbelt is a late 1990s phenomenon. It’s driven by lower costs for real estate and (I think) the same thing that keeps people moving into those regions — good quality of life issues, lower cost of living than in the cities on the coasts, lower taxes and the perception of more business-friendly authorities.

Within the US, though, there is a greater diffusion of centers than ever before. The factors that go into call center site selection now include one that was relegated to the bottom of the list ten years ago: corporate convenience. With telecom plentiful, labor expensive and real estate a non-issue, you can put your center near an important client, a critical supply warehouse, a distribution point, or the CEO’s summer house.

Canada. The Canadian call center business is not just an offshoot of the American industry. It’s a strong, growing industry in its own right, capable of serving both the domestic Canadian market and the cross-border North American market. Also, you can take advantage of a completely open border, a citizenry with a high education level and a multitude of language skills.

Ontario, the nation’s largest province, is host to many centers. One city, Welland, is home to Canadian Tire Acceptance, a dispatch center for roadside towing assistance that serves (mostly Canadian) customers through an 800 number accessible in either the US or Canada. Ontario boasts that its province-wide payroll taxes and benefits costs are, on average, 37% less than in the US. This disparity can work in the favor of an American company looking to reduce costs by opening a new center or relocating the functions of an existing center.

Farther west, Manitoba has, since 1993, been very active in trying to attract new call centers to their centrally located province. Manitoba’s position just north of the American upper Midwest is perfect for telemarketing to and from both coasts, which was a lot of the rationale for the industry to thrive in the American Midwest. If you need full time zone coverage, you can function just as effectively in Canada as you do in Omaha. Winnipeg was recently the site of a new 500-seat center built by Air Canada.

As an example of the kinds of incentives available, the airline launched the center in cooperation with the Call Centre Initiative of Manitoba and the City of Winnipeg. The provincial government assisted with start-up and training costs by providing a $3.5 million forgivable loan through the Manitoba Industrial Opportunities Program. In return, Air Canada committed to create 500 new jobs over three years.

In the east, New Brunswick and Nova Scotia have emerged as strong sites for call centers, based on what are reported to be an extreme cost differential between those provinces and the mainland US. NB Tel (the carrier in New Brunswick) cites a recent call center study, which showed that centers in that province can cost up to 50% less to operate in than other locations. They also claim that New Brunswick call centers pay the lowest workers’ compensation rates on the continent.

One of the most important factors in the development of this industry is the aggressive support of the New Brunswick Government. A direct stakeholder in the call center industry, the government encourages businesses to move to New Brunswick by offering high-level call center training courses. Call centers are reportedly the province’s fastest growing industry.

NB Tel partnered with Genesys Canada to offer a technology package that includes a network-wide call center solution called Enhanced Call Center Solutions (ECCS). This offers a multi-tenant call center provisioning platform that delivers a number of enhanced call center services such as screen pops, intelligent call routing and predictive dialing to centers of various sizes, technology platforms and geographic locations. Wherever you are in the world, you can access complete call center functionality using regular telephone lines.

Europe. How big is Europe’s call center market? Around $9 billion, according to a report from the Pelorus Group entitled. European Call Center Markets Great Britain, France, Germany and Holland together accounted for 80% of call center sales revenues within the 15-member European Union.

During the five-year period from 1999 through 2003, sales of call center systems among those Big Four will total more than 1.8 million seats, over $3.6 billion in base revenues, and over $9 billion in gross revenues.

This growth is happening unevenly, and that has a lot to do with the fact that some countries had a head start over others going into this period of expansion.

Their findings indicate that despite the creation of a single, continent-wide currency system, there has really not been a single continental market for call center products. Vendors still have to treat the various countries as what they are — separate entities each with its own tendencies and its own market idiosyncrasies.

Of the four markets, France remained the least developed for the longest time. In the 1997-1998 period, however, it began making up for lost time, and a far larger, more sophisticated market finally began to emerge.

Germany has made the greatest strides in the shortest time. Around mid-decade its limited and over-priced marketplace for call center products fell to an invasion of advanced solutions from abroad. Since then Germany has climbed into the lead for numbers of system sales. It continued to trail Britain in total seat installments and revenues, however, due largely to the more robust high-end segment of the British market.

Meanwhile, Holland’s call center market should continue to show surprising strength for a country its size, due in large measure to the sophistication of its users. It will be a market heavily driven by the under-40-seat range, the report says.

If Europe’s your goal (as it often is), the first question an American firm should ask itself is this: do I need a pan-European center, or do I want to target my center to a single country’s market?

A pan-European center requires you to staff up for calls in a multitude of languages. You’ll need switches and software that can handle skill-based routing, and probably a voice processing system to offer language-based prompts.

Another option is to identify the call’s originating country using the phone network itself. The advantage is that it’s more transparent to the caller if your rep answers right away in the language of the caller, without voice system intervention.

What are your options in Europe? You have several really good ones. The top-tier countries are already so similar in the quality of their telecom, that they are differentiating themselves on the basis of pricing, incentives, multi-lingualism and local regulations that help (or hinder) call center activity.

For a while, Europe was divided into two camps: those countries that had an active effort to attract call centers, and those that couldn’t see the benefits and did nothing. Ireland, the Netherlands, the UK and Belgium formed the core of the first group, France and Germany the second. Now both France and Germany have awakened to the facts of life, and are trying hard to attract call centers, particularly those that serve the lucrative pan-European market.

A couple of years ago, Belgium went to the trouble of building a dedicated facility for call centers, called variously Brucall, or the Call Center Hotel. It was designed as a semi-official outsourcing portal, a place for companies to come and park their centers at preconfigured workstations.

Other countries have had more success attracting outside business, notably Ireland and the Netherlands. In Ireland’s case, they built upon the country’s solid education system, the fact that everyone there speaks English, and the structurally high unemployment rate. Ireland has functioned as a point of entry into the European market for many high profile American companies, for call centers, but also for other kinds of back office functions like data processing.

And the Netherlands has carved out a niche serving companies from Europe and the US that want to serve the continental market from a single center, using agents skilled in multiple languages and a layer of multilingual technology on top of that.

For its part, the UK has prospered because it has a strong domestic call center industry of its own — by some counts, as many as 3,000 to 5,000 call centers focusing on British customers (although it is impossible to know for sure).

The Americas. One of the great open-ended questions of the day regarding call centers is how deeply the North American industry model will penetrate into other emerging markets, particularly Latin America.

For example, El Salvador is grappling with that question right now, as it tries to attract outside call centers as a way of lifting its economy.

The possibilities are tantalizing. On the plus side, the Latin American countries offer a Spanish-speaking workforce to answer calls from the US or Latin America. But there are high technological, human and business hurdles that stand between them and this clean, efficient industry. It seems to boil down to jobs: call centers provide plenty of them, and they’re not bad jobs, as jobs go.

Despite the tax incentives a locality has to dole out, attracting centers boosts a tax base through more skilled workers, and the ricochet of their spending through a local economy.

Outside the US, it’s led countries like El Salvador to an interesting crossroads: does it make more sense to develop a domestic call center industry, or should they try to become outsourcers to a larger market, like the US? Or a mix of the two?

The country has several mid-sized call centers already, mainly in banking and for the national airline’s reservation system. (A million Salvadorans in the US generate a lot of phone calls for flight reservations.)

El Salvador has been making the case for some time that it is a desirable location for an American outsourcing company to open (or take over) a center that would answer calls from either the US itself, or from the wider Latin American region.

The idea behind that is the same as building a shopping mall — you want to have a big name as the anchor tenant, so others will feel comfortable moving in. The El Salvadorians have been negotiating with a couple of the big names in outsourcing, but so far nothing has been signed.

Mexico has had the most success so far, with both a domestic industry and a cross-border business answering calls for the US Spanish-language community.

Other areas like Puerto Rico, Jamaica, possibly Brazil and Argentina have shown signs of joining the international call center industry.

Asia and the Pacific Rim. Call center companies (both those on the user and vendor sides of the fence) often disregard the Asian call center market as either too complex or too undeveloped to merit wide attention. That seems like an increasingly wrong-headed view, as both the Asian and the Australian call center industries have burst into flower in the past few years. These are industries that are not necessarily carbon copies of the strong American industry — they have adapted North American call center tools and techniques to the unique qualities of their particular markets, just as the non-English-speaking European industries did in the 1990s.

Now comes word from a Frost & Sullivan report (entitled Pan Asian Call Center Hardware and Software Markets) that the Pan-Asian market is growing at a rapid clip, driven by intensifying competition following the deregulation, privatization and liberalization of the Pan Asian call center hardware and software markets.

“Corporations are realizing the importance of customer service as a competitive tool in this new market environment,” according to Frost. “The driving need is to provide superior customer service by deploying high-end applications and call center solutions,” they go on.

According to the research, this market produced revenues of $272 million in 1999. By 2006, those revenues are predicted to reach $946.9 million.

“Proactive operators have realized the benefits of implementing call center solutions and have invested aggressively in the same,” say the analysts. “Educating potential customers and changing their perception regarding call centers as cost centers is a key challenge.”

One of the things they found (that mirrors very closely what’s going on in the North American market) is that it’s hard for the very specialized vendors to stay competitive. They are being forced to look at strategic partnerships that enable larger vendors to offer “end-to-end” or turnkey customer care tools. This is much like the CRM/email/Web-integration scramble going on now among the former CTI companies in the US.

To a certain extent this only matters to the companies that want to sell more stuff to hungry call centers. But it’s an important barometer of the degree to which the Asian market, so long considered an “emerging” call center market, has become an actual one.

Not surprisingly, Australia is the most popular destination for US-style call centers in this area. There are strong ties to American vendors of equipment, and numerous outsourcers have set up shop Down Under, taking calls for both the Australian domestic consumer market (often tied to US or European companies) and as a jumping off point for other, smaller markets.

Other areas of note are Singapore, which has a highly regarded telecom infrastructure and the Philippines (noted for its inexpensive labor and favorable pro-business climate). Japan, despite its highly developed economy and world-class telecom, has not been used by American or European companies as a call center gateway (perhaps because of the high cost of doing business there).

India. Broken out here separately because of the tremendous changes that have been going on there over the past few years. For several reasons, this area is worthy of special mention.

Since 1999 the market for call center services in India has been exploding — reports of new companies making software and offering services to both the international and domestic markets came fast and furious.

To get a better picture of what’s happening in that huge and technologically sophisticated country, I asked Ritesh Srivsatava, international marketing manager of PARSEC Technologies to answer some questions by email. PARSEC is a company that offers both products and services, with more than 4000 CTI ports installed in India.

KD: Generally, what is the state of the domestically focused call center industry in India? Are Indian consumers used to using the telephone (and other electronic interaction methods) for customer service and sales support?

RS: Yes, and increasing very fast. Mobile phone growth is also taking off, with SMS services already offered, and WAP being offered shortly. Indian cellular service providers like AirTel, Essar cellphone, Fascel and Hutchison Max are already testing WAP services in the country.

KD: How large is the Indian call center industry? Do you have any sense of the number of call centers or the number of people who work in call centers?

RS: CTI-enabled call centers (true call centers) - 25. Non-CTI, 300-500. According to the National Association of Software and Service Companies, GE Capital International is employing over 1,000 people in its call center in Gurgaon near New Delhi.

KD: Is it fair to say that the call center industry is externally focused, that is, it exists right now to serve markets outside India?

RS: Domestic companies are becoming more consumer focused now. For example, Whirlpool, the global white goods manufacturer, is setting up 5 call centers, Kotak Mahindra — which is India’s largest financial services company — is also setting up 5 call centers.

Educational Institutes, like KarROX and North Star are setting up call center institutes that will provide agent training. Third-party call centers, like Cybiz Call are mushrooming all across the country to provide various services to the customers of small and medium companies who cannot afford to set up their own call centers. Cybiz Call is establishing a network of 35 franchisees across India. ISPs, like Dialnet are setting up centers. Hence, a range of segments is highly recognizing the need of call centers to service their customers.

The offshore business is big but the Indian domestic business is also growing rapidly due to increased competition and hence focus on customer care.

KD: How deeply linked to other back office functions (like data processing) is the Indian call center industry — from outside, it looks as though many of the companies offering call center services began by offering services other than call handling. Is this the case?

RS: Not much. Medical transcription centers essentially have a lot of the infrastructure needed for call centers so there is a synergy there. In financial companies like GE Caps, there is back-end processing also. But that is an exception, not the norm. Back office operations are typically difficult to outsource because of data security issues.

KD: What are the advantages that an Indian call center can bring to a prospective customer outside the region? How do you make the case that an Indian company can do the job for an American or European (or other regional) company, despite the geographic remove? Is it based on labor, or technology, or some other factor(s)?

RS: Some of the factors include the booming IT industry, the largest English-speaking population after the USA, a vast pool of skilled labor (English speaking, and numerically literate), and a low cost of workforce. With overhead, a call center agent costs between $50-100K per annum in the US; in India that would be $10k, plus add $20k for telecom costs and higher infrastructure costs — this means a prospective saving of $20-70k per agent per annum. This saving can be split among the call center and the customer. These are some of the advantages India offers to attract foreign traffic.

Another big potential area is tech support. India graduates about 100,000 engineers each year. These can be used in call centers for troubleshooting/tech support, as the salaries are dramatically lower than in Europe or the US.

In fact, one company in India proposes to hire 300 Ph.D.’s to provide very high-end consulting over the phone/videoconferencing. Given these advantages, India could build a $17 billion industry by 2008 according to the NASSCOM McKinsey Report.

KD: Your estimate of the number of call centers seems small in comparison to both the size of the nation as a whole, and other English-speaking markets, like Australia, UK and Canada that have small populations. Is India playing catch-up, and if so, what will it take for the Indian industry to become a major player in the world market?

RS: India lags behind because of poor infrastructure. Telephone density is about 3 per 1000 persons in India. Better telecom infrastructure is a key requirement. Poor reliability, limited bandwidth, high price, and limitations in service make us fall short of current global standards. Apart from that, customer service was a low priority area for Indian companies due to a protected market, red tape and lack of competition. Now things are changing, customers are more demanding.

To follow up on these lags, the Government of India has taken a big step towards a National Telecom Policy. There is a strong commitment to create a strong independent regulator, set up hi-tech habitat centers, build a high speed national backbone, provide competitive international services and remove restrictions.

KD: Increasingly, it appears that the US/Canadian/UK/ANZ call center markets are becoming more integrated through networks of outsourcers, technology suppliers and shared information resources. Does the Indian domestic industry stand strongly alone, or is it trying to become part of this worldwide English-speaking industry?

RS: India is looking to be part of that network. There are already networks being planned by several Indian companies, which span technology, services, training etc.

In fact, PARSEC is very soon setting up a single stop solution and 24 x 7 services for teleservices outsourcing for dot-coms and conventional businesses. PARSEC’s delivery network would be based on an Internet-Native architecture capable of handling conventional and Internet telephony, email and Web. PARSEC has a dedicated agent pool who are domain-trained and are servicing blue chip customers. To ensure guaranteed service levels PARSEC would adopt the best-in-breed delivery processes through the right HR and Quality processes.

KD: As a corollary to that, which is larger — the domestic English-speaking call center industry, or the domestic industry in other languages? Does the distinction even matter?

RS: Currently the English speaking market is bigger, but the distinction does not really matter as English is the language used by business in India.

KD: Does the worldwide move to Web-based contact centers give the Indian market a chance to grab a bigger share of the international customer contacts and build a reputation among multi-national companies?

RS: Yes, online companies are looking to outsource customer contact operations to countries like India. India is gaining a high degree of acceptance to set up international call centers.

GE Capital International services is servicing its international clientele from Gurgaon, India, employing over 1000 people and is soon setting up another one in Hyderabad.

Also, companies like Spectramind are servicing the email queries of dot-com companies from the US in Delhi. Their dot-com clients receive half a million queries every month. Half of them go unanswered. Spectramind is creating a human interface to it. This capability is a great opportunity for India.

PARSEC is also helping two other third party call center companies set up international call centers. PARSEC will provide business, infrastructure, technology and manpower to them to service international customers from India. One is Phonesys, which is setting up a 100 seat call center that will handle outbound calls for telemarketing and credit chasing for its client’s customers. The other one is Call Center India Ltd., a third-party call center that is setting up 16 agents and will migrate to 96 agents within three months of its inception. They will handle outbound calls for marketing websites.

KD: How about technology providers? Does the Indian call center services market look to domestic hardware and software companies for their infrastructure, or do they look to the standard US/UK companies for things like switches and software.

RS: Currently US companies dominate. But Indian companies are catching up, especially in software.

In fact, PARSEC Technologies is a pioneering leader with expertise in providing Server Based Call Center solutions. It is India’s leading and fastest growing provider of the technology in the Computer Telephony industry and has the largest market share in the voice mail systems market in India

That interview, conducted early in 2000, just scratches the surface. I’ve become convinced that India will become as important to the customer contact industry between 2005 and 2015 as Ireland, Canada and the Netherlands were in the 1990s. Some examples of why I think that:

  • FirstRing, an interactive call center and ecommerce customer care provider, implemented the first phase of Interactive Intelligence’s communications software solution. The solution automatically routes calls between FirstRing’s headquarters in Sterling, Virginia and its customer support center in Bangalore, India. FirstRing selected Interactive Intelligence because it offers a cost-effective, single-vendor contact center solution that simplifies deployment and support.

    FirstRing expects the new solution to result in up to a 50% reduction in costs for its ecommerce customers via optimal capacity utilization, access to up-to-date customer information, redundancy and security features, and management information tools. FirstRing focuses on servicing Fortune 100 and 500 companies, and currently supports five customers in the US. The company will use the new solution to service calls originating in the US with its professional and semi-professional Indian call center representatives.

  • The tool lets calls be automatically routed to the FirstRing site with the most appropriate resources. The solution also provides screen pops to FirstRing agents, giving them vital customer information simultaneous with the call. Predictive dialing features are expected to increase agent productivity, along with built-in features like Interactive Voice Response (IVR) and Fax-on-Demand service.

  • Also, one of the major US outsourcers, SITEL Corporation, formed a 50/50 joint venture with Tata International, a part of Tata Group (India’s largest group of companies), to be called SITEL India.

  • The new company will provide Web-enabled contact center services from India. The venture will provide technical support and customer care for English-speaking customers throughout the United States, United Kingdom and other English-speaking countries.

  • Initially, SITEL India will provide customer care and technical support services using email and Internet-based chat solutions. The venture will add telephone-based channels of communication by the first quarter of 2001. The services of the joint venture will be offered to clients of both SITEL and Tata.

  • Together, SITEL and Tata plan to make the investment required to deliver world-class services from India, using state of the art technology and operating practices,” said SITEL ceo Phil Clough in a statement. “Through SITEL India our clients can accelerate their ability to access this wonderful labor market and reduce the risks associated with operating in an offshore environment. India has over 300 million English-speaking inhabitants, a booming IT industry, and a vast pool of skilled labor to draw upon. Operating in India also helps us provide these valuable eCRM technical support services on a 24-hour per day basis. It is a win for everyone.”

  • NHancement Technologies, a provider of unified communications and unified information technologies, has implemented a worldwide intercontinental call center operation (the company’s second), with Falah Information Technologies Ltd., an Internet call center business located in Bangalore, India.

  • Falah is currently building a 40,000 square foot center to international standards that will service customers worldwide with technical help desk support. It is located in the heart of Bangalore, commonly noted as the “Silicon Valley” of India.

  • The NHancement application simplifies the call center transfers between a point of presence (POP) in the United States and that of the call center in India. The center will support 250 agents upon deployment. The solution is being implemented in conjunction with Interactive Intelligence Inc., a developer of automated multichannel customer interaction software.

  • The value of the contract is $1.7 million to Nhancement and includes the installation of 250 agent terminals, ongoing training for supervisors and call center agents, and ongoing outsourcing for business development. With NHancement’s software, Falah will realize a rapid return on investment through a cost efficient and time saving application, and will have the ability to route the call to an agent with the appropriate technical expertise to service the customer. A screen pop containing customer history for easy reference arrives along with the call.

  • Here’s more evidence. Contact Center University (which is not really a university, but a training unit of Aspect Communications) is licensing some of its course material and curriculum to a company that’s going to train as many as 18,000 call center reps, supervisors and managers. Much of that total will be in India.

  • Information Exchange India Ltd., the company doing the licensing, is a provider of eKnowledge services to corporations and institutions worldwide. They’ve signed on to be a Contact Center University (CCU) alliance partner, and will offer CCU’s course curriculum through training academies in Troy, Michigan, and major Indian cities.

  • IEIL has licensed the following courses from the standard CCU curriculum for instructor-led training delivery: Contact Center 101; Customer Service 101; The Business of Contact Centers; Understanding Contact Center Technology; Recruiting, Hiring and Training; Inbound Forecasting and Scheduling; and Performance Measurement and Management.

    The CCU curriculum includes intensive coaching in staffing, performance management, equipment optimization, communication and customer service skills, problem-solving techniques, stress management and people management and motivation.

India is developing one of the most robust technical infrastructures for call center operations in the world. In my conversations with Indian technologists and call center managers, I am hearing a sense of confidence. In general, they are founding their new call center industry on advanced technology (moving swiftly to create Web/voice combo centers, for example). The nation also has the advantage of a highly educated, English-speaking, tech-savvy workforce at a lower wage rate than in Europe or the US. This is poised to explode into the industry’s consciousness.

In short, when you’re undergoing a site selection process, open your eyes to all the new possibilities that are out there, domestic and foreign. You should look off the beaten path. There are bargains to be found and attractive locations that can serve very well as the long-term home of a call center. The important thing is to be flexible, and work with the community economic development officials. You don’t need to be in a big city, or in the Midwest, or even in the US. It’s all up to you.

1 comment:

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