Selection Criteria | Destination Call Center

Labor. One surprising quality of this strong economy is low unemployment — hovering around 4% for long enough now to create real competition for quality workers, particularly in the service sector at the low end of the pay scale.

While that’s good for workers, it’s affecting the call center industry. Anecdotal reports indicate that it’s harder to find workers in large quantity at the traditional low pay and benefit rates that have fueled the dramatic expansion of the industry in the last few years. Staffing large centers is harder, and turnover has always been a problem. It appears that the national labor squeeze is exacerbating the problem that used to appear on a local or regional level, where too many call centers in one area would saturate the labor pool. Where in the past the industry would move on to another area, now instead salaries are creeping up.

“Call centers have traditionally drawn from the marginally employed,” says call center expert Madeline Bodin. “People like housewives, students with flexible schedules, people who have to work part time, or recent graduates. With unemployment so low, people have other choices.” She says that given the choice between a job in a call center and something else, there has to be a reason for potential employees at that level to choose the center. Often, there isn’t one.

Kevin Leonard of Strategic Outsourcing Corp. specializes in hiring in bulk — hundreds of agents at a time for large, high-end call centers in the southwest. “What most call center people do is call temp agencies,” he says. “The signal is sent to all the temp agencies and they find everyone they can’t place anywhere else.” When you staff by the hundreds in a single concentrated area, especially under time pressure, the call center management ends up under the gun, with no real opportunity to check the skills of the pool as a whole.

What this means for call center site selection is that the old rules don’t necessarily apply. Going to a location because of the of labor doesn’t make sense. Economic conditions will change over time, changing the cost of labor. What you need to look for is the quality and Continuity of a region’s labor force. Quality, meaning people are well educated, with computer and communication skills, and a solid work ethic. Continuity, of course, meaning that the labor pool is deep enough to supply a constant stream of workers, even at your highest projected rate of turnover.

While many believe that an area’s unemployment rate is the most important indicator of workers available, the best indicator is how likely that market is to grow. Unemployment gives you a quantity of workers from which to choose, but is not a guarantee of quality.

If the labor market is growing, a company can set high standards for recruiting. Growth allows that company to let go employees who don’t meet its standards. High growth also lessens the inflationary pressures on wages and benefits in that market. In the US, this kind of growth is usually indicated by a high number of people moving to the area. A large percentage of young people — and even a high birth rate — are other signs to watch for. Salt Lake City, for example, is a recently popular call center location, in part because of its nation-topping birth rate.

A growing labor pool is more important for call centers than for most other industries. Because of the stress and the high turnover rate, call centers tend to burn out a labor pool faster. After a while your help wanted ads may go unanswered by a populace battle-scarred by call center work.

A steady supply of new workers can make finding employees easier when your best employee retention efforts fail. Also, call center employees are different from most. They are usually part-time workers that don’t share a demographic profile with the usual nine-to-fivers.

Analyze an area for students, senior citizens, housewives, people in a career transition and people new to the area. It is from these labor pockets that call centers usually draw their workers.

Educational Institutions. As noted above, students are historically a ready source of call center reps. Placing a center in an area that has one or more colleges or even a single large university can give you an ongoing flow of admittedly transient workers. They won’t stay around long, but they are often available on short notice, and they can work odd shifts.

Increasingly, vocational education is a powerful draw for call centers. Community colleges are beginning to offer certification programs in the kinds of skills that are necessary for call center work.

When rating an area, look at what the educational infrastructure is like. Does the community support it? Is it channeling people into high tech jobs, and preparing them for entry level high tech work (which is what call centers are, really) with the appropriate mix of people skills and technical skills? Are graduates staying in the community, or are they leaving for something else? And is there another dominant industry in the community that’s soaking up the newly graduated workforce? An industry that’s cyclical might create boom and bust cycles of high unemployment that will affect your cost structure — not necessarily always badly, but it’s something you have to think about going into an area.

Using student labor is a very personal corporate decision. Students offer a ready source of low-cost labor, have higher academic credentials and are generally articulate. But to students school comes first, employment is second. Their schedules are more important than their jobs.

Companies that can compensate for this, and students’ high turnover rate, find a ready source of student labor very attractive. Other companies avoid student workers.

Whether you are looking for students or graduates, junior colleges, trade schools, business schools and even high schools are often-overlooked resources. Some schools even fashion their curriculum to meet the needs of business, with “call center certification” a growing trend in some areas.

Real estate. Outside the major cities, this is one of the things, oddly, you have to worry about least. Space for call centers is plentiful, and customizable to your heart’s content.

What you should look for is outside the scope of this book because it’s going to depend entirely on the kind of call center you are creating, and the way that center relates to the rest of your company. For example, company culture will determine the likelihood that the center will add seats over time, perhaps doubling or tripling in size. Or alternatively, perhaps the company has a bias to opening multiple centers and keeping them small. There are advantages to either method, but again, it depends on internal factors more than external.

People used to stay away from cities like New York and Los Angeles because the cost of office space was so prohibitively high (as are the taxes). In recent years, though, cities (and their near suburbs) are more popular for some industries despite the high real estate costs. Some financial services businesses, for example, want their call centers closer to their trading desks and corporate headquarters, particularly when the call center is used to respond to Internet inquiries as well as voice calls.

And cities are beginning to awaken to the notion that call centers are job creation engines (except for New York — the city that never met a tax or burdensome regulation it didn’t like). “Enterprise zones” are areas that are tax-abated or otherwise incentivized to allow businesses to open at lower cost, provided they hire a certain number of people.

While this is a good thing, and is starting to show results, people looking at urban locations for their centers have to balance these zoned advantages against higher urban telecom costs, poor services and infrastructure, and possibly deficient educational systems.

Another way to think about your real estate selection is from a facilities point of view: is it somewhere that people will want to work? You’re trying, after all, to hire and retain hundreds of people, keeping turnover low. Therefore, safety and security are issues. And along with this go amenities that cost relatively little, but attract workers who will stay and keep them from burning out: accessible day care, parking, even windows.

Telecom. Take it as a given that you need more than you think you do. Imagine the fanciest, most complicated and bandwidth-hungry application you can possibly conceive of using, then double or triple it. If you find that a particular location doesn’t make this possible, walk away. Someplace else will make it happen. The last thing you want to have happen is that you commit to a locale that keeps you from using something you’ll come to need in three or four years. That was the case with ISDN a few years ago. People who wanted to run multi-site call centers were stymied — they could either get a dedicated T1, or use one of the smaller, cheaper ISDN call routing systems that were coming out around 1994 and 1995. But with ISDN coverage woefully incomplete in the US at that time, there were a lot of unhappy call center managers (and vendors, who couldn’t make sales to centers that weren’t covered by ISDN).

Within the US, sophisticated telecommunications is the norm. While it is important for your call center site to have sophisticated telecommunications, you can find this level of sophistication even in the hinterlands.

You might have a particular relationship with an RBOC or a long distance carrier. There may be particular services that you need that you can only get within a prescribed geographic area. For example, centers with extremely high call volumes may find the fact that Kansas City, Missouri is a major switching center for both Sprint (which is headquartered there) and AT&T a big plus.

And don’t forget the Internet. In the near future, the telcos will be carrying much of their voice traffic as data packets across newly crafted IP networks. But until then, you’re still going to need the best, strongest Internet backbone you can find. Many more applications than just email are going to depend on this. Maybe you’ll get it from a carrier like AT&T or MCI Worldcom, or maybe from one of the new alternate carriers like Qwest — in any case, this is something that needs attending to before you commit to the location.

Government (and other) incentives. There’s nothing like getting something subsidized to make a location more attractive. There are lots of ways that governments try to sweeten the pot:

  • Real estate tax breaks. They may give you a percentage off the cost of running your center for a few years into your operation, particularly if you’re considering a specialized office park that’s had government input, or going into an economically depressed area.

  • Job creation credits. These are incentives based on the number of people you hire and keep on the payroll for a designated period of time. (This is in the authority’s interest because they make up the loss in the personal and sales taxes that the hired workers end up paying.)

  • Along with that come training subsidies. To get you to locate in an area with lots of underemployed workers, they may offer to pick up the cost of training. This is a good incentive — ask for it if it’s not immediately on the table.

  • Coordinated sweeteners. That is, a state (or country) can couple one or more tax advantages with favorable rates provided by the local telco, and/or something delivered at the local level by the town or county authorities.

The area of government incentives is one of the most creative (in legalistic and accounting terms) — there’s no reason not to ask for what you want and see if it can be delivered, because call centers are so advantageous to a community that there’s often no reason not to make them happy. But remember that leverage is a function of size; the more people you might hire, the redder the carpet that’s rolled out for you.

A company that’s bringing jobs and high-tech facilities into a city is worth incentives. If two or more locations are competing on an even playing field with regard to telecom, labor and amenities, then incentives are a critical lure — and something a call center planner should insist on.

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