50-states and EU demographics for site selection

50-states and EU demographics for site selection

Burdorf, Katie S

It is estimated that more than 3 million people work in more than 95,000 call centers around the world, logging approximately $800 billion a year in business.

Call centers are still the most locationally active of all industry sectors, with no slackening in the foreseeable future. Growth continues to spiral upwards, especially in customer service. After all, customer service is king and queen and cuts across industry boundaries with no let-up on the horizon for the profusion of growth. For the good firms that are now competitive on wages, benefits and human resource practices, there is also less turnover.

Labor Shortage Issues

Because of this explosive and radical growth, there has been an extraordinary velocity of location decisions. There is so much activity that companies are stumbling over one other with sometimes almost simultaneous announcements in a single area. There is pressure for larger units due to this high demand, but the “mega center” concept is constrained by tight labor market situations almost across the board. The need is so great that it puts undue pressure on time for these projects, as well.

Some call centers are addressing the labor shortage issue by opening smaller facilities with less seats (100+). This fact alone offers greater geographical diversity (a greater amount of smaller areas), with untapped labor pools yet greater competitive exposure.

Companies are also paying closer attention to where the site is positioned relative to labor pools. It is very rare to find all desirable attributes in a single location, so trade-offs are a necessity. Some companies are going to a hub– and-spoke or satellite configuration strategy. Others are introducing computer-telephony integration (CTI) and more IVR (interactive voice response) technologies. Still others are stockpiling “hot sites” by screening areas ahead of their need. Aggressive human resource practices are another way companies are dealing with the tight labor market situation. They are using extensive recruiting methods with bonuses and creating more favorable internal work environments. Companies such as Nortel and L.L. Bean even have ergonomic specialists on board. From acoustics, chairs, lighting, colors and workstations to plants and stretch breaks, companies need to do everything they can to give themselves a competitive advantage.

Many companies are implementing off-shore strategies as well. In all provinces in Canada, call centers are cropping up. From Dublin, Ireland, Compaq serves a pan-European market. Scotland alone has more than 17,000 people employed in more than 150 call centers. Brussels, Belgium was the winner for Western Union, which recently launched its first center outside the U.S. to service Europe, Africa and the Middle East. Their three top reasons for this decision were a sophisticated telecommunications infrastructure, multilingual and technical skills and the strong incentives offered by the government.

Companies are realizing that it is their total corporate package (e.g., compensation, benefits, internal work environment, company’s reputation within the context of other competing employers in the community) that will determine how successful they will be in recruiting and retaining a quality workforce for their call centers.

Assessing Information

In the same vein, companies are looking for communities that offer a total package. Unfortunately, many areas carry a mixed message. In an effort to create more jobs, economic developers often do not pay enough attention to existing tight labor market conditions and fail to design a workforce development strategy to overcome this shortcoming. Another community may have no available building at the moment (but lots of pastures), yet no plans to fund, design or erect a special building. Most communities provide information overload, which may arrive in an overnight mail box and weigh up to 20 pounds. Often, there seems to be no solid rationale for having targeted the call center industry. In a frenzy to recruit new companies, too many areas have forgotten to develop and implement a strong retention strategy. Even state-of-the-art telecommunications cannot make a “good” location. It’s now a given, much like water and sewers.

If your company is seeking to make a sound decision for a call center location, be sure to scrutinize the information you receive from communities in regard to the following areas:

Labor supply, quality and cost,

Infrastructure, especially telecommunications,

“Ready-to-go” sites,

Available buildings,

Fast-track permitting,

Training availability – not only basic skills, but call-center-specific.

Small Town Considerations

Small towns and rural areas may be the last frontier for companies to find untapped labor reserves and less heated competition. Be aware, however, that some obstacles in going this route would include:

Less extensive air access,

A lack of sophisticated telecommunications infrastructure — particularly in regards to a greater distance to points of presence, or POPs – switches to long-distance carriers,

A lack of available buildings or older structures needing costly upgrades, The difficulty of national recruiting for executive, managerial, professional and technical talent,

Labor market sustainability – you don’t want to end up hiring the whole town.

One way to ensure you do not have to face these problems, should you choose to locate in a small town or rural area, is to ask the community development folks if they can provide you with information such as:

A quantification of their labor and quality of life resources in both 30- and 60-minute commute zones,

Accurate wage and salary surveys (including underemployed positions such as retail store sales clerks),

A survey of local businesses that reports on effective starting salaries, salary ranges and progressions within the range, incentive compensation, benefits (including part-timers), hiring experiences (selectivity ratios), turnover, ratings on basic skills, applicant flow, PC literacy, work ethic and the ability to staff “off-hour” shifts,

A survey of high school and college graduates who have left the area along with an employment opportunities database to tap when the need arises,

Information on state labor legislation and telephone call regulations (e.g., dual monitoring, call hour restrictions and long-distance taxation policies),

You may also want to ask the community if they will perform some of the following tasks for you:

Establish a formal spousal employment assistance program to offset one of the major difficulties of recruiting management talent,

Enact a shell building program (with at least seven parking spaces per 1,000 RSF) or, at the very least, some pre-permitted “ready-to-go” sites,

Ensure that sufficient telecommunications are in place. Local carrier characteristics that must be present are digital switching, fiber optics, ISDN, SONET ring diversity and dual feed from two central offices. For long-distance service, dual feed to a hardwire (versus microwave) and POP of at least one major carrier (this is critical, and the closer the POP, the better). All buildings should have dual power feed, preferably from two substations.

Create CSR/TSR training programs – at the high school, as part of adult education and at the community college.

Create a local incentives pool to apply on a case-by-case basis (to include free pre-employment training for part-timers if the state won’t provide).

The Urban Allure

The big attraction to urban areas for call centers is an underemployed pool that can excel in this industry, especially outbound telesales. The pool consists of artists, designers, actors, actresses, writers, musicians, waiters, waitresses, bartenders, retail sales clerks and bank tellers. They are usually friendly and not afraid of rejection.

Other pluses are mass transit connections, which make staffing off-hours shifts easier, office space availability (even on a sublet basis), electric power reliability and availability of experienced agents and supervisors.

Some obstacles include built-in turnover (based on the nature of the labor pool), higher costs (payroll, occupancy, construction and taxes) and the image/perception in upper executive ranks who say, “Who moves TO the center city?” But, with a “smart” building in an enterprise zone, those same executives might think twice.

Katie S. Burdorf is a managing director of The Wadley-Donovan Group (WDG),

headquartered in Morristown, New Jersey. Wadley-Donovan is a management consulting firm which specializes in corporate location and economic development consulting and information services. It has recently become part of EPS Solutions, the first national provider of horizontally integrated outsourcing services. For more information, visit www.wadley-donovan.com.

Copyright Technology Marketing Corporation Feb 1999

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