| The
Global Site Selection Strategy
By James Beatty, NCS International
Over the last two months, I've discussed two different strategies for
site selection: the Small Town Strategy and the Urban Inner City Strategy.
The final strategy in call center site selection is the Global Strategy.
This strategy recognizes that call centers can and are located throughout
the world. This article addresses several key issues with an admitted
emphasis on labor and the issues involved in evaluating labor.
Generally, companies interested in selecting a new call center site are
seeking to either provide better service to their clients and/or to lower
costs in their call center operations. Better service might be defined as
locating closer to customers, having more staff available at various hours
to accommodate customers worldwide or providing a multilingual environment
to reflect the diversity of customers worldwide.
The same principles apply whether reviewing locations in the U.S. or
other countries.
Certainly ongoing operating costs are always a concern and the one cost
everyone wants to mitigate is labor while not sacrificing quality. Labor
quality and costs will always be the key issues in call center site
selection whether in the U.S. or worldwide and many foreign countries are
making a strong case for consideration based on labor costs alone. The
Asia-Pacific region has many countries that are often reviewed and
discussed. Perhaps the most current example is India, which purports to have
agent labor costs as low as 25 percent of a U.S. call center agent. This one
fact has led to quite an interest and investment by U.S. companies to
establish call center operations in that country. These companies include
Dell, Compaq, First Ring, Convergys, GE and The ICT Group.
India is aggressively pursuing U.S. and U.K. call center investment and,
according to reports by Datamonitor and New Rapport.com, the call center
employment picture is as depicted in Table 1.
| Year
|
Employees
|
| 2000
|
3,250
|
| 2005
|
35,000
|
| 2008
|
1,000,000
|
| Table 1. Datamonitor and New
Rapport.com projections.
|
Some of the reasons put forth for this astounding growth are:
- India produces 2 million college graduates annually,
- Unemployment among college graduates is as high as 20 percent,
- Customer service positions are viewed as professions, not merely jobs,
- India has an English-speaking population second only in size to the
U.S.,
- 65 percent of the world's top-rated software companies are based in
India,
- Proximity to serve the greater Asian market,
- Annual turnover rate of 18 percent versus U.S. rate of 42 percent.
More information on India can be found at the Web sites www.ciionline.org and www.nasscom.org.
Other Asia-Pacific countries that could be classified as mature markets
include Australia, New Zealand and Singapore. The Philippines is also
establishing itself as an up-and-coming location. More information on these
locations can be found at www.callcentres.net.
In reviewing European locations, one should consider the following facts.
In 1999 there were 12,750 call centers and this will grow to 28,000 by 2006
according to the marketing consulting firm of Frost and Sullivan. Also,
according to Datamonitor, the number of outsourced call center agents in
Europe has risen from 58,000 in 1998 to a projected 127,000 by 2003.
However, according to the U.K. Department of Trade and Industry, almost
400,000 people are employed in the call center industry, more than the coal,
steel and vehicle industries combined. The industry is growing at a rate of
30 percent per year and is expected to provide employment for 665,000 people
by 2008.
European mature markets, areas in which call centers have become popular
and might be creating tight labor conditions, include Scotland, Ireland and
the Netherlands. Emerging markets include Spain, Sweden, Belgium, Germany
and Denmark, due in part to the pools of foreign language workers and lower
labor costs.
Companies that have located in Barcelona, Spain include Citibank, Avis
and Bayer. The Netherlands can boast the customer care operations of
DaimlerChrysler, Novell, Sony, DHL and Sykes Enterprises.
On the North American front, Canada has emerged as a leader in the call
center industry, due in part to the sustained efforts of the federal and
provincial governments over the past few years. Over the past decade, many
provinces established call center/economic development teams that were the
joint efforts of the provincial governments and the telecommunications
company servicing the area. These teams were very active in recruiting call
centers to their respective province and, in fact, many teams remain active
today.
Canada's attractiveness was also due to the exchange rate with the
Canadian dollar at about one-third of the U.S. dollar. Canada also provided
large pools of English-speaking and multilingual workers, especially in
metropolitan areas such as Toronto, Halifax, Montreal and Vancouver.
Due to the growth of the call center industry, the trend in Canada has
been to locate in communities of 50,000 and below population range.
Canada's unemployment rate has been about 8 percent with some areas as
high as 20 percent due to changes in the type of work performed in some
locations, especially in the mining sector.
The call center industry in Canada has 330,000 agents and is growing at a
rate of 24 percent annually. According to PricewaterhouseCoopers Consulting,
Canada's contact center sector had 4,000 centers in 1995 and has 13,500 in
2002 and will continue to grow at a rate of 20 percent annually for the next
three years.
The breakout by province is detailed in Table 2.
Table 2. The breakout of Canadian call centers by
province.
Source: PricewaterhouseCoopers Consulting
|
Call Center Employment
|
Number Of Call Centers
|
| Alberta
|
8,000
|
50
|
| British Columbia
|
10,000
|
60
|
| Manitoba
|
10,300
|
90
|
| New Brunswick
|
14,000
|
90
|
| Newfoundland, Labrador
|
2,200
|
20
|
| Nova Scotia
|
10,000
|
24
|
| Ontario
|
150,000
|
3,300
|
| Prince Edward Island
|
1,100
|
10
|
| Quebec
|
50,000
|
2,000
|
| Saskatchewan
|
4,000
|
50
|
There are numerous companies with operations in Canada. They include
Electronic Data Systems, Convergys, Spiegel, Ron Weber and Associates,
Neiman Marcus and Stream International.
The Caribbean has also become an emerging location due to lower costs of
labor and multilingual talent. Among some of the recent entries in the call
center recruitment market are Jamaica and Barbados.
Jamaica has publicly stated its desire to recruit 40,000 jobs within
three years starting in 2001 and with 2,200 jobs thus far, the government is
actively seeking more U.S. and U.K. investment in this industry. Jampro is
the organization tasked with achieving these goals. More information can be
found at www.investjamaica.com.
Barbados, through the efforts of Cable and Wireless, the
telecommunications provider, and Bidco, the agency promoting the area, is
actively recruiting U.K. and U.S. More information can be found at www.bidc.com.
Incentives
Each country has developed an array of incentives to attract inward
investment for call center operations. These incentives range from the
elimination of the surcharge on international calls to forgiveness of
various corporate and personal taxes on revenues associated with the
business operation in their country. In fact, based on some of the
information I have reviewed, some of the financial incentives, especially
for IT-related call center jobs, are more lucrative than can generally be
found in the U.S.
Keep in mind that the countries mentioned here and even the ones I have
not mentioned are generally aggressive and will work closely with you in all
phases of the project.
Telecommunications
This can be a very precarious topic. One should spend extra time
researching the telecommunications laws and rates of the countries under
consideration. The U.S. market has conditioned call centers to think in
terms of costs around 5 cents per minute or less based on volume. This will
not necessarily be the case in other countries. Be sure to identify all
costs associated with the project, as potential savings on labor costs could
be eroded in the telecom arena. Some countries are in varying stages of
telecommunications deregulation and competition, thus creating unique
opportunities for your call center project. This area is indeed a topic unto
itself and I plan to cover this in a future article.
Political Stability
Clearly, companies need to evaluate the stability of the government of
the country under consideration and determine the degree of risk associated
with having an operation on foreign soil. Understand the history, the
political landscape, the parties and the election process in order to assess
the risk, if any, in a specific country.
The site selection process has many similarities but the differences are
potentially very costly such that one must truly research and conduct due
diligence in selecting a foreign country as a location partner. If you have
questions or comments, please contact me at www.callcentersites.net or jbeattyncs@aol.com.
James Beatty is president of NCS International, Inc., which
specializes in corporate site selection, community analysis and marketing.
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