For those of you not familiar with Ontario, here's a quick recap: Located in east-central Canada, bordered by Manitoba to the west, Quebec to the east, and Michigan, New York, Ohio, Pennsylvania, Minnesota to the south, (plus three of the five Great Lakes) Ontario has a population of about 12.2 million, making it the largest of Canada's provinces and territories. The capital of Ontario is Toronto, the largest city in Canada. And oh, by the way, Ottawa, another of Ontario's cities, is the capital of Canada. Ontario is the home of the Toronto Maple Leafs, Ottawa Senators and Toronto Blue Jays. It is the birthplace of actors Mike Meyers, Dan Aykroyd and Jim Carrey, and musicians Neil Young, Alanis Morrisette and Avril Lavigne. It is a gorgeous place with crystal clear streams and rivers, dense forests and wide open prairies, perfectly symmetrical pine trees and starry nighttime skies. It is also home to Niagara Falls, a popular tourist destination and one of the natural wonders of the world.
________________________In 2006 alone our team attracted 24 new or expanded centers to Ontario, creating 8,600 jobs across 18 communities. And we're on track to see comparable investments in 2007, as well as in 2008.
According to Deborah Clark-Forster, senior business consultant for the Ontario Ministry of Economic Development & Trade, Ontario is "very well positioned for the future with very solid growth" in the contact center industry.
"The sector is evolving into higher value contact center applications, combined with the emergence with BPOs specific to IT, finance and accounting, as well as HR," Clark-Forster said during a recent interview. "In 2006 alone our team attracted 24 new or expanded centers to Ontario, creating 8,600 jobs across 18 communities. And we're on track to see comparable investment in 2007, as well as in 2008."
Clark-Forster pointed out that many U.S. companies are now taking a "global approach" to their call center operations, in which they identify which applications are best suited to be implemented in near-shore locations, such as Ontario, versus off-shore locations such as India and the Philippines. As such, Ontario is primarily attracting technologically-advanced contact centers where the emphasis is on high quality customer service.
“We’ve attracted a solid complement of contact centers ranging anywhere from 100 to 1,000 or more seats,” she said, adding that in 2006, most of the centers the agency handled fell between 100 to 500 agents. “We had a 1,200 seat operation, a couple of 1,000 seat operations, several around 400-500 operations and a few around 300, as well as a few around 100, so I think on average it’s more on the high end.”
And the growth is spread across all industry segments.
“We continue to see tremendous growth in customer service, help-desk, human resources, finance and accounting, order management and insurance-based contact centers and/or BPOs,” she said. “Personally, the industry sectors I see growing fastest include financial services, retail, wholesale, manufacturing, telcos, utilities, transportation and services — it really is a broad range.”
________________________Ontario offers the lowest health care costs of the G-7, with employers saving nearly 60 percent in comparison to the U.S.
________________________In fact, the call center industry has grown so much in Ontario that in some communities it has topped manufacturing as the primary industry. For example, in Sault Ste. Marie, the number of people who work for the local call centers just recently surpassed that of 100-year-old Algoma Steel, which has long been the community’s primary employer. Major corporations having opened call center operations in Ontario in recent years are Dell Inc., which recently selected Ottawa for a new 156,000 square foot center to provide technical support and sales to its customers in North America, and SITEL Corp., which recently launched a customer support center in Kanata. Other companies operating call centers in Ontario include StarTek, Sunoco, Union Gas, Research in Motion, Rogers Communications, Allstate Insurance, American Express, HP, Oracle, Panasonic, Accenture, IBM and Bell Canada, to name some. Let’s take at look at some of the advantages Ontario has to offer U.S. businesses considering locating their call centers there:
The Economic Advantages
First, there is the favorable exchange rate, which is currently about 4 cents on the U.S. dollar (yes, the dollar is weaker than it has been, but consider that in 2002 it was 57 cents on the dollar). Then there’s the fact that labor costs average 5 to 10 percent less than in the U.S. (and labor costs are a critical consideration for companies embarking on the site selection process, as they are the biggest portion of any call center operating budget). Another draw is the fact that Ontario offers the lowest health care costs of the G-7, with employers saving nearly 60 percent in comparison to the U.S. With health costs endlessly spiraling upward in the U.S., this is one of the main things keeping business execs awake at night.
Also attracting call centers to the region are Ontario’s low statutory benefits, including worker compensation, pension and unemployment taxes, which range anywhere from 30 to 50 percent lower than in the U.S. Perhaps most importantly, the province’s corporate income taxes, at 36.12 percent, are among the lowest in North America (averaging four percentage points lower than in the U.S.).
In addition to the basic economic incentives, the provincial government also offers several programs through which qualifying companies can get interest free loans and grants to help offset the cost of opening a new call center. For example, in Northern Ontario, a number of contact centers have benefited from the Northern Ontario Heritage Fund, which provides new centers with up to $1 million in a loan or a grant to help defray the start-up costs. There’s also training subsidies, including a program run provincially through the Ministry of Training Colleges and Universities, which help defray the cost of recruiting and training new employees.
In addition, the province recently launched a Contact Center Apprenticeship Program, administered by the Ministry of Training, Colleges and Universities, which offers eligible companies up to $5,000 annually in tax credits for each apprentice who joins a call center as a technical support, inside sales or customer service agent.
“It’s a maximum tax credit per apprentice of $5,000 per year for a period of up to three years,” Clark-Forster said. “So the maximum tax credit per apprentice is about $15,000.”
Companies eyeing Ontario as a site for their call center operations should also consider that the overall cost of living is much lower than in the U.S. For example, electricity is significantly less expensive, due to mainly to the fact that roughly 30 percent of the province’s power is hydro-electric delivered by Niagara Falls. Another advantage of doing business in Ontario is its close proximity to the U.S. — Clark Forster points out that nearly 60 percent of the U.S. population lives within a two-hour plane flight of Toronto. If anything, that means less expensive travel for company managers, supervisors and executives (obviously Ontario is more
convenient to get to than say, Manila, or New Delhi).
The Skilled Labor Force
Aside from the economic incentives, Ontario also offers a highly skilled, well-educated and motivated labor force. With about 20 universities and 24 colleges located throughout the province, it boasts the highest education levels among the G-7, with about 58 percent of all Ontarians having completed post secondary education (as compared to the U.S. average of 38 percent). Furthermore, of the approximately 130,000 graduates a year, roughly 38 percent are graduating in the field of IT — with many having gone through specialized training programs geared specifically the call center.
“Currently we have 16 colleges with accredited programs in place to build skill sets at the call center agent, supervisory and management levels,” Clark-Forster said.
This is a key factor, because many companies are now learning that having a well-educated, well-trained labor pool has become critical in today’s customer-facing call centers, where agents must deliver service quickly and proficiently. As such, demand is increasing for agents who can handle advanced software and systems for both call center work and business process outsourcing. (In fact, it can be argued that a lack of skills and training is partly what led to the customer service problems some companies ran into after off-shoring their call center operations to India and the Philippines.) Ontario has these workers, in droves.
In addition to the high level of technical skills, Ontario’s labor force is also “accent neutral” — a factor that has become increasingly important for certain U.S. companies focused on their customers. What this means, quite simply, is that Canadian call center workers don’t have the thick accents that call center workers in India and the Philippines have — accents which have made it difficult, at times, for Americans to understand them. At the same time, however, more than 20 percent of Ontario’s population is multi-lingual, speaking French, Cantonese, Mandarin, Spanish, Italian, German, Portuguese and many other languages, giving this workforce yet another advantage over its overseas competitors.
Currently there are about 320,000 people employed in the IT space alone in Ontario — and with the province’s colleges and universities are continuously pumping new, well-trained candidates into the labor force, Clark-Forster says Ontario “not only has the labor base it needs today, but also the labor force it will need well into the future.” In fact, there is such an abundance of qualified workers, she said, that a 500 plus seat call center can expect to fill all of its seats “in a matter of days.”
“Depending on the community and how they market the availability of these jobs, we see these centers being filled within days, or at the most within a two week period,” she said.
Another credit to Ontario’s labor force is that fact Ontarians tend to view contact center work much more favorably than workers do in other countries. Clark-Forster said this is mainly attributable to the fact that the companies with call center operations there are now operating high-tech facilities and are therefore spending more time training their agents and providing them with access to advanced software and systems. This not only gives them the tools they need to better serve customers, but also injects them with a greater sense of accomplishment in their jobs.
________________________Not only does Ontario offer some of the most advanced communications infrastructure in the world, its communications costs are 30 to 40 percent lower than the U.S., due mainly to a more competitive environment.
________________________“Ontario has been very successful in attracting [call centers which use] more interactive and complex applications for targeting those higher value existing customers, particularly from an inbound and a consultative sales perspective,” Clark-Forster said. “Here we’re talking about things like tier 2 and tier 3 technical support — and in the end this provides gratifying work for our residents.”
Interestingly, Ontarians are among the most loyal call center workers in the world. Clark-Forster said according to recent research, the turnover rate in the contact center and BPO sector in Ontario is “less than 20 percent on average,” with absenteeism levels “at around 3 percent.” Meanwhile, companies operating call centers in the U.S. have seen turnover rates averaging 25 percent or more.
The Superior Communications Infrastructure
Ontario is also an attractive place to open a call center because its core communications network is now completely fiber optic. This facilitates rapid and efficient deployment of IP contact center systems and enables companies to get their call centers up and running in much less time — and its much less expensive since there is less telecommunications infrastructure to install. Furthermore having an all-IP network already in place enables companies to monitor and control their contact center operations from a central location, such as a U.S.-based corporate headquarters. Furthermore, having an all-IP backbone in place means companies can more quickly deploy hosted and SaaS solutions, which facilitate the “virtualized” contact center model, which is ideal for the deployment or remote or home-based agents.
However, Clark-Forster said from where she sits, the remote agent model is yet to gain momentum. “With regard to home-based or remote agents, we haven’t really seen that translate into results yet,” she said. “I think what we’re dealing with is this mentality among businesses that ‘we need to see our people in order to manage them,’ and that’s more of a cultural persona for the industry. I think many of these companies are very interested in exploring whether remote agents make sense for their business — but we’re yet to see any significant investment with respect to that.”
Not only does Ontario offer some of the most advanced communications infrastructure in the world, its communications costs are 30 to 40 percent lower than the U.S., due mainly to a more competitive environment.
Plenty of Room for Growth
Although there are always hard questions to answer regarding the availability of adequate facilities, Clark-Forster said Ontario has an abundance of commercial property available which is ideal for setting up new call centers.
“I think it is fair to say that there is real estate available to meet any client’s demands,” she said, adding that most of the call centers she sees coming into the province are utilizing existing structures and doing lease/hold improvements. “It’s unusual to see a contact center do a design/build,” she said. “In terms of new construction, I’ve seen maybe three or four new projects during my past 10 years of doing site selection work with clients.”
Many of the call centers locating in the urban centers are utilizing office spaces vacated by the many dot com companies that went bust and left the area in the 1990s, but meanwhile, in the suburban and rural areas, they’re retrofitting old warehouses, factories and light assembly plants to make them into state of the art contact center and/or business process outsourcing facilities. Perhaps most importantly, real estate costs in Ontario “are on average about 15 percent less that they are in the U.S.,” bringing yet another important economic advantage to the table.
But perhaps more important than the availability of adequate facilities is the fact that there are droves of graduates with appropriate training coming out of Ontario’s many colleges and universities — enough to drive the future growth of the call center industry there for many years to come.
“I hear nothing but positive comments about our labor and our talent pool here in Ontario,” Clark-Forster said. “That’s what keeps bringing companies back to expand — and what keeps the new call centers rolling in. With access to our talented pool of labor, our US-based clients find they’re able to ramp up very quickly — not only with the labor, but with all the resources they need. Thirdly, they find it very easy to do business in Ontario — it’s quite seamless — and I think that’s mainly due to our cultural similarities, our accent neutrality, and the fact that we’re an easy commute to and from the U.S. Usually following their first year in business here, they’re blown away by how much cheaper it is to do business in Ontario than it is compared to the U.S.”
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