(This article originally appeared in the August 2010 issue of CUSTOMER INTER@CTION Solutions)
Where to locate contact centers is one of the most critical and costliest investments an organization can make. The selected community can make or break labor costs, including both wages and churn , and employee skills and quality will impact service and sales. With renovations and outfitting costs running into the millions of dollars and with leases running three to five or more years, this is a decision that has to be made very carefully.
With the economy beginning to turn around, choosing the right sites is becoming even more important, as other employers begin to hire and often draw from the same labor pool. Contact centers need to be in the best communities to meet their needs today and into the future.
Arguably, many of the best locales for contact centers are mid-sized industrial cities throughout the Northeast and Midwest United States. They have an attractive combination of an available, educated labor force with a strong work ethic, excellent facilities and voice/data and power connectivity and eager local governments.
VXI Global Solutions, a BPO firm has discovered that one such city, Youngstown, Ohio, has proven such an excellent site that it is expanding there. The firm has 12 contact centers in the U.S. and others in China and the Philippines.
VXI has tripled in business recent years, growing from $34 million in 2006 to more than $100 million in 2009. VXI is ranked in Customer Interaction Solutions Top 50 Teleservices Agency in the Top 10 for inbound and in the Top 30 for outbound.
Such strong growth led VXI to approach Susan Arledge and Jeff Pappas of Arledge Partners Real Estate Group (www.arledgepartners.com) in early 2009 to find a 500-seat site that it could move into quickly with the workstations and wiring intact (i.e., a plug-and-play expansion). They visited the area initially early that year, but there were no such available facilities.
“We looked at a lot of properties throughout the area, including Pittsburgh, Pa. that could be converted for their use, but it wasn’t resonating,” says Arledge.
Then, when InfoCision (News - Alert) moved its contact center from the city-owned former Phar-Mor building at 20 Federal Place in downtown Youngstown to the suburbs that year, the opportunity opened up that Arledge Partners and VXI were looking for on the structure’s fourth floor, with the option to expand on the fifth. That meant there was plug-and-play space immediately available.
To seal the deal, Arledge Partners and VXI secured from Youngstown City Council a $600,000 Community Development Block Grant from funds from the American Recovery and Reinvestment Act. The city also approved a competitively-priced five-year lease for the company at the building, with a five-year option. The deal included free parking in the downtown area near the building. In turn VXI would pour $4 million to modify the space for its needs.
VXI signed the agreement in August, 2009. The plan was to ramp up to 500 employees by fall 2010. Renovations started immediately and the center opened on October 1, 2009. To move into the fifth floor, VXI would need an additional 300 to 500 employees.
Just over two months after the opening on December 7, the [Youngstown] Business Journal reported, “‘the company is moving faster than it had projected and should reach 500 employees by the end of first quarter 2010,’ said T. Sharon Woodberry city economic development director.”
“We were trying to be conservative,” Nick Covelli, VXI senior vice president, sales and marketing told the newspaper. “We were aware that demand possibly would be higher.”
“The rapid employee growth is being driven by a number of components. [These included] increased demand from existing clients, support for new clients, and the work force in the Mahoning Valley [Youngstown area],” Covelli told the paper. “Comments have been positive on the part of the management team regarding the quality and work ethic of the workers, and the attitude they bring to the job.”
The VXI executive’s words were prescient. The Business Journal reported on June 17, 2010 that City Council had approved enabling legislation that would allow the city to enter into a $2 million float-loan agreement with VXI to help it expand to and take over the entire fifth floor.
“Incentives from the city and the support of council are critical so the company can make a decision on where to expand its operations, she [Woodberry] explained”, reported the newspaper.
Brendan B. Read is TMCnet’s Senior Contributing Editor. To read more of Brendan’s articles, please visit his columnist page.
Edited by Stefania Viscusi