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September 1999

Call Centers: Setting Your Sites


The U.S. economy is in its ascendancy right now. According to the White House Council of Economic Advisors, the nation is enjoying its strongest performance in 30 years, posting a real rate of growth of more than four percent over the last three years, concurrent with a drop in inflation and a rise in worker productivity. With the economy percolating, the unemployment rate has hit its lowest level in more than 20 years, raising the specter of the supply of skilled labor being tapped dry. This grim reality has raised profound concern within corporate America, and perhaps nowhere more so than in the labor-intensive call center industry. With personnel constituting as much as 80 percent of the total cost of operating a call center, it is not surprising that it has become the preeminent motivating factor in the site selection process for a call center. It is, however, a simplification to think that gleaning information from the U.S. Bureau of Labor Statistics, which is compiled only every fours years, is enough to secure an optimal site. What is required is a more strategic approach with keen attention given to central planning so that the corporation can properly orient the call center to serve its long-term goals. Depending on the internal real estate capability of the corporation, it may be advisable to engage a third-party site selection consulting firm.

Taking Stock
Whether building an outsourced teleservices provider facility or a corporate help desk, the lead times for call centers have been dramatically constricted to as little as 10 months from the moment of approval. The natural corollary of this is that the real estate point person will likely adopt a short-term solution to the requirement in order to save time. This may be retrofitting an industrial or big-box retail building or situating the building in a community that may not be entirely conducive to the call center’s overall mission.

The initial step in selecting a site is to organize the initiative internally so there is a clear division of responsibility and chain of command with representatives from relevant departments, including operations, human resources, information technology, sales, real estate and finance. The critical question that must be posited is the way in which the call center will serve the overall objectives of the company.

Call centers today have advanced from simple clearing houses for transactions and information to critical centers for managing customer relationships and increasing profits. Computer-telephony integration (CTI) software has allowed call center agents to be linked to back-office processes so they have access to structured database information, including customer histories, profiles, complaints and pending transactions. In turn, agents can input information from customers that relates not to a single transaction, but enables the fostering of a long-term relationship. Clearly, call centers hover close to the nerve center of a company’s operations. Questions that should be discussed internally include the relative merits of leasing versus ownership, the virtues of multiple call centers versus centralized operations for the purposes of uninterrupted service, and what functions should be outsourced.

At this point, the company should consider the locational key criteria for evaluating a potential community and ultimately a site.

Labor, as the truism goes, is king. A company needs to determine its staffing and skill-sets requirements well in advance. Based on this, it is possible to target labor markets through information from the Bureau of Labor Statistics, such as median household income, turnover rates and average incomes within major industries, and percentage of population within the desired age range of 16 to 64 years old. These may include rural areas, areas that have experienced recent layoffs, college towns and senior-citizen communities. A sector that often remains unexplored by prospective employers is the underemployed population. The U.S. Census Bureau dedicates its STF3 file to breaking down underemployed labor by occupational categories. It would behoove a call center operator to determine which categories they can recruit from and to calculate the number of people within the optimal age group. The number of underemployed workers should generally be 15 times greater than the staff requirement of the call center to accommodate high turnover rates.

The extraordinary attrition rates (often 100 percent) within the call center industry merit consideration. It is incumbent on call center operators to structure their wage and benefits packages to mitigate this.

Companies need to figure out such esoteric human resource issues as the period from starting salary to maximum compensation, shift premiums for nocturnal workers, medical insurance, holidays and benefits for part-time workers.

The company should also adopt a policy of flexibility, including institution of a casual dress code, flex time, unpaid time off for slow periods and alternative work weeks. The employee should also be given the option of declining benefits in favor of added pay.

Some of the other important criteria are:

  • Telecom infrastructure is important, including a dual fiber optic feed with digital switching and a fiber ring diversity system. For more sophisticated operations, local POPs, or points-of-presence, with long-distance carriers, are highly advantageous, as are ISDN lines, which allow concurrent voice and data transmission over the same line.
  • Power is a vital consideration. Each call center features a critical data center or “com” room that cannot go down. This necessitates a UPS system that also serves every PC. Dual power feeds on the site are absolutely vital. Some call centers also have emergency back-up generators which can service most of the facility for an extended black-out period. Variable operating costs, such as electric power, office leases, heating and air-conditioning and amortization, dictate call center location.
  • Telecommunications taxes, which include sales/use tax on incoming toll-free or outgoing WATS calls, are also an important factor to consider. The findings show cities like New York, Los Angeles and San Francisco are highly prohibitive, while cities like Dallas, Clearwater, Florida and Virginia Beach, Virginia are more affordable. Not surprisingly, all three cities are in the top 10 for call center activity.
  • Consider available economic incentives. As communities jockey for position around major call center users, they have developed increasingly elaborate incentive packages, particularly tax incentives. Others offer training programs through local institutions for call center agents. Considering the average cost of training an agent may be as much as $20,000, this can be a compelling benefit.
  • In determining what the occupancy date for the new call center is, an important consideration is the speed of the approval process within the prospective location. As a rule of thumb, a state approval process should take no longer than 45 days and the local should take roughly 30 days. Companies should request that the permitting be done at one venue so they do not have to deal with the frustration of numerous and often adversarial agencies. Online permitting is still in its infancy, but promises to be a powerful way of accelerating the process.

It is worth mentioning two locational criteria that have largely fallen by the wayside:

The central time zone in regions such as the Midwest and Northern Plains used to be deemed an advantage, because it offered a wider window for calling clients across the country. This has, however, been superseded by a larger concern which is the wish to mitigate the effect of natural disasters and inclement weather by building multiple call centers around the country. In the event that a call center loses power or its phone service, a company can switch operations to a satellite center in a different region of the country. This has opened up the call center market to states like Arizona, North Carolina and Colorado.

Nonregional accents, the conventional wisdom used to say, are much sought after by call centers because of the clear enunciation and the way they connote professionalism. This notion, however, has essentially been put to rest with the emergence of the South with its mellifluous speech patterns as a hotbed for call center activity.

Once this locational criteria has been analyzed and a company has determined issues such as the size of the center, the number of agents and the occupancy date, the company should shortlist 6 to 10 viable locations. These should then be assessed according to labor market, operating conditions and business costs by soliciting detailed information from the local economic development agencies.

Once this is done, it is time to scout the locations personally, interviewing local personnel agencies, telecommunications and other utility carriers, touring prospective sites, analyzing labor within the commuter zones of the site, investigating residential and office development patterns, and finally soliciting incentive packages from the economic development representatives.

One of the temptations for a call center user constrained by deadlines is to lease an existing building with a big floor area and a parking ratio adequate to house the agents. Because of the high densities of people in call centers, a typical parking ratio is seven spaces per 1,000 square feet. The ideal is 10 to 12 per 1,000 square feet, which makes big-box retailers a strong candidate for conversion. Some developers are now taking it a step further by retrofitting retail shopping malls into multitenant call centers.

The drawback with retail is that it lacks design elements like windows and often cannot easily accommodate the infrastructure and cable requirements, which must often be hung from the ceilings. Even the existing HVAC system has to be replaced since most retail facilities use a continuous-volume system while call centers require a variable-air volume (VAV) system.

A company that has endeavored to build a new facility should finally choose two sites, a first choice and a backup, whereupon final real estate and incentives negotiations can begin. A knowledgeable developer should accelerate this process by serving as an intermediary for the call center user in the cost differential analysis, site acquisition, zoning, financing, and finally, design and construction process.

It should be pointed out that choosing the site is by no means the last critical decision. The design of a call center is crucial to aid in the recruitment and retention of the workforce. Because of the sedentary, often repetitive nature of the job, developers must integrate design features to mitigate the stress and discomfort of the job. This includes introducing natural light, using warm, soothing earth tones for the walls, designing ergonomic work spaces and monitoring air quality.

Companies are also outfitting their call centers with a bevy of amenities to provide respite, including fitness centers, cafeterias, break rooms, libraries and day-care centers.

Clearly, call centers have emerged from a dingy back-room office to a business unit at the epicenter of a company’s operations for the simple reason that responding to one’s customers is every business’ core competence. Site selection is at the very heart of ensuring the efficacy of this function and needs to be a programmatic and thorough process so that in choosing a location, a company always makes the right call.

Richard M. Gatto is executive vice president of The Alter Group. In this capacity, he is responsible for directing all business development, leasing and build-to-suit activities and corporate services, including The Alter Group’s proprietary call center development program, CallCore.

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