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September 1999

Making The Right Call On European Site Selection


An outsourcer from Kansas called our office a few months ago with a unique predicament. Its largest customer had decided to expand its activities to Europe. Since the company's sales were done exclusively over the phone, using the outsourcer's services, the outbound call center company had to gear up an operation in a foreign country in a hurry.

Slightly flustered in our first discussion, the call center's chief executive had quite a few questions on myriad subjects, such as, "Where do we locate our facility? How do I find multilingual staff? Are there European labor laws which are different from U.S. laws? What will be the tax implications of doing business in Europe? Who can provide our technology solutions? What are our real estate options? What government assistance is available to us in the countries in which we are looking to site the facility?"

This "dilemma" is not an unusual one for American call center operators, whether they are "following" a major client to a foreign market or simply deciding that markets overseas represent an important opportunity for long-term growth. Whatever the reasons for international expansion, there are a number of issues that must be addressed to ensure a successful global transition.

The most basic issue is who will lead this effort on a company's behalf? Unless a company has someone with international experience, there will be a fairly steep learning curve. This can obviously be ameliorated by engaging professional international site location advisors. However, someone at the company must take the reins on such a project. This individual should be flexible, energetic, have the support of senior management and possess solid experience in most elements of the business. Problem-solving skills are also a big plus.

Once a company has selected an individual to "champion" the project, the issue of whether or not to engage professional advisors arises. To some extent, this question hinges on the immediacy of a project. When time is of the essence, good professional advisors can have a tremendous impact on the success of an expansion. This is particularly true when considering many different countries in Europe. Experienced professionals can tap reliable resources in the human resources, technology and real estate areas, for example, in a variety of countries and save their client time and money. Trial and error in selecting vendors far from a company's home market is a luxury few businesses can afford.

Professional advisors can also help to educate the project manager on the subtleties of doing business in various foreign countries. In one instance, a project manager of a help desk operator looking for a site in England was unaware that Gatwick Airport had scheduled flights to the United States and Europe. Focusing only on an area near Heathrow Airport, the project manager soon found himself overwhelmed by logistics problems as he attempted to schedule his shift patterns in this congested area west of London. On top of this, it was apparent that he had committed to office space which was too expensive for the company's budget. Gatwick Airport was just as accessible, less congested and presented more economical options for quality office space. An experienced professional advisor could have helped to avoid the problem.

On the flip side of the professional advisor argument, a project manager who sets out to learn the nuances of various international markets is an invaluable asset to the company. While developing this type of in-house expertise might be more time-consuming and expensive, at the end of the process, the company employs an individual who may be in position to offer not only local operating experience, but more global strategic insight as well.

Whether a company keeps a project in-house or engages outside advisors, one of the best places to start collecting information is the Internet. The Internet can be viewed as a massive global encyclopedia where thumbnail sketches can provide directional signposts.

When searching the Internet, view the search process as "funnel-shaped." In other words, start a wide search of countries in Europe, focusing on general business issues like taxes, labor costs, incorporation laws and the like. Pay particular attention to other sources of helpful information on "links" pages. As the data begin to narrow and your company begins to focus on one or two countries, resources "on the ground" should be identified and collected. These resources could include the names of lawyers, accountants, consultants, real estate brokers and economic development groups.

Mike Allen, managing director of People, Technology & Location (PT&L), a consulting company specializing in helping companies in the call center industry with pan-European location decisions, finds the Internet useful — to a point. “Many of our clients started their pan-European information searches on the Web. Coincidentally, a number of our current clients found us through our Web site. What many of our clients have said regarding the Internet is that it is a good place to start, but at the end of the day it lacks the depth that reliable local resources offer.”

When determining which areas of Europe warrant a closer look as a potential location, most experts agree that workforce issues are paramount. The kind of call center service a company is looking to provide, however, has a significant impact on where to begin studying comparative demographics. Many of the in-house software help desks are located in Ireland, where a young, well educated workforce is available. Since proximity to customers is not a significant issue in this market, Ireland, which is somewhat distant to continental Europe, makes good sense. For an outsourcer looking to sign corporate clients, a location in southern England or in the Benelux countries (Belgium, The Netherlands and Luxembourg), closer to major potential customers, might make more sense.

In either case, a detailed understanding of regional demographics is crucial. The Mitial Group in Wrexham, Wales annually publishes comprehensive pan-European site location studies for the call center industry. In the study (the 1999 edition is due out this month), Mitial rates specific areas according to their suitability for call center operations based in large part on pressure on the workforce.

As the last Mitial study pointed out, some of the traditionally favored call center locations like Dublin, Ireland are becoming overheated. Competition for skilled workers is said to be driving up labor rates and creating the “job hopping” syndrome. Commenting on “hot spots,” David Clancy, director of Recall Companies, a U.K. call center recruiter, noted, “A mail order company has recently built a swimming pool and gymnasium, established an open learning center and opened a shop in the call center where employees can buy products at a discount.”

By contrast, Mitial has identified the area southeast of London, in the county of Kent, as one of the premier locations in Europe for help desks, customer service desks and outsourcers. At Locate in Kent, the County’s economic development agency (which maintains an office in the U.S. to assist American companies), David Sweetnam, the company’s resident call center expert, opines, “Being situated between London and continental Europe gives us the competitive advantage of a huge, skilled labor pool and a high proportion of multilingual candidates.”

Our own experience has shown that many communities in what could be termed secondary and tertiary cities and towns are actively courting the call center industry primarily with stable, energetic, local workforces with specific niche skills, like financial services. Generally speaking, labor and turnover rates are lower in these areas as well. Examples of these communities would include Sheffield and Merseyside in England, the Oresund region in Sweden and Denmark and Apeldoorn and Arnhem in The Netherlands.

With detailed demographics guiding the site selection process, gathering local information about available real estate and service providers such as lawyers, accountants and recruitment firms is the next step. As most communities in Europe are anxious to welcome call centers to their areas, a call to a local economic development agency is recommended. You will find that some agencies are more professional than others, but all are eager to help.

At Locate in Kent, David Sweetnam’s team has a “call center resource/checklist” already prepared. His checklist includes such items as suitable rental housing for American staff, suitable schools for the children of American executives and bus and train schedules for the likely employee catchment areas.

Sweetnam’s list also includes names of proven service providers; offering the client at least three choices in the areas of technology vendors, legal counsel, specialist recruitment agencies, real estate brokers and grant advisors.

While contact with local economic development agencies is recommended, one can quickly become inundated with what is essentially promotional material. Sorting through myriad claims by these agencies that they each have the ideal location for your project can be a daunting task. Local professional advisors can help to separate fact from fiction. The advisor can also act as a buffer between the many organizations trying to “help” with the decision-making process and provide an objective point of view.

Once the demographics have pointed a project to certain geographic areas and local development agencies have been contacted, the actual site search can begin. The real estate aspect of a call center project can often be the most time-consuming and frustrating. When looking back on her call center project in England, Amanda Roberts of Cabot Financial Services was surprised the real estate negotiations took as long they did. “They were far more protracted than we anticipated,” she remembers.

Real estate practices in most of Europe are vastly different from those in the U.S. In fact, real estate practices differ from country to country in Europe. For example, in England leases tend to be much longer in term than in the U.S. Often times, real estate principals require corporate guarantees before agreeing to lease property to non-European companies. A professional advisor with good relationships with both the local real estate brokerage community and development agencies can prove invaluable in overcoming these obstacles.

While most landlords in Europe are moving toward American-style terms and conditions, higher occupancy rates are slowing this process. Rental rates in most of Europe, already high by U.S. standards, are going up. The British government estimates that approximately 900 new call centers will open in Great Britain alone over the next two and a half years, further adding to this pressure.

When looking to expand to Europe, a company must commit itself to success by choosing and empowering a “champion” for the project. Commitment, careful planning and programming and the right advice are the keys to a successful European expansion. This is a people business; let the demographics drive the process. People will ultimately drive your call center.

There are many good reliable sources of information to guide the expansion process. Whether the issues involve real estate, training, government grants, tax issues, labor laws, technology vendors or public transportation, there are excellent resources and people throughout Europe willing to provide assistance to the U.S. call center executive. As a client of ours, whose European expansion is nine months away, reminds us, “We plan ahead to stay ahead.”

Leighton Wildrick is the CEO of International Business Development Corp., an international management consulting and site location firm. Wildrick has been providing professional advice for 20 years to American companies globalizing their businesses.

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