October 1998

Looking For An Unsaturated Market In Europe? France Delivers

BY NICOLAS LENOIR, INVEST IN FRANCE AGENCY

"Given Ascend's needs to recruit high level technical skills, the capability that a location can provide to attract and retain outstanding professionals at low costs is a fundamental value for the success of a customer support center. Sophia Antipolis (near Nice) is in a seamless position to serve this purpose," concluded Edgardo da Fonseca in his location study for Ascend Communications Technical Assistance Center for Europe Middle East Africa (EMEA). In 1997, the Alameda, California-based producer of wide area networking solutions for telecommunications carriers, Internet service providers and corporate customers worldwide, chose Sophia Antipolis to set up its Technical Assistance Center (TAC) for EMEA. "We looked at 10 to 12 sites to base our EMEA TAC and after a detailed analysis of 10 different parameters, Sophia Antipolis appeared as the best possible location on a short list of three" reported da Fonseca, Director of Operations. Included in the list of criteria were operating costs, proximity to major markets, a high-tech environment and, most important, the availability of multilingual, highly skilled technical support engineers and managers. "Ireland and the U.K. were not shortlisted because of their lack of availability of highly skilled, multilingual, multicultural engineers. The concern with Germany was the high level of labor cost and employment regulations," explained da Fonseca.

Bay Networks and Tandem in Sophia Antipolis, as well as Diamond Multimedia Systems and Nortel in the Paris area, are some of the many high-tech companies that have decided to locate a technical support center in France. The key reason is the availability of highly skilled, native and multilingual speaking agents. With 0.1 agent positions per 100 inhabitants for France, against 0.25 for the UK and 0.7 for Ireland, France is far from being a saturated market for call centers. High-tech companies have long realized that the attraction and retention of qualified agents is a crucial competitive advantage. It is costly to train a high-level technical support agent, and it is therefore vital for a company to be able to retain and to rely on that individual.

Loyalty, long understood by high-tech companies to be vital, is becoming increasingly important for other types of call centers as well, such as order-taking call centers or even telemarketing operations. Dell Computer Corporation has thus recently decided to relocate some of its activity from Dublin to its expanded operation in Montpellier (Southern France). The Montpellier call center now handles telesales for France, Italy, Spain, Portugal and Switzerland, and 100 employees will be added.

Numerous outsourcers are also looking to France at the moment. Sykes and Sitel, for instance, recently announced major investments in France. In December 1997, Sykes opened a center that accommodates 300 seats on a single-shift capacity in 36,000 square feet of space. The facility serves France, as well as the Southern European countries of Italy and Spain. According to Phillip A. Clough, president and CEO of Sitel, which recently acquired IPA, a French outsourcer of high tech call centers: "France has one of the fastest growing teleservices industries in Europe."

Two years ago, France was not considered to be a major player in the run for call center projects. How to explain this turnaround and success?

First, recognizing their importance to the French economy, the French government has improved the business environment for call centers and taken various measures that include:

• New labor regulations that ease the use of temporary and part-time workers, thus facilitating operating 24 hours a day and seven days a week;
• New, attractive incentives specially dedicated to call center projects;
• Social charges exemptions for call center agents. The average social cost for a call center agent is 29 percent of the base salary, which brings the monthly cost per agent to about $1,585 ($19,020 yearly);
• Deregulation of the French telecommunications market, which also creates numerous business opportunities.

A second reason is the country's well-known competitive advantages that have existed for many years: the central location of France in Europe (it is the only European country to share seven borders with other European countries), the size of the home market - the second largest in Europe - and, most of all, the high availability of skilled multilingual and native speaking labor force. Companies now recognize these as the major criteria for call center location, which was not the case a few years ago when the focus was primarily on cheap labor costs and high incentives. Companies have realized that a call center must be a profit center and that costs must be competitive, but the quality and dedication of the work force have become the prime criteria.

The unique quality of life in France makes it one of the easiest places in Europe to attract and retain a skilled, multilingual labor force. The attraction of the French quality of life makes it unnecessary to pay a premium to attract agents from other countries, if needed. For instance, EuroDisney, located in the Paris area, attracts agents from all over Europe and pays them the minimum hourly wage ($6.59, a total cost to the employer of $7.97 that includes a social contribution - for medical insurance, unemployment and social security).

France's recent achievements can also be attributed to the change in the requirements of companies willing to set up European call centers. More and more companies are looking at setting up multiple regional call centers. Companies now realize that having two or three call centers makes it easier to manage the center and reduces the risks of a breakdown. Companies that already have one call center in the U.K. or Ireland are often looking to create a second one, either to better serve their clients on the Continent, or to face their huge increase in volume. France is, in this case, well positioned to attract call centers looking to serve France and Germany. In the Alsace and Lorraine areas, companies find a totally bilingual work force (French/German) at a much lower cost and subject to much more flexible labor laws than in Germany. France is also ideally suited to service Southern Europe - France, Italy, Portugal, Spain and Switzerland.

Nicolas Lenoir is the director of Call Center Projects for the Invest In France Agency.