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Technology Highlights
August 2002

The Hub-And-Spoke Approach To Site Selection

By James Beatty, NCS International

Call center organizations have had to react and respond to labor constraints by testing and implementing different and unique location strategies. Although I have outlined several strategies in past articles, I want to visit one that is somewhat of a hybrid, the Hub-and-Spoke approach. This is related to the Small Town/Rural and the Urban/Inner-City strategies. Think of the spokes on a wheel and how they converge at the hub in the center. The Hub-and-Spoke approach to call center location is similar in that the center of the wheel, or the 'hub' call center, could be in a rural area or in an urban area and the 'spokes' call centers could be in adjoining areas up to 50 to 60 miles away.

Let's examine one of many possible scenarios.

You need to establish a 250-seat center requiring 500 employees. Using traditional thinking, you could site the operation in one locale and, using conservative figures, you would have a single center with the following metrics for employees and real estate:

Center Size: 25,000 sq. ft.
Seats: 250
Employees: 500
Space Costs: $15 NNN*
Annual Lease: $375,000
*NNN = triple net (base rent without taxes, mtce and common area charges)

Now, if you make a few modifications on size and location, your configuration could look like this, based on conservative estimates.

These are assumptions and certainly can be challenged, but assuming spokes A and B are at least 20 to 25 miles from the main facility, it is reasonable to assume lower costs. I have not even factored in potential saving for personnel, as they are also lower due to being located in towns that are smaller than the hub location. The hub location should be at least 25 percent larger than the largest spoke location.

Certainly you can create more spokes by simply reducing the size of the hub. In the above example, one could create 5 or 6 spokes based on the geography of the region under consideration. Again, this also underscores the need and the competitive advantage of considering rural or non-urban areas for your spokes.

This method can be applied to projects of varying seat size and can be used to take advantage of several factors within the project, such as a centralized management team, centralized support staff, multiple municipalities for incentive negotiations, multiple labor markets, lower occupancy costs, career pathing for agents, multiple sites for establishing client project testing, etc.

I cannot stress enough the ability you, as call center executives, have to create 50 to 60 jobs in a locale. This job-creation ability cannot and should not be overlooked or understated. In many communities, 50 to 60 jobs will not only make you a large employer but an employer of choice as well. Based on several comments and experiences gained over 30 years of call center site selection, I have concluded that many call centers would prefer to be either the only game in town or the main game in town, thus staking their claim as the employer of choice in the workforce and the company of choice among community officials. This approach allows you the flexibilty to attain those goals while still growing your company and, based on your ongoing success and proper treatment of your workers, you will find a loyal workforce and abundant labor supply in these smaller communities. Do not be fooled by demographics alone, as word travels quickly in these communities and the success of your operation will be the subject over many cups of coffee or latte in these communities.

Did I mention incentives? Well, you may be very pleasantly surprised again in these smaller areas, as you will also be their largest project in this century. Yes, this century! Or the last one, for that matter and, as such, I have personally witnessed many communities willing to work with you as a partner, and in the case of multiple spokes, there are multiple partners, partners willing to assist you in securing financing, space, equipment and, of course, people. I can recall one community even having a press conference just to announce they were being considered for a location and while I do not endorse that mode of activity, it clearly demonstrated their resolve in working with the prospective call center.

Did I mention that the economic officials on the state level will pay a lot of attention to you and your project? Why? Because not many projects will pursue multiple areas simultaneously with the possibility of all areas winning a project. Trust me on this one; you will be given the red-carpet treatment at the state level. State officials would like nothing more than to bring jobs of the caliber that the contact center industry represents to the communities they serve.

This hybrid strategy deserves your consideration. I would be please to receive your e-mails on this topic or any others relating to site selection.

Hub Center Spoke A Spoke B Total
Employees 300 100 100 500
Seats 150 50 50 250
Sq. Footage 15,000 5,000 5,000 25,000
Lease Costs NNN $15 $12 $10 $13.40 AVG
Annual Lease Costs $225K $60K $50K $335K

Potential Lease Cost Savings : $40,000

James Beatty is president of NCS International, Inc. and founder of www.callcentersites.net. NCS International specializes in corporate site selection, community analysis and marketing.

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