Site Selection: What is the significance of the new benchmarking alliance you have established?
James T. Trobaugh: Dr. Jon Anton’s group — the Purdue University BenchmarkPortal — has accumulated a lot of call center operations data that allows Fortune 500 companies to benchmark themselves against their peers with respect to turnover and other work-force issues [see sidebar]. We thought there was an interesting tie there based on what we have developed, which is a new model for evaluating communities based on individual cities rather than just on MSA (metropolitan statistical area) data, which takes into account multiple cities per MSA. So we are now tracking in the United States every city with a population of 10,000 or greater, which are 3,362 cities. And we use data — supplied by Claritas — on those communities gathered from a 20-mile (32-km.) radius, because that’s what we feel is the maximum anyone will drive for the lower end of a call center salary range. Labor markets don’t end with city boundaries, so we concentrate on demographics in that 20-mile (32-km.) range. And we’ve developed a saturation model that we use as one indicator of a city’s ability to support new centers.
So Dr. Anton was intrigued that we were finding smaller communities suitable for new call centers, and we thought we might be able to tie his operations benchmarking data together with ours in some way. We are in the midst right now of developing a white paper that shows the correlation between, say, smaller, more rural communities that have a lower household income and high unemployment rates and the BenchmarkPortal information. This way we can see whether call center turnover rates are lower in smaller cities with higher unemployment rates. It turns out they are, and now we have the quantifiable information to prove it.
to run a call center, but the majority of the work force
is made up of the worker bees.”
SS: So a new set of criteria is emerging in call center location decisions.
JTT: Yes. The real estate departments in corporate America have to realize that these aren’t real estate deals. These are all driven by labor, and real estate managers are starting to realize that. They used to be worried about exit strategies. You go into small town America, and you make a big splash. But leaving that town causes a major black eye. That happens in Atlanta, Ga., and it hardly registers as an event. It’s a much bigger deal in Monroe, Ga., and the media makes more of a spectacle of it. That’s unfortunate, because companies are seeking a better quality work force, and they are finding it in the smaller cities at a much lower wage.
SS: Is new call center activity keeping pace this year with recent years?
JTT: I would say we’re seeing a slowdown. More people are accessing the Web, which is taking the call volume away from ‘real people.’ Some companies are waiting to see whether the economy heats back up and are not moving ahead with plans they had. But I know of one major company sitting in two very busy labor markets they’ve been in for years. The real estate director there is realizing that being in those markets is costing a lot of money, there are turnover issues, and he’s taking a bold approach and looking at the smaller communities. He wants to go back to management and show the labor savings that can be accomplished by being in a market that is not saturated and the cost of doing business is a lot less. So at a time when companies are looking to trim costs, moving to another market can save them a lot of money, and there’s some of that going on.
SS: Could you give an example of savings possible by relocating a call center to a smaller city?
JTT: Sure — let’s take a 500-seat center to show the impact that labor has vs. the cost of real estate. Five hundred seats times 50 cents an hour savings times 2,080 hours should give you about $520,000 to the bottom line per shift per year. We use a seat utilization number to determine square footage. So if we’re looking at a 500-seat facility with training rooms, common areas and so forth, we figure you need about 125 sq. ft. (11.6 sq. m.) per person, or a 62,500-sq.-ft. (5,800-sq.-m.) facility for 500 seats. Divide that $520,000 by 62,500 sq. ft., and you have just saved your company — by finding the right real estate — $8.32 in pure real estate cost by just shaving 50 cents an hour off the customer service agent wage rate. And that’s just one shift. Imagine saving $2 or $3 per hour, which is more common. It just shows that real estate pales in comparison to the labor impact. If you miss the labor market and your wages start going up, it will cost you millions of dollars to your bottom line; you don’t have the people you want anymore; and you’re paying a lot more for not getting the service you need to provide to your customers.
SS: What is the call center operator’s most vexing challenge right now?
JTT: Finding the right labor market. We visit trade shows and see lot a of people marketing relationship management software, but it all starts with labor. You can have all the hot software in the world, but if you’re in a competitive labor market, it won’t matter. The basis of a call center or customer service center is human capital. If you haven’t got that right, then the software won’t help you. The labor is out there — you just have to look harder for it, and you have to go outside of what you might have felt comfortable with in the past. Just because everyone is going to Phoenix or Tampa doesn’t mean you should. Some call center operators are more concerned about finding senior managers to run it rather than the human capital that is the infrastructure behind it. This kind of thinking is often a barrier to considering smaller markets as site locations. I say they’re missing the boat. You can always find people at the senior management level to run it, but the majority of the work force is made up of the worker bees.
SS: What areas come to mind as examples of the markets you’re encouraging companies to consider?
JTT: Well, it’s different for everyone. Communities we recommend for some clients wouldn’t work for someone else. People are starting to look not just at second- and third-tier communities, but fourth- and fifth-tier communities. Stream International [a Canton, Mass.-based provider of customer relationship management solutions for e-business] went to Kalispell, Montana. There are lots of opportunities still in Texas; California is often overlooked because of things going on there. The Northwest has a great quality of life going for it. Call centers in Oregon and Washington have benefited from a highly educated — almost overqualified — work force, because people are sticking around. They have college degrees, but they’ll take $8.50 or $9 an hour to work at a call center because of the quality of life.
SS: Are new skill sets emerging as requirements in hiring personnel?
JTT: With the advent of the Internet, computer skills and the ability to write well are becoming more important. People are concerned now about writing ability and communications skills. We still see a lot of demand for bilingual capabilities, but not so much on the multilingual side.
SS: What important trends are unfolding in the call center arena, now that most major organizations have Web-enabled their centers?
JTT: Linking the Web visitor to your contact center is a huge trend. And people are no longer putting all their eggs in one basket and building 1,000-seat centers. That forces you into a larger market in which you’ll have to compete more vigorously. And there is a distinct increase in turnover when call centers jump from 250 to 500 seats. It’s exciting for us to see people deciding on a 250- or 300-seat center in Albany, Oregon, or St. George, Utah, where they can go and grow with the community.
