he heat created by the North American push into Europe for new call centers has turned desirable locations into no-go areas for some U.S. corporates. But while some locations have become victims of their own success, others are emerging as new winners in the current cooler environment for new call center operations -- especially outside Europe and North America.
        The late 1990s witnessed a rush into Europe by some North American call center corporates. Dublin was the darling location and as corporates piled in, the labor pool was eroded, costs escalated and site selectors started to rethink their strategies. With its international outlook and high-level language skills, Dublin was considered an ideal European call center location in the mid-1990s, but by the end of the decade the city was decidedly over-heated - and over-priced. Similar things have also been said of Newcastle in the UK and Frankfurt in Germany, which has become particularly hot for financial call centers.
        Perhaps less crowded by call centers, but still considered particularly expensive in terms of property and labor costs, are Amsterdam and London. Christof Abrahamse, vice president of finance and business development at Stream International, has significant experience of call-center set-up throughout Europe. Stream located its European head office and first European call center in Amsterdam, chosen for the multilingual capabilities of many of the city's residents. Abrahamse said that these capabilities can only be matched by the residents of Dublin and London.
        In France, Stream has a high-level support operation close to Paris and a more cost-effective site in Angers. Next came the UK, where Stream avoided high-cost London and its environs - as well as the other regional capitals of the UK - and chose Londonderry in Northern Ireland. It was the Londonderry strategy that has provided the blueprint for Stream's future European call center set-ups.
        "That model is based on locating the call center not close to the higher salary areas like London, Paris, Amsterdam or Frankfurt, but in the rural areas," said Abrahamse. "The first thing we always look at are labor costs."
        After the UK, Stream expanded into Germany, Spain and Sweden. Central and Eastern Europe are still interesting, but the company is still at the information-gathering stage there.
        While labor costs are by far the most dominant factor in European call center site selection criteria - 70 percent of call center operating costs are associated with labor - other factors count. Population is important in order to staff the call center. In fact, Stream only considers locations where there is a catchment area of at least 100,000 potential employees. Unemployment figures are also studied - and this was the main driver for Stream in pursuing the German call center in Berlin. Also of interest is the competition for call center services in the location under consideration. High densities of similar operations are usually a turn-off for customer care companies planning new call center operations.

Support from the public purse

Grant aid in Europe from regional or city-focused support agencies factors into the equation too. Northern Sweden has been pursued by some North American companies who have been offered attractive financial assistance. However, for some companies, the population in these regions is just too small: the potential employment pool is limited, travel time and costs are high and employment opportunities in these regions are not attractive.
        Economic development agencies throughout Europe have become increasingly knowledgeable on how to talk to North American corporates pursuing call center set-up in Europe and how to address their needs, particularly on the information-gathering and regulatory compliance fronts. To this end, Call-for-Europe - a pan-European association of inward investment agencies - has been established to provide location advisory services for both call centers and other functions. The role of Call-for-Europe includes advising both North American and European corporates on new locations for call centers, shared service centers and logistics centers.
        To start with, this association comprised economic development agencies already strong in call center operations in the UK (Manchester Investment & Development Agency Service), France (Comite d'Expansion de la Moselle), Germany (gwSaar), Scandinavia (Invest in Sweden Agency) and Spain (Barcelona Activa SA). More recently Italy has shown an interest in being represented in the association and the membership of an Italian agency is expected to be concluded shortly. All of these agencies have traditionally competed for inward investment; but for call center business (and now for certain other functions) the agencies have seen a need to collaborate.
        Call-for-Europe was established a couple of years ago to assist largely U.S. companies in finding a solution to the tighter European labor market when looking for new European call center locations. The solution presented by the association was to provide a single reference point for non-European companies which was equipped with contacts, information and support covering a European region rather than a single European city or country. The major problem being encountered by North American companies developing a European call center network at that time was the over-clustering of call centers in certain key locations. As a result of this over-clustering, staff retention in these locations was particularly low, resulting in very high and on-going recruitment and training costs.
        The members of Call-for-Europe have been able to suggest not only national solutions to a company's call center location requirements, but also locations with multi-lingual capabilities from which a company can serve a range of countries. According to the alliance, the western European markets of the UK, Ireland, northern France, Belgium and Holland developed this concept of multi-lingual centers first. It is now being pursued actively in other regions.
        According to Andrew Young, business development executive at the Manchester Investment and Development Agency Service - the UK member of the association - European regions are beginning to show themselves to be particularly attractive in call center operations because they offer significant multi-lingual capability to serve a regional market but are not associated with an over-heating labor market. These regions can offer a number of languages prevalent in that region as a whole, thereby increasing the business opportunities of that call center.

Watch out, Western Europe

Central and Eastern Europe is the most talked about European region for future call center operations. This largely results from cost pressures, but also because of language ability. Apart from indigenous languages, this region is also proficient in German.
        Other parts of the developing world are stealing a march on the less developed European locations and North American corporates are turning their heads toward Asia in order to serve the European market. India has already shown itself to be a rival to English-speaking Europe, with English-speaking Asia serving European callers on behalf of North American corporates in a cost-effective and proficient manner.
        Already we are starting to see U.S. customer care companies laboring under recessionary pressures and announcing restructuring plans, job cuts and closures. One such company is Sykes Enterprises Inc., which operates 41 customer support center and five e-commerce fulfilment centers in North America, Europe, Latin America, Asia and Africa. This company's restructuring plans comprise primarily the closure and consolidation of several facilities.
        John Sykes, chief executive officer of Sykes Enterprises, said, "The economic slowdown has left much of the industry with excess seating capacity and companies looking for more cost-effective solutions to handle their customer support needs. Sykes' offshore model provides that flexible, cost-effective solution."
        To this end, the answer at Sykes Enterprises was clear: cut back capacity in Europe and the U.S. and grow operations in Manila and Costa Rica to support the offshore demand. If this strategy is indicative of a new trend, it is easy to see which regions will be the winners and losers in the new call center location environment.