|
Strategy drivers include a mix of
achieving/maintaining cost minimization, hiring the best talent to
deliver excellent customer service, serving customers in different
languages, maximizing business continuity, and allowing flexibility to
up or downscale the physical portfolio as market conditions warrant.
One component of the
strategy embraces the siting of call centers in US labor markets that
allow an operation to recruit/retain top quality labor at relatively low
cost. Wadley- Donovan- Gutshaw Consulting recently completed a location
study for a highly regarded third party outsourcer that exemplifies the
aforementioned strategy.
This outsourcer needed to
find a suitable location for a 200 FTE inbound customer service center
to handle mostly routine inquiries. WDGC was retained to advise the firm
on the best US location. Simultaneously, we were charged with
recommending locations for the company's first two offshore operations,
targeting South America and Asia.
In the remainder of this
article we illustrate the process by which WDGC recommended a small town
locational solution (Gillette, WY) for the company's new US call center.
While the firm has tentatively decided to move to Gillette, no official
announcement has been made. Hence, management has requested anonymity
until the decision is ready for public consumption.
Study Focus
Given the outsourcer's existing call center network in North America,
management determined that the new facility should be located in the
western US (Mountain or Pacific Time zones). All states would be
considered except California. The latter has a labor legislation climate
(e.g., paid family leave) which management believed was too restrictive
and costly for a customer service business.
As a third party vendor,
new capacity was dictated by the signing of a contract with a company
(in this case, a communications corporation) that needed to bring
customer service functions live at the earliest possible date.
Consequently, to save on time, WDGC recommended 20 communities (based on
experience) that had a realistic chance of meeting the call center's
pre-eminent locational criteria, which were heavily weighted toward
labor market (cost, supply, quality). The universe of 20 locational
candidates spanned 10 western states.
Arizona
Bullhead City
Casa Grande
Kingman
Yuma |
Colorado
Fort Collins
Grand Junction |
New Mexico
Clovis
Hobbs |
Idaho
Moscow
Twin Falls |
Montana
Helena
Bozeman |
Washington
Centralia
Walla Walla |
Oregon
Corvallis
Pendleton |
Utah
St. George |
Wyoming
Casper
Gillette |
Nevada
Carson City |
Location
Criteria The following were deemed to be of overriding
importance in choosing the ultimate location.
-
Labor Cost
-
Labor
Supply/Quality
-
Ample supply (at
least three qualified applicants for each of 200 positions) of
workers possessing solid basic skills (e.g., reading, writing,
communications, problem solving, a high school education, and some
previous work experience (e.g., retail clerk)
-
Workforce stability
-
Minimal
labor/management relations risk (i.e., nonunion)
-
Favorable
labor legislation (e.g., Employment at Will)
-
Proximity
(within 75 miles) to a Point of Presence (switch) of a
long-distance carrier|
-
Broadband
telecommunications on a self-healing SONET ring
-
Availability
of a 25,000 SF building on one floor with ample parking (at
least 8 spaces per 1,000 rentable square feet of office
space)
-
Community
leadership that would welcome an enlighted call center
employer
-
Absence of
sales tax on out-of-state telecom calls
-
Ability of
the company to be viewed as a 'white-collar' employer of
choice (absence of major, direct labor market competitors)
-
Minimal
natural disaster risk (e.g., severe storms)
-
Presence of a
commercial airport
Location Screening
WDGC conducted a comparative analysis of the 20 locational candidates to
identify a shortlist of the six most promising areas. Those areas would
then be subjected to further empirical research to choose the best
long-range location.
To compare/rank the 20
locations, WDGC examined statistical indicators suggesting the degree to
which each area could satisfy primary operational criteria. Exhibit A
illustrates the data elements that were utilized in the locational
rankings.
Individual factors were
aggregated into three major categories. They (along with representative
factors) were:

Information utilized to
compare the 20 areas was drawn from WDGC's proprietary database and
other secondary sources (e.g. state departments of labor) plus contact
with local economic development entities. The chart below shows how the
20 areas stacked-up on overall rankings.

Final Analysis
The shortlisted locations were further evaluated to ascertain their
acceptability for the project in question. Each area was subjected to a
field based due diligence analysis, composed of the following.
-
Interviews
with white-collar employers to learn of their labor market
and other operational experiences
-
Interviews
with other pertinent organizations that could shed light on
business operating conditions, e.g.,
-
Personnel agency
-
State employment
service
-
Local government
officials
-
State labor
department officials
-
State/local tax
officials
-
Education/training
representatives
-
Office building
owners
-
Telecommunications
representatives
-
Physical
inspection of potentially suitable buildings
-
Area tours of
residential neighborhoods
-
Request of
local/state economic development agencies to provide an
incentives package
Location Selection
Predicated upon this original research, the six finalist areas were
ranked/scored. Current and future labor market conditions weighed
heavily in the analysis. Two areas emerged as superior for this specific
call center. They were Gillette (WY) and St. George (UT).
Both areas rated well on
the following criterial locational considerations.
-
Absence of
direct labor market competition (none in Gillette and only a
small center in St. George)
-
Large
underemployed labor pool suitable for call center operations
-
No impending
call center location activity which would impair the
company's ability to recruit during start-up
-
Flexibility
to grow beyond the 200 FTE level, possibly to 300 in either
area
-
Buying power
(generating a large flow of qualified applicants) of a
starting wage in the $7.25-$8.00 range
-
Good labor
quality (basic skills, PC literacy, basic problem solving,
work ethic)
-
Comparatively
low turnover (under 35%) due to several forces
-
Company's HR package
(wage, benefits, policies)
-
Minimal labor market
competition
-
Workforce attitudes
-
Fee
pre-employment training offered by each area's community
college
-
Nonunion
operating environment
-
No deal
breakers on labor legislation
-
Satisfactory
and reasonably priced (gross rent below $14/SF) office space
(including former retail stores) comprising around 25,000 SF
-
Adequate
telecommunications
-
Low natural
disaster risk
-
Acceptable
tax practices/rates
-
Area
leadership warmly embracing the proposed business
There were no significant
drawbacks to either location. While air service was limited, this can
actually be viewed as a positive because neither area is likely to
experience a substantial infusion of new businesses. One minor
disadvantage of both locations was a limited economic incentives
package. Each area offered free pre-employment training worth about
$1,500 per new hire. That was the extent of the incentives. However, a
built-in incentive for Gillette was no state taxation on corporate or
personal income.
Despite the paltry
incentives offerings, labor market attractions are far more important
for successful operation of a call center. This is especially true in
these two areas, wherein wage levels are highly favorable.
In the end, Gillette was
chosen for two reasons. They are:
-
More suitable
available building (e.g., easier and less costly to retrofit)
-
Somewhat more risk
that other call centers would discover St. George due to its strong
growth in tourism/retirement and the fact that there are few other
undiscovered small town alternatives in Utah while there are several
in Wyoming.
The other four locations
were a decided notch below the two finalists. They were judged less
attractive primarily due to more labor market competition, somewhat
higher cost, and probable future wage escalation pressure.
Concluding Remarks
By following a structured analytical process, companies can find
locations that will enhance potential success of future call center
operations. And as this article demonstrates, there are still viable low
cost locations in the US, which can be integrated into a global platform
for delivery of call center services in a manner that balances cost,
risk, and flexibility. To arrive at an optimal locational solution,
several guiding principles should be followed. These are enumerated
below. Application of these principles should result in a location
strategy that maximizes a company's ability to provide superior customer
service at attractive cost levels.
Keys to Successful
Call Center Location
-
Think globally or multi-shore
-
Customer
concentrations
-
Current call center
portfolio
-
Future capacity needs
-
Ability of existing
portfolio to accommodate new capacity
-
Determination if a
new center is required
-
Success drivers, such
as
-
As best as possible,
estimate near-term and longer range
-
Staffing
-
Occupancy
-
Design/layout
-
Telecommunications
-
Accessibility
-
Determine most desired
traits that new customer service representatives should possess
-
Ascertain maximum
tolerance for starting wages, benefits levels, yearly turnover, and
daily absenteeism
-
Outline an exit
strategy that could be quickly activated if necessary
-
Thoughtfully weight locational criteria, keeping in mind there will be tradeoffs such as
ideal labor market vs. minimal incentives and marginal air access
- Labor costs
- Labor supply
- Labor quality/stability
- Future labor supply/cost
pressure
- Union risk
- Available office space
- Occupancy costs
|
- Telecommunications
- Electric power
- Air access
- Taxation
- Incentives (should only be
considered after promising areas have been identified)
- Leadership attitudes toward
call centers
- Flexibility to grow
(headcount)
|
-
Determine flexibility
to tweak benefits, HR practices, and on-site amenities based on local
labor market dynamics
-
Explore possibility of
telecommuting
-
Put together a project
team led by an operations executive and to also include
-
Corporate support
(e.g., HR, real estate, IT)
-
Outside advisors
-
If appropriate, major
customers
-
Set realistic
timeline for all tasks required to get the new operation live
-
Specify rules of
confidentiality/disclosure concerning the impending call center location
project
|