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Article : Call Center Location Selection

This article addresses a structured process for selecting the best call center locations. Typically, there are three phases comprising the location selection process. Key elements of each phase are highlighted below.

Phase One: Discovery/Definition
The objective in this phase is to create the information model upon which any location will be identified and assessed. Critical inputs include the following:

  1. Project team (Operations, Human resources, IT, Legal, Finance, Corporate affairs, etc.)

  2. Rules of disclosure/confidentiality

  3. Primary business objectives to be achieved via the proposed call center

  4. How will the new center affect the existing locational configuration (e.g., downsizing)

  5. What functions will be carried out in the entity in the short and long term

  6. When must the new center be operational

  7. Based on both the most successful company centers and a look to the future what are the ideal traits that successful job applicants should possess.

  8. What will be year one and projected operating requirements:

 

A) Headcount

  • Category (CSR or TSR, Trainees, Experienced, Supervisors, Tech support, Clerical, Managerial)
  • % by shift
  • Seasonal
  • Preferred part-time vs. full-time mix
  • # transferees

B) Maximum acceptable wage structure, especially start rate
C) Probable use of incentive compensation
D) Fringe benefits (Programs, Eligibility, Cost (% of salary))
E) Unionization issues
F) Reliance on special HR practices like personal leave bank, flextime, alternative workweeks, telecommuting, etc.
G) Office space (Size (SF), Floor size, # floors, Former retail acceptable, # parking spaces per 1,000 rentable SF, Lease vs. own, Multi-tenancy concerns)
H) Telecommunications (POPs, LECs, CLEC's, T1s or T3s, Use of VOIP, Dual feed)
I) Taxable base
J) Air service needs
K) Time zone preference, if any
L) Deal-breakers as far as natural disaster risk is concerned
M) Concern about locating in an area where there is a presence of competitors, vendors, or customers

  1. Maximum size (headcount and space) for study purposes
  2. Any restrictions on the initial geographic search region
  3. Any other notable considerations
  4. Relative weighting of various locational criteria, aggregate/into broad categorize such as:
Category Relative Import (1-least, 10-most)
Labor Market 10
Competitive demand 10
Qualified labor availability 10
Workforce quality 9
Workforce stability (e.g., turnover) 8
Unionization 9
Labor legislation 5
Votech training resources 2
Operating environment 8
Telecom 9
Electric power 5
Highways 5
Mass transit 3
Air Service 4
Available office space 8
Natural disaster risk 8
Ease of exit strategy 6
Leadership attitude 9
Business costs 9
Payroll 10
Occupancy 5
Taxes 4
Air travel 2
Incentives (offset) 4
Quality-of-life 4
Cost-of-living 8
Housing 8
Public education 9
Arts/culture 6
Recreation 7
Crime rate 5
Climate 3

Phase Two: Location Screening
Concept
The objective in this phase is to identify a shortlist of the most promising locational candidates. These areas would then be brought to the next phase for a field based, due diligence evaluation.

Most often, screening is divided into two stages. The first stage involves desktop research to derive a longlist (usually 8-12 locations. Stage two requires contact with appropriate economic development agencies to obtain customized information on semi-finalist or longlist areas (e.g., roster of competitive employers).

Stage One

The focus of locational screening is either at the metro area or county level, depending on the scale of the proposed operation. Among the locational factors taken into account are:

  1. Population
  2. Household income
  3. Adult educational attainment
  4. Workforce
  5. Telecommunications
  6. Natural disaster (prefer low risk of earthquakes, flooding, and severe storms)
  7. Taxation
  8. Average wages (lower the better)
  9. Air service
  10. Electric power

Stage Two
In this stage, a formal information request is sent to the pertinent state and/or local economic development agency. The major thrust is to gauge the labor market environment.

The information request is submitted to ED groups in longlisted locations that emerged after Stage One. Data most often asked for includes the following:

  1. Major Employers
  • All sectors (beware of high tech or financial services concentrations as wages could be high)

  • Call centers and back offices (try to distinguish those that are lower vs. higher wage)

  • New/expanding firms (should be minimal direct labor market competitors)

  • Character of firms seriously looking at area for new operations (a red flag if includes large customer service or back office operations)

  • Downsizing white collar employers (could augment labor availability)

  • Larger seasonal employers

  1. Two And Four Year Colleges

  • Enrollment

  • Annual graduates

  1. Military Installations

  • # military personnel including those separating/retiring every year

  • # adult dependents

  1. Available Buildings

  • General features

  • Average gross rent ($ per SF)

  1. Average number of hours airport closed per year due to inclement weather

  2. Tax practices/rates regarding real and personal property

  3. Possible incentives applicable to this project

  4. Area wage surveys including retail, clerical, and customer/tele service

  5. Telecom infrastructure (service providers and basic characteristics)

  6. Quality-of-life features (e.g., housing, public education, crime, culture, recreation)

The Shortlist
Contending areas (usually 8-12) should be ranked/scored. If appropriate, one or more existing company locations should be carried through the screening process for benchmarking purposes.

A straightforward way to rank each area is to aggregate individual categories into several categories. These might include:

Category Possible Relative Weight
(1 Low, 10 High)
Representative Factors
Labor market 10 Competitive employers, new employers, downsizing
firms, demographics, underemployment
Business costs 9 Employment wages, real estate taxes, air travel
Operating conditions 7 Available buildings, telecom, electric power, disaster
risk, air service
Quality-of-life 3 Cost-of-living, housing costs, crime rates, culture,
recreation, public education

Each individual factor is assigned a relative weighting. Scores are tabulated/by category. A composite score for all categories is then derived.

After analyzing results based on what is most important to the business, the shortlist is chosen. The project is now ready to enter the third phase.

Phase Three: Location Evaluation/Selection
The Thrust
The principal Phase Three objective is to select the location which will optimally support the call center's paramount operating requirements over the immediate horizon and longer range.

Most important is the likelihood that the call center would be considered an "employer of choice" in the local labor market. The call center would have to stack up favorably with other employers needing similar workers.

Other key considerations often include unionization among white-collar employers, pre-employment and ongoing training programs geared toward customer service, office space availability and cost, telecommunications capability, and incentives.

Below, the prime research tasks involved in Phase Three are denoted. Major locational factors utilized to compare finalist locations are then listed.

Methodology
The call center location team visits each shortlisted location to personally assess current and emerging operational conditions. While in the field, the following tasks should be undertaken:

  1. Interviews with contact/call centers and back offices to learn of their:

  • Recent operating experiences, especially recruitment/retention
  • Opinions on staffing the proposed operation at various wage levels
  • Competitive wage/salary structure, especially entry rate
  • Keys to achieving "employer of choice" status
  • Best geographic sector of the area from a labor draw perspective
  • Unionization risk
  • Experiences with labor law
  • Satisfaction with telecommunications services
  • Opinions on other variables
  1. Interviews with other pertinent organizations who can shed light on labor market and business operating environment

  2. Office space tours, especially in the preferred geographic sector from a labor market standpoint
    Quality-of-life tours (e.g., Neighborhoods wherein targeted labor pools reside)
    Request of the lead economic development agency to craft a preliminary incentives package

Comparative Evaluation Factors
Each area should be investigated on how well it satisfies pivotal criteria for the call center. Emphasis should be placed on emerging trends. Predominant factors including the following:

  1. Labor market

  • Supply/demand for requisite skillsets
  • Qualified applicant flow
  • Quality
  • Stability
  • Salary structure
  • Benefits
  • HR practices
  • Recruiting sources/methods
  • Training resources
  • Unionization risk/avoidance
  • State labor legislation
  1. Office space

  • Availability
  • Characteristics
  • Dual telecom and power feed
  • Security
  • Parking
  • Cost
  • Recommended finalists
  1. Infrastructure

  • Highways
  • Congestion
  • Mass transit
  • Telecommunications (Services, Redundancy)
  • Electric Power
  • Air Service/costs
  1. Taxation

  • Practices
  • Rates
  1. Incentives

  • Applicable programs
  • Clawback provisions
  • Annual savings
  1. Natural disaster risk

  2. Leadership attitude toward this project

  3. Quality-of-life/transferee appeal

  4. Support documentation

  • Statistical snapshot of each area
  • Office property profiles/maps
  • Incentives package
  • Digest of employer interviews results
  1. Commute zone maps

  • Labor market indicators by zip code
  • Major highways, communities, employers shown

The Final Choice
The call center team should interpret due diligence research results from the standpoint of those considerations deemed most important for success of the new entity. This would lead to a recommendation on which of the three areas is best suited for the proposed operation.

Additionally, the team's preferred site and a backup should be recommended for each area. Input on the latter should be secured from the appropriate real estate broker retained by the company.

A report should be issued by the team, capturing due diligence research outcome. The document should, at a minimum, include an executive summary containing the following:

A) Area comparison/conclusion
B) Staffing

  • Competitive demand
  • Availability (Initial needs including ramp-up time, Growth requirements, Replacement - due to turnover)
  • Competitive/recommended salary structure
  • Benefits/HR practices for successful recruitment/retention
  • Important on-site amenities

C) Office space

  • Available buildings
  • Costs
  • Recommended
  • Multi-year business costs (Payroll, Occupancy, Taxes, Air Travel, Property Insurance, Incentives (offset to cost)

D) Telecommunications capabilities
E) Risks/red flags, if any, on other considerations
F) Exit strategy (e.g., should labor market conditions deteriorate)

  • Elements (e.g., short-term lease)
  • Contingency cost (e.g., severance)

G) Recommendation

  • Which area
  • Where within area
  • Best site/building
  • Viability of the two remaining areas
  • Key points of emphasis for final negotiations (Real estate, incentives)
  • Selection of appropriate vendors

Conclusions
The above defined process typically requires 3-4 months to complete. By adhering to such a structured, disciplined approach a company will have reasonable assurance that a new call center will enjoy successful operations over the foreseeable future.

Lastly, it should be mentioned that the majority of new call centers being established in the U.S. and Canada are going to second and third tier metro areas (below 250,000 population). The primary motivating force is to realize positive staffing experiences at affordable and sustainable cost.


About Dennis J. Donovan:
Dennis J. Donovan is a principal of Wadley-Donovan-Gutshaw Consulting (WDGC). WDGC has been advising corporations on facilities location for over 25 years. Dennis is a graduate of the University of Nebraska at Omaha, and earned a masters degree in economic geography from the University of Rhode Island.

About WDGC:
Wadley-Donovan-Gutshaw Consulting is a management consulting firm specializing in corporate location and economic development consulting services. Since 1975, the firm has provided advisory services to private corporations and economic development organizations. Annually, the firm conducts 15-20 global call center location studies.

Today's Tip of the Day - Don’t Over Glamorise Your Job Adverts

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More Editorial From WDG Consulting

Published: Friday, April 8, 2005

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