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Industry Research : Return of Call Centres Offers Hope for Spain's Economy
Aug 6, 2013 -- Spaniards are hearing more home-grown accents when they call to discuss their phone service these days, thanks to increased competition and an economic crisis that has made employing in-country staff more attractive.
In a sign that the improved competitiveness touted by Spain's government since last year's labour reforms may be filtering through, local firms are opening call centres at home and shifting away from historically cheaper countries.
Fixed-line provider Jazztel (JAZ.MC) has opened its first call centre in Spain, and operator Telefonica (TEF.MC) aims to answer almost all customer queries in-country "within a few months", bringing much-needed jobs back home.
Firms in Spain have long outsourced many customer service functions to countries such as Chile, Colombia and Peru, just as British and American companies moved call centres to India. Young, educated workers with the right language skills could be employed for a fraction of the cost in developed nations.
But falling salaries at home and rising costs abroad make employing Spaniards attractive again, something the ruling centre-right government hoped would happen when in 2012 it made it easier for firms to hire and fire workers.
"We have well-educated people with lower salaries than before at a time when the economy is starting to pick up," said Sandalio Gomez, management professor at IESE business school.
Spain's recession came close to ending in the second quarter and the number of registered jobless fell for the fifth month running in July.
Jazztel opened its first call centre in Spain at the end of last year, where it currently employs 485 people. The company said 90 percent of workers were jobless before, while 70 percent have degrees or technical qualifications.
Spain's crippling 26 percent unemployment rate means employees are more likely to stay put. Churn rates are at record lows while abroad growing numbers of workers are switching jobs, according to the Spanish Contact Centre Association (ACE).
Telefonica has contracted over 1,000 people for a new call centre in Las Palmas in the southern Canary Islands. The company currently handles a percentage of domestic call traffic in Spain.
"Of course moving traffic to Spain has a cost, but it's a project that Telefonica is committed to as part of its strategy to put the customer first," a company spokesman said.
Orange (ORAN.PA) recently took one of its call centres in-house, putting 800 Spanish employees on its books.
Operators in Spain must find ways to distinguish themselves from competitors as rivals rush to slash prices to attract cash-strapped consumers. For Telefonica, improved customer service is one way to justify a price premium.
"Telcos really need to think about building long-term customer relationships... especially in a low-growth environment," said Francis Barassi, vice president at mobile work management firm TOA Technologies, which signed a contract with Telefonica earlier this year.
Call centres increasingly deal with complex issues as clients use the internet to solve basic problems and domestic workers are more able to handle social nuances, said Mike Havard, founder of customer management consultancy Ember.
As Spanish employment costs fall, some foreign firms are also taking a closer look.
The switch in the telecoms sector - where the UGT union says Spanish call centre workers should earn a base salary of 13,000 euros this year - mirrors tentative signs of recovery in the country's car industry.
Manufacturers including Germany's Volkswagen (VOWG_p.DE) and Japan's Nissan Motor (7201.T) have both increased production in Spain this year.
"The question is whether more foreign companies will come here to make use of the low salary costs... The government's efforts should be focused in that direction," said Marcel Jansen from think tank Fedea.
On the other side of the cost equation sits Chile, where economic activity expanded 4.2 percent in June and the jobless rate fell to 6.2 percent in the second quarter.
The number of call centre workers serving Spanish clients there has fallen to 1,200 from 4,500 in 2007, according to Pablo Cruzat, manager of the Chilean Call Centre Business Association.
"It's a marketing move by the Spanish companies ... Nowadays an hour in Spain costs $25 or maybe $20, in Latin America it's between $6 and $9.50," he said.
Ember's Havard agreed the marketing mileage may be the most important element for the firms, which at their peak enjoyed a 25 percent to 30 percent cost advantage by going overseas.
Posted by Veronica Silva Cusi, news correspondent
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