Call centers: The phones are ringing off the hook Anyone who has ever dialed an "800" or "888" number -- for business or for pleasure -- more than likely has interfaced with a person working in a call center. Call centers, which essentially support corporate sales, marketing and customer-service functions, are designed to handle either incoming or outgoing calls. The most familiar use of outgoing call centers is telemarketing. According to the Direct Marketing Association, call centers now account for more direct sales than direct mail.
Call-center industry statistics indicate that currently there are approximately 60,000 call centers operating in the United States. As reported recently in theSun-Times, an additional 10,000 call centers were expected to open during 1997. Approximately 3 million agents are now on line in various industries. This totals nearly 3% of the U.S. workforce.
So many people, so little space. This is the dilemma faced by corporations and teleservice providers when developing new call centers. Call centers are a significant investment (roughly $2 million before infrastructure, software integration and training costs); that puts the pressure on corporations to find the most cost-effective way to maintain this capability. Some choose to outsource the function to service providers such as Matrixx Marketing Inc. and Sitel Corp.; however, according to Dain-Bosworth Inc., a Minneapolis-based research firm, outsources account for only 7% of the teleservices industry. The large majority of companies build and operate their own facilities, and this has opened up a new and dynamic real estate market.
Not surprisingly, the primary factor in site selection for a call center is labor. It accounts for 60% to 70% of call-center operating costs. Secondary to labor is telecommunications infrastructure, including the presence of fiberoptic cable.
One of the most remarkable developments in the last few years has been the influx of telecommunications companies into secondary and tertiary markets, especially to the Northern Plains region, comprising North Dakota, South Dakota, Nebraska, Wyoming and Montana. According to a recent survey created and co-sponsored by The Alter Group and the International Association ofExecutives (NACORE), 71% of the corporate real estate executives surveyed said they were planning to build in the Northern Plains region. This magnetic pull is attributable in no small part to the growth of the telecommunications industry and call centers there.
Cities like Omaha, Neb. -- widely known as the "toll-free capital of the nation" -- now serve the customer-service and-processing needs of the entire country. MCI Communications, for example, opened its Mid-Continent Data Center in Omaha during 1996. Financial institutions such as Dial Bank and Citibank have both moved credit-card-processing operations to South Dakota.
For the call-center industry, this migration to the Northern Plains is hardly surprising. A recent study by location consultant Boyd Co. measured the costs of operating call centers in 19 cities and found Sioux Falls, S.D., to be the most inexpensive place to operate a call center. Omaha was not far behind. Some teleservice providers have gone further out to communities like Linton, N.D., where Rosenbluth International, the third-largest travel company in the world, has half of its reservation centers (the starting salary is $5.15/hour). The labor force in North Dakota is also educated and conscientious. This state has the highest SAT scores among high-school seniors in the country and an absenteeism rate of 2%, according to the Harvard Educational Review. It also helps that the Northern Plains states have expanded fiberoptic networks, a central time zone so agents can call people all over the country and extraordinary economic incentives. For example, South Dakota levies no personal or corporate income taxes. All of these factors have brought teleservice providers calling.
Once the site is in place, though, that still leaves the matter of the call center facility. Corporations and service providers are often severely pressed for time and routinely ask for turnaround times of six months. The Alter Group has amassed significant experience in developing call centers for companies such as Lender's Service Inc., AirTouch Cellular and The Prudential Insurance Co. of America. Learning empirically about what works best, we have created our proprietary ReadiDesignTM program, the industry's easiest and fastest project-delivery method for producing new office buildings, including call centers.
The CallCore series of ReadiDesignTM models are not prototypes, but have already been designed, priced and often permitted in various locations; yet, they can accommodate the specific requirements of their users. All told, ReadiDesignTM can save up to four months off the delivery schedule because of our extensive pre-planning.
It is important to note that the developer has an obligation tocall centers for residual use by other business units within the corporation or to be sublet on the market. The CallCore series has a value-added benefit because it has been designed to function as a call center today and a traditional single-story office tomorrow.
Expediting the development of call centers is vital considering the unparalleled growth in the industry. Corporations, having seen the potency of a customer-focused strategy, are spurring new call-center development all over the country. According to the July/August issue of Plants, Sites & Parks magazine, there were 39 new call centers developed in the past 12-month period. Fifteen are in the Midwest (which includes the Northern Plains); 12 are in the South; eight are in the Southwest; two are in the Mid-Atlantic; and one each is in New England and the Pacific Northwest. Florida leads all other states with six new centers; Oklahoma has five; and Arizona and Texas have four each.
Companies are increasingly going across the border to Canada, which has 25% lower labor costs and universal health care, relieving companies of significant costs. Places like New Brunswick, Manitoba, Winnipeg and Prince Edward Island offer favorable tax structures, polyglot or multilingual populations and advanced telecom infrastructures. The story is even more dramatic in Europe, where the industry is growing at an astonishing 40% a year and where the universe of 270,000 agents is growing by 75,000 agents annually, according to the London-based research firm, Datamonitor. In Asia, Singapore has opened 16 call centers since 1994 and has maintained low telecom rates.
Clearly the call center has arrived. Previously a neglected backroom at the company' branch office, it is now an industry with revenues of $7.1 billion and worldwide spending on operations between $55 billion and $100 billion. Therefore, developers must recognize their unique requirements and accommodate their accelerated schedules. Do any less and you will be disconnected from this burgeoning new development market.
Nikki Block, MCRS, is a senior vice president at Chicago-based The Alter Group.