Call-center industry booming nationwide
Advertiser Staff and News Services
When you dial that toll-free number to talk to your bank, cable provider or insurance company, there's a good chance you'll speak to one of thousands of workers in Delaware.
In the last two decades, Delaware has grabbed a significant portion of the fast-growing call-center industry. From offices where sometimes hundreds of workers sit in cubicles wearing headsets, a Delaware work force of more than 11,000 people fields incoming customer service calls and does telemarketing.
But Delaware may be at risk for losing some of its telephone call-center business to Southern states and to Canada as businesses seek out cities with lower healthcare, labor and telecommunications costs, according to a report by Princeton, N.J.-based The Boyd Co.
Staffing call centers carries high fixed costs for labor, facilities, electricity and phone lines. And today's technology, lower long-distance rates and deregulated phone systems mean the companies can set up virtually anywhere that fits their budget.
While observers say Wilmington maintains an edge in location, quality of life and existing pool of trained workers, it's one of the more expensive options available.
"Within the Northeast corridor, Wilmington could be the location of choice," said John Boyd, president of the site-selection consulting firm. "But it will be facing uphill competition from other areas of the country and Canada, which is rapidly becoming a desirable location for the industry."
Hawai'i is having similar issues with its call-center industry, which employs hundreds of workers in the state.
Some firms have been successful developing "niche" call centers — AT&T, for instance, is expanding its multilingual customer service center here, which employs several hundred workers.
But companies including Genesys, Federal Express, Northwest Airlines and Sprint PCS have closed their Hawai'i call centers, often when they consolidated operations in cheaper, larger Mainland centers.
Still, Boyd projects that call centers will be the nation's fastest-growing industry from 2002 to 2005 as electronic commerce continues to grow and companies seek to distinguish their reputation through customer service and help desks. Also, corporations and consumers are turning more to phone and Web services to pay bills and place orders in the wake of last year's anthrax-by-mail scare.
By 2005, Boyd projects the number of North American call centers will surge to 120,000 from 70,000, and the number of call-center workers will double to 5 million.
Companies spend billions each year operating call centers to serve customers and boost sales, but the cost varies widely among cities.
According to the study, the most expensive city was San Francisco, at $10.46 million, followed by Washington, New York, Jersey City, N.J., and Stamford, Conn. Wilmington came in 14th, at $9.27 million.
The cheapest places were all in Canada — Montreal; Halifax, Nova Scotia; Winnipeg, Manitoba; Edmonton, Alberta; and Saint John, New Brunswick, the lowest at $6.77 million a year. The cheapest U.S. cities all had annual costs under $8 million.
Call centers are bound to become vulnerable in a tough economic climate, said Lyn Kramer, managing director and partner at Kramer & Associates, a Cincinnati call-center consulting firm.
Companies are trying to shift more of their call volume to either automated voice-response systems or to the Web to shave expenses, Kramer said. Labor costs account for 70 to 78 percent of total call-center expenses, but 70 to 90 percent of all financial services calls and as much as 30 percent of utilities calls can be handled by automation, she said.
Cost-cutting used to mean competition from other areas of the country, particularly rural locations where salaries and rents are lower. But foreign sites such as India, Ireland, the Caribbean and the Philippines are becoming increasingly attractive because of deregulation, lower labor costs and a drop in international calling rates.
Canada in particular has become attractive for a growing number of companies, as its national healthcare system has lowered the cost of health benefits, while the current exchange rate — 63 Canadian cents to the U.S. dollar — makes other expenses much cheaper. On top of that, the common language makes the adjustment easy.
Already, companies such as New Yorkibased travel franchiser Cendant Corp.; Marriott International Inc. of Washington, D.C.; Armonk, N.Y.-based International Business Machines Corp.; and Rochester, N.Y.-based Xerox Corp. have set up call centers in New Brunswick instead of the United States.
But Delaware also enjoys a few natural advantages other areas can't duplicate, Boyd said.
Companies like its location midway between Washington and New York. The state continues to enjoy a reputation for a skilled work force and friendly business climate, he said, adding that it stands to benefit from efforts by many New York companies since the Sept. 11, 2001, terrorist attacks to spread out their operations.
"Companies that will leave Manhattan will look at places like Wilmington because it has Amtrak service to New York," Boyd said.
