True Stories of Site Selection

1 May, 2002

By: James J. Trobaugh

The slowed economy means that most companies are continuing to examine ways to cut costs while still improving performance and customer satisfaction in their call centers. Although labor accounts for more than 70% of a call center’s costs, many companies still place more weight on other drivers that will ultimately effect the outcome of their search, including real estate, taxes, or an unwillingness to drive 2 or 3 hours from an airport to a selected community. Another factor is the internal politics of a company. A senior level executive might veto the communities or community that has been chosen for any variety of reasons.

Smaller communities throughout the United States and Canada have proven to be the land of opportunity for many companies, provided they meet the criteria outlined in the company’s profile and their internal team has the ability to validate the particular labor market. Don’t ever rely solely on the demographics, because what looks good on paper doesn’t always look good in person. You must visit the community. Companies must get comfortable with the idea of smaller communities. Abandoning saturated metro areas for smaller communities can equal a more available and quality workforce with lower wages and turnover. In addition, city and state officials will roll out the red carpet to welcome these new jobs to their communities by offering abundant incentives.

Here are some real-life case studies that document how three companies made their site location decisions based almost solely on labor. Through the site selection process that included a benchmark study and labor market analysis, community evaluation tours, tax & incentive analysis and real estate, we were able to uncover these “jewel in the rough” labor markets that have equaled very successful centers for each company.

A nationwide wireless services provider, Company A, needed more capacity to service increased demand for customer service by its rapidly growing subscriber base. Company A’s site selection objectives included a lower starting wage, reducing employee turnover, a qualified and able workforce and an enthusiastic community. After completing an in depth benchmark study that looked at over 650 cities, 8 to 10 cities which had both the labor and community characteristics Company A was seeking were recommended, of which 4 were short-listed. Subsequently, thorough on-the-ground evaluations of each community were conducted with members of our site selection team and Company A executives.

Since making the final selection of a small community in southern Texas, Company A reports the new center has the best performance metrics of any of their centers. The commitment of the community and the quality of the workforce have exceeded expectations. Additionally, our site selection team was able to secure numerous tax and economic incentives for Company A, including:

• The economic development authority donated 22 acres for the project at no charge.

• Cash grant was provided to assist with start-up costs.

• Real estate tax abatement was provided.

• Economic incentive package was given that is valued at over $2 million.

• Construction materials sales tax refund was provided.

A fast-track building, more than 100,000 square feet, was completed in just 4 months so that Company A could meet its deadline and begin taking calls on schedule.

Company A expects that the savings generated through its projected labor costs will result in a $23 million dollar benefit over the first 5 years of its lease term. They are saving $3.00 hour per full time employee and didn’t sacrifice labor quality. The labor saving equates to 200% of the annual real estate costs related to the transaction.

In another example, Company B engaged our site selection team to consolidate their 19 geographically diverse call centers into one location. This partially unionized company’s goals were to create standards and efficiencies in its customer service infrastructure and to reduce wages.

After a detailed analysis, which included demographic modeling, proprietary call center market intelligence and hands-on primary research, 1,200 US cities were evaluated and short-listed to 6.

Tours through each of the 6 communities were conducted and included meetings with city officials, local employers, college representatives, telecommunications providers and others to assess labor, financial incentives, telecommunications and real estate options.

Upon completion of the tours, a community in Illinois was selected. In the first 2 months of hiring for the center, Company B received more than 3,000 applications and their actual starting wage is $3.50 LESS than their target wage of $12.00 per hour originally identified. Over their 5 year lease term, this equates to a total labor savings of approximately $11 million dollars!

In a third and final example, Company C, an airline, had been outsourcing their call center fuctions to a third-party provider. Company C wanted more control over their customer service functions and therefore decided to take calls in-house. In addition to securing the best possible labor market, the company wanted their new center to be located within a 90-mile radius of a gateway airport so that their employees could utilize the flight benefits that are part of the overall benefits package with Company C.

To begin the site selection process, Company C determined their required employment skills (ie: education levels), desired wage and total number of employees necessary to staff the new center. Through a combination of demographic modeling, proprietary call center market intelligence and hands-on primary research, more than 1,200 cities across the US were evaluated. Upon completion of the process, a short list of 8 communities was further narrowed to 4 by Company C executives.

Tours through each of the four communities were conducted, and included meetings with local employers, city officials, community college representatives, telecommunications providers, and others to assess labor, financial incentives, telecommunications and real estate. Upon completion of the community tours, the final selection was made of a community in New Mexico. Company C received more than 1000 applications for employment before the center opened without any recruiting. The new location is right on target with Company C’s desired wage, and they received a $3,600 per employee training grant. The center has now been in operation for 2 years and reports great satisfaction with the quality of their employees and very minimal turnover.

Call center site selection is a critical business decision that can have a major effect on bottom-line profitability and overall operating success. Call centers play a significant role in achieving the highest levels of customer satisfaction, so finding the right people to service your client base is key. The days of having to be in the larger metro areas are over. These markets are so tight and saturated that it only fuels turnover, which equals more increased cost. However, due to their labor-intensive nature, assuring that a call center is located in a labor market positioned to optimize its process and function is essential to its success. An effective and successful site selection process will uncover a community optimally positioned for your call center operations.