The call center site selection process can be full of obstacles that you never would anticipate. As a result, it is critical to identify those challenges before you make that final location decision which in most cases will commit you to a five- to 10-year lease on a call center facility. To help you navigate these site selection issues, Site Selection Group has identified 10 mistakes to avoid during the call center site selection process.
1. Use quality demographic data and make sure you understand how to use it
There is more demographic data on the market than ever. The challenge is that the data needs to come from the same source if you are going to compare cities. A classic mistake is to try and utilize the data provided by local economic developers. The odds of one economic development organization using the same data and methodology as another group in a different city is extremely unlikely. Free data from the internet can be even more dangerous. If you want reliable data such as population, population growth, labor force, unemployment, age groups, educational attainment, college and military data then you will need to go to reliable sources such as ESRI or Experian; however, you need to be prepared to pay for it. Lastly, it is also very important to know how to score and weight the data so make sure to use some type of proven, balanced score card model using the correct data.
2. Online wage data is very dangerous
Labor costs account for approximately 70% to 80% of a call center’s operating cost. The classic comparison, $1 per hour in labor cost reduction pays for the entire rent of a call center facility, still holds strong today. As a result, you need to make sure you are using reliable industry data on wages in order to not miss the mark on your No. 1 expense. Due to this wide range of labor costs, it makes the site selection process very complicated as public data often does not accurately reflect the true labor rates that a call center needs to pay in a labor market to attract the quality of agents needed and to maintain reasonable employee attrition rates. As a result, the data from sources such as the U.S. Bureau of Labor Statistics and Salary.com are often out of date as soon as they are published and only provide a wide range of labor costs typically more linked to cost of living than true market wages. It is critical that you conduct employer interviews, talk with workforce development officials and meet with staffing agencies to gain current intelligence into wages.
3. Forecasting future labor conditions is often overlooked
Labor conditions change over time so what looks good today might not be good tomorrow. You can’t control the future; however, there are some ways to mitigate your risk of making a bad location decision by forecasting future labor conditions. A good example is the trend in the late 1990s when companies were flocking to very small labor markets where they could be the big fish in the little pond. This location strategy worked for around three to five years until many call centers in these small labor markets found themselves rehiring agents that had quit or were fired in the past. To combat this issue, there are many modern analytics such as LaborCast that can be used to forecast future labor supply and demand to calculate the longevity of a labor market as explained in a previous blog Forecasting Labor Supply and Demand.
4. Accurate call center competition data can be very difficult to find
Companies will often enter a labor market not knowing who they are competing against for labor. You can search job postings and ask around; however, companies often have unusual titles for call center workers which can make it difficult to find who is hiring. In addition, the call center industry is a cross vertical sector so there is no SIC or NAICS code to identify the location or number of workers that companies employ at call centers in a city. Local economic development organizations can be good resources; however, their data may also be limited. It is also important to consider indirect competitors such as retailers, major employers and other non-call center employers that pay similar wages to call center workers.
5. Call center saturation rates can be deceiving
Call center saturation is one of the core models utilized to measure the tightness of a labor market for call center workers. One of the key elements is to break the competition into higher-end call centers such as captive, in-house call centers versus lower-end call centers such as those operated by business process outsourcers who often pay lower wages. This will help you segment who you are directly competing against and more accurately assess the saturation for your targeted employee type. For a more detailed breakdown on call center saturation strategies, our whitepaper can be downloaded here: 2019 U.S. Call Center Saturation Report.
6. Economic incentives should be considered “icing on the cake”
Economic incentives are an incredible tool that many call centers utilize to minimize their up-front capital investment as well as their on-going operating expenses. Some of the best economic incentives to pursue include cash grants, real estate grants, training subsidies, tax abatements and restrictions on offering economic incentives to other call centers in the future. However, this “show me the money” mentality can cause a lot of problems if you are not careful. Make sure you have the right labor market before being lured to a location by an economic incentive package that you think is too good to pass up. Also remember that if you don’t meet your employment, payroll and capital investment requirements, you might find yourself paying back those incentives while garnering undesired local press coverage.
7. Don’t underestimate the bilingual skills of a labor market
English-Spanish bilingual skills continue to be in high demand which has fueled the growth of call center expansion along the U.S.-Mexico border. However, many cities away from the borders have fast-growing Hispanic populations. The problem is that many of the Hispanics in labor markets are 2ndgeneration U.S. residents and don’t even speak Spanish. As a result, it is critical to carefully evaluate the amount of population speaking both languages versus just having Hispanic heritage.
8. Be as flexible as possible on the required time zone
One of the most restricting site selection factors for call centers is the notorious time zone needs. The Mountain and Pacific time zones have seen tremendous call center activity as well as higher than normal wage inflation due to the influx of California corporate relocations and higher than average minimum wage increases. If you are able to open up your search to the Central and Eastern time zones then you can pick up a significant amount of less saturated, lower-cost places to set up your call center.
9. Don’t make site selection decisions based on real estate
There is currently enough vacated call center and back office facilities available in the U.S. to house almost 300,000 call center workstations. There is often a reason why these call centers closed so you just need to be careful you don’t choose a site just because of an available building. Oftentimes, the best labor markets don’t have a ready-to-go call center available so companies need to be prepared to wait a few months longer and spend a little more capital to get into the optimal locations.
10. Don’t underestimate the need for parking
Even if there is good real estate available, it doesn’t matter if there isn’t adequate parking for your employees. Call centers typically need a parking ratio of one employee to every 100- to 130-square-foot workstation. In addition, call centers typically run multiple shifts which creates even more parking traffic during shift changes. As a result, the optimal parking ratio is seven to 10 parking spaces per 1,000 square feet. This high ratio will usually eliminate downtown office buildings, traditional suburban office buildings and industrial sites. The remaining buildings typically include retail big boxes and unique suburban single-story buildings with adjacent land.
There are many roadblocks that companies can run into when trying to find the best call center location. Hopefully these 10 mistakes to avoid during the call center site selection process will help you make smarter location decisions in the future.