12 Location Factors to Consider During the Call Center Site Selection Process
by King White, on Sep 21, 2022 9:42:54 AM
It has become more difficult to find the best call center locations due to tight labor conditions, call center market saturation, and geopolitical risks in nearshore, offshore and onshore geographies. To help you evaluate locations, Site Selection Group has identified 12 location factors to consider during the search for your next call center location.
1. Labor availability
The biggest challenge facing call centers is the availability of labor. It is extremely challenging for both work-from-home and brick-and-mortar call centers. As a result, there is safety in numbers so the key is finding a large enough labor pool to support your hiring goals without pushing yourself into high-cost labor markets. It is a balancing act. A good rule of thumb is to not exceed 100 seats per 100,000 population within a metro area. The risks will become greater as you exceed 1,000 seats. These estimates will vary between onshore, nearshore, and offshore geographies based on the language needs, market saturation and other factors outlined below.
2. Labor costs
The cost of labor for call centers has increased by over 20% between 2020 to 2022 in the U.S. where entry-level wages are now $15 to $17 per hour. Many nearshore and offshore markets are seeing wage escalation of over 5% per year with wages ranging from $3 to $6 per hour depending on the geography. Therefore, it is critical to pick a location where call center wages are lower to start at a lower cost basis and to provide more runway before labor costs inflate high over time.
3. Call center saturation
One of the biggest threats to call center recruiting and staffing is your competitors in the labor market. Site Selection Group developed the call center saturation rate metric to help companies evaluate a market’s competitiveness. It is basically the percentage of the labor force employed in call centers. In the U.S., a market is often considered saturated when over 3% of the workforce is employed in call centers, while in nearshore and offshore locations the saturation threshold can often exceed 10%. It is critical to measure the call center saturation before making a location decision.
4. Economic incentives
Economic development organizations utilize economic incentives to help attract and retain companies. Call centers are often eligible for economic incentives such as cash grants, real estate grants, training subsidies, and tax abatements. U.S. locations typically offer a greater range of state and local economic incentives which can vary greatly from city to city and state to state. Nearshore and offshore locations are typically limited to tax holidays that are either linked to your company or the building in which you locate.
5. Language skills
The need to provide scalable support in multiple languages has grown as companies support customers across the globe. Spanish has the greatest demand while other languages such as Portuguese, French, Italian, and Russian are in high demand across Europe. Nearshore geographies can support Spanish and Portuguese while Eastern Europe and Africa are able to provide European languages. The Philippines and India mostly support English. Malaysia and Vietnam are good alternatives for Asian languages. It is important to accurately assess the availability and scalability of language skills as well as any premium in wages you might need to pay for them.
6. Time zones
The need for diversified time zones has always been a challenge in the call center industry. The follow-the-sun strategy becomes difficult as work moves offshore, which has given the Latin America and Caribbean region an advantage over offshore markets. It is critical to think through the time zone challenges and consider labor laws, wage premiums, and employee transportation subsidies that may impact your ability to successfully operate after hours.
7. Geopolitical risks
Crime, corruption, and politics can often have a major impact on your location selection, especially when navigating nearshore and offshore markets. Crime and corruption can often go hand-in-hand when you consider countries such as Mexico while politics could have a major toll in Nicaragua and Ukraine. It is critical to conduct extensive due diligence on these factors to avoid having to exit a market after you have already established yourself in the country.
8. Labor laws
Labor laws can create significant challenges if you don’t understand them. Within the U.S., labor laws have made it very difficult to fire someone in certain states such as California. In international locations, it is important to understand the unique labor laws which may include items such as retained holiday bonuses, severance rights, and the simple ability to terminate someone.
9. Employee benefits
Companies often overlook or don’t understand the total benefit load required to be a competitive employer in a particular location. The benefit load includes mandatory employment taxes which you can typically find easier; however, companies often overlook the supplemental benefits needed such as meal and transportation subsidies. The combined benefit package can add up to over 50% of your labor costs in many nearshores and offshore locations versus only 35% in the U.S. Bottom-line: It is important to carefully evaluate your total cost of employment.
10. Business continuity
Business continuity has long been a factor evaluated based on weather and natural disaster risks. However, COVID-19 created a new challenge as companies now need to understand if a location has infrastructure at the residential level in the event you plan a virtual location strategy or intend to send workers home during pandemics.
11. Real estate availability
Real estate is a necessary evil if you have a hub-and-spoke or facilities-based location strategy. There is a current flight to quality as it relates to call center office space so it is more important than ever to invest more in your facilities if you want to attract and retain talent. The good news is there are plenty of quality vacated call centers available; however, most of these sites are going to be 200 to 300 seats and greater which was historically the average call center size. Finding smaller sites has become challenging due to the demand for hub-and-spoke sites.
There are two ways to look at transportation. The first way is the accessibility to a location for management visits which requires access to major airports. Nearshore locations have gained a lot of momentum as companies got burned out on the challenges of flying to countries like India and the Philippines. The other transportation factor to consider is the employee commute. They need to be able to access the site by car or public transportation. In the U.S., most employees will drive to work while internationally it is more important to have public transportation to your site.
Call center site selection can be challenging when trying to do it on your own. There are so many moving parts and the availability of reliable location data can be spotty. It is important to leverage a site selection consultant who can accurately assess locations for you to maximize your ability to select the best location possible to set up your call center.