by King White, on Oct 27, 2015 1:15:15 PM
One of the primary objectives of economic development organizations is job creation. To help create jobs, economic development organizations and related state, county and city government entities provide economic incentives to companies in exchange for creating jobs for back office projects such as call centers and shared service centers. These back office operations are prime targets due to their density of employees and perception as a white-collar employer.
“The perception of call centers and shared service centers by economic developers has changed since the recession. Prior to the recession, many economic development organizations were hesitant to offer economic incentives; however, the value of these types of jobs has become more widely accepted as communities continue to diversify their local economies,” explains King White, CEO of Site Selection Group.
How many jobs need to be created to be eligible for economic incentives?
Economic incentives are typically offered for both new job creation and the retention of existing jobs. The typical threshold is approximately 50 or more jobs to attract economic incentives or to make it worth it to go through the application process. The economic incentives offered for net new jobs are often more than double what is offered for retaining jobs in a community. The availability and eligibility requirements vary greatly across the United States so the process can be very complicated — a key reason why many companies decide to utilize site selection consultants.
What kind of wages do employers need to pay to receive economic incentives?
The challenge with call centers is the wages are often too low to make them eligible for economic incentives. Shared service centers often have more success as they typically pay higher wages. For example, there are many tertiary markets across Texas that will offer incentives for wages as low as $9 to $10 per hour while other states such as Kentucky or Arkansas are based on the average wage within the county where the facility is located. The economic incentives often come in the form of cash grants, payroll tax rebates, tax credits and training grants.
Economic incentive clawback provisions should be carefully reviewed
Due to fluctuating employment levels at call centers, it is critical to carefully review the clawback provisions of the economic incentive programs. Many states and cities have shifted to a pay-on-performance model, which is great for economic development organizations but doesn’t help companies with off-setting their up-front capital investment. In any event, it is critical for companies to understand the ramifications of paying back the economic incentives if they fall out of compliance due to layoffs or restructuring of employee compensation.
What call center and shared service centers have received economic incentives?
The following table identifies some of the recent call center and shared service center projects that have received economic incentives across the United States.
Recent Economic Incentives Awarded
to Call Centers & Shared Service Centers
| Company | Location | Incentive Value ($M) | Jobs Created | Capital Investment ($M) | Project type |
|---|---|---|---|---|---|
| General Electric | Cincinnati, OH | $51.60 | 2,000 | $0.00 | New Project |
| Atlantic City Contact Center | Atlantic City, NJ | $33.00 | 332 | $0.00 | New Project |
| Advance Auto Parts | Raleigh, NC | $17.40 | 600 | $5.00 | New Project |
| Council Bluffs, IA | $16.80 | 70 | $1,000.00 | Expansion | |
| United Airlines | Denver, CO | $13.20 | 200 | $40.00 | Expansion |
| United Technologies | Palm Beach, FL | $10.56 | 380 | $115.00 | New Project |
| Johnson & Johnson | Tampa, FL | $9.10 | 700 | $23.50 | New Project |
| Community Health Systems | Nashville, TN | $8.00 | 1,500 | $66.00 | New Project |
| General Dynamics | London, KY | $6.80 | 600 | $13.77 | New Project |
| Lowe's | Indianapolis, IN | $5.60 | 1,000 | $20.50 | New Project |
| Barclays | Cincinnati, OH | $5.00 | 1,500 | $9.30 | New Project |
| Teleperformance USA | Louisville, KY | $3.80 | 750 | $13.20 | New Project |
| Lutheran Health Network | Fort Wayne, IN | $3.49 | 320 | $6.00 | Expansion |
| AT&T | Oklahoma City, OK | $3.16 | 140 | $0.00 | Expansion |
| General Dynamics | Winchester, KY | $2.50 | 150 | $12.00 | New Project |
| EOS USA | Somerset, KY | $2.00 | 150 | $4.00 | New Project |
| Xceligent | Blue Springs, MO | $1.52 | 211 | $0.81 | Expansion |
| StarTek | Hamilton, OH | $1.33 | 682 | $0.00 | New Project |
| General Motors | Arlington, AZ | $1.30 | 738 | $17.74 | Expansion |
| US Cellular | Tulsa, OK | $1.26 | 61 | $0.00 | Expansion |
| kgb USA | Memphis, TN | $1.25 | 1,000 | $8.00 | Expansion |
| Firstsource Group USA | Louisville, KY | $1.20 | 125 | $1.90 | New Project |
| Prudential Financial | El Paso, TX | $1.15 | 300 | $0.00 | New Project |
| Senture | Annville, KY | $1.00 | 89 | $3.00 | New Project |
| S&P Data | Troy, MI | $1.00 | 420 | $4.40 | New Project |
| Springleaf Financial | New Castle, DE | $0.82 | 235 | $0.60 | New Project |
| State Collection Service | Multiple locations, WI | $0.75 | 300 | $5.00 | Expansion |
| Alliance Data Systems | Rio Rancho, NM | $0.74 | 181 | $0.00 | Expansion |
| Taylor Law | Jeffersontown, KY | $0.70 | 100 | $0.84 | Expansion |
| Asurion | Las Vegas, NV | $0.68 | 500 | $4.43 | New Project |
| S&P Data | Rio Rancho, NM | $0.63 | 425 | $0.00 | New Project |
| Laserwords | Madison, WI | $0.57 | 286 | $1.20 | Expansion |
| NOVO 1 | Grand Rapids, MI | $0.55 | 287 | $1.50 | New Project |
| IBM | East Lansing, MI | $0.50 | 100 | $0.20 | Expansion |
Conclusions
Call centers and shared service centers have become a staple employer in most communities around the United States. Companies should pursue economic incentives if they are considering creating jobs at existing or new call center facilities or simply renewing their lease at an existing site. It is critical to investigate the availability of these cash grants, payroll tax rebates, tax credits and training grants to make sure companies are making an informed site selection decision.
