Reintroduction of U.S. Call Center & Consumer Protection Act Could Impact Call Center Site Selection Strategies
by King White, on Jun 25, 2019 9:50:41 AM
Call center site selection strategies could be in for a change if the U.S. Call Center and Consumer Protection Act makes its way through Congress. The Act failed its first attempt in 2017; however, with Democrats controlling the House of Representatives and Republicans riding the protectionism and job creation bandwagon, this bipartisan legislation could gain some momentum this time. To help understand the impact on call center site selection strategies and the estimated 3.6 million call center jobs in the U.S., Site Selection Group reviewed the legislation and assessed the situation to help companies develop the optimal location strategy for their call centers.
What is the Call Center and Consumer Protection Act?
The bill was written to deter companies from sending U.S. call center jobs nearshore and offshore. In addition, it incentivizes companies to locate in the U.S. by creating a “blacklist” of companies sending call center jobs offshore. The following provides a summary of the its provisions:
- Make companies that shift call center jobs offshore ineligible for federal grants and guaranteed loans;
- Require call center work performed on federal contracts be done in the U.S. and that the federal government give preference to companies that do not offshore jobs when awarding contracts;
- Ensure that U.S. callers be told the location of the call center they are speaking with and offered the option of being transferred to a call center located in the U.S.
Politicians continue to build their case to support the bill
The bill is mostly supported by Democrats and some Republicans as well as unions like the Communications Workers of America (CWA). It claims to be bipartisan but appears to be leaning a little more on the side of Democrats.
Rep. Mark Pocan (D-Wisconsin) recently commented on the bill stating, “When corporations offshore American jobs, our communities and workers suffer the consequences, just so corporations can pay lower wages than what workers in the U.S. make. The U.S. Call Center Worker and Consumer Protection Act is smart policy – supported by both Republicans and Democrats – that will help keep call center jobs in the U.S. and help prevent the loss of economic activity in communities across the country. We must do more to support American workers and our economy, and we can start by ensuring that corporations that ship jobs overseas aren’t rewarded with federal grants and loans.”
Another congressman across the aisle, Rep. David McKinley (R-West Virginia), explained, “Protecting and creating American jobs should be Congress’ top priority. Plain and simple, we should not be rewarding companies for moving jobs offshore. This bill does not mandate that companies keep call centers here in America, but simply says if you move call center jobs offshore, you don’t receive funding from the government. This should be common sense.”
How will this impact your call center location decisions?
There are multiple ways the proposed bill would impact companies sending call center volume offshore. The following summarizes some of the positive and negative implications:
- Significant cost increases– The cost to perform this work onshore is roughly three times the cost of offshore locations like the Philippines and nearshore locations like Mexico, Guatemala, Honduras, Jamaica, Costa Rica and Colombia. These cost increases could cause an increase in the goods and services they are supporting.
- Improved customer service– If companies are forced to bring the work back onshore then consumers will be the winners by receiving better customer service.
- Labor shortages– The U.S. call center industry is already faced with tight labor conditions which will only become tighter if companies shift more jobs onshore.
- BPO offshore capacity challenges– Business process outsourcing (BPO) providers with a heavy offshore presence such as Concentrix, Sykes, Sitel, Teleperformance and Teletech could have a capacity glut from a bill like this.
- BPO revenues spike and profits shrink– If these BPO providers route calls to their U.S. call center sites then you could see their revenue spike as their billable rates for onshore sites are typically two to three times the cost of offshore. However, their profits will likely decrease as they carry empty offshore capacity and route the calls to the U.S. where profit margins are less.
- Artificial intelligence growth – Artificial intelligence (AI) utilization could get amplified to combat the increased cost and complexity of routing calls. If so, then the bill could actually cause more jobs to be lost as companies rapidly deploy AI solutions to deal with the new legislation.
Considering this proposed legislation failed to get approval in 2017 is a sign that there will be similar roadblocks today. The risk exists that the bill, if passed, could destabilize the call center industry and increase costs for consumers. The desire to keep jobs in the U.S. is laudable, but at what cost does it make sense? I guess we will have to leave it to the politicians to make that decision.