Wednesday, October 17, 2007

City Centre Call Centers - A European quirk?

The prevailing wisdom in the call centre industry is that you build your call centre somewhere with cheap land prices and somewhere with cheap labour. Compared to labour costs, telephony is not nearly as expensive, so remoteness of location is only restricted by the availability of the labour supply.
This then is the prevailing wisdom and is valid for a lot of the customers I work with.

Yet it is far from universal and a very significant minority go against this prevailing wisdom and locate in city centres and pay above market wages.

At first sight this might seem an indulgence or a sign of inefficiency such as owning rather than leasing office buildings that then means the buildings have to be filled to be justified. In fact it is actually a well thought out business strategy with some very powerful justifications and may point to the way parts of the contact centre industry are going to be in future.

The companies who mostly locate their call centres in the heart of cities are financial services sector. They have a need to provide 24 hour service and do with relatively highly skilled agents. These agents are expensive to train (4 weeks +), expensive to recruit (all the background checks for anti-fraud) and carry out high-value transactions (because so much in financial service is automated with IVR/ Voice Portal or has moved to the web). You have to pay above market rates for these people and you have to be in an area where you can recruit them. It sounds obvious, but this is not recruiting from the majority of unemployed and means financial services companies' call centres need to be in area where there is a critical mass of talent. The final key factor for the agents is that they need to be able to get to work. Again, it sounds obvious, but out of town sites don't necessarily have public transport 24hrs a day and even if paying above market wages, you start restricting your labour pool (and your shift flexibility) considerably if you require employees to have a car.

The result is that in Europe quite a number of higher end call centres can be found in city central areas. The most striking for me was an international bank that ran its call centre covering eleven countries from a square in one of Spain's most expensive cities. This was pure economic decision because what they lost in terms of (much) higher property rents, they gained by being able to tap the multi-lingual, highly flexible student population of the city.

Of course, as IP Contact Centres evolve, things like homeshoring and community call centres (as announced today for Nottingham) may will end the tradition of large sheds in remote areas but even without the technology there are sound business reasons for Europe having city centre call centres.