With the current economy slowing and corporate expenditure under intense scrutiny, corporations are investigating the operating efficiency of their call centers and seeking alternative methods to reduce their operating costs and increase profitability. While many companies consider outsourcing the solution, in reality, corporations can "do it themselves" through alternative site selection strategies.

A CFO's first question always is, "How much can be saved and how much will it cost?" Considering that over 70% of a call center's annual expense goes towards labor costs while less than 5% is spent on real estate, the answer is clear - relocate call centers to locations with less expensive labor and minimal attrition risks. (See chart, "Typical Site Relocation Return On Investment".)

Research has concluded that corporations can expect approximately 10-20% labor costs savings by relocating away from a saturated call center environment. Other savings include attrition, savings achieved by lower turnover (usually 15-30% annually in new locations), economic incentives, and improved productivity and customer service. The total savings from labor cost, training, and real estate usually ranges from $3,000 to $6,000 per employee per year. Initial investment varies depending on the amount of furniture and equipment reused, severance packages, relocation packages for management and training costs. Many investment costs can be offset through local and state economic incentives, which vary from community to community. Overall, relocating can prove to be a very valuable business plan when analysis proves that the return on investment will be achieved in less than two years.

How Do You Find a Desirable Site?

Some corporations conduct site selection studies internally. Others outsource the function to various advisors, including site selection consultants, real estate companies or, at times, a combination of these resources. You must carefully consider how you conduct your analysis and whom you use to conduct it. The decision should always be labor not real estate driven - so be wary of consulting local, traditional real estate brokers.

Simple demographics will not provide the answer; multiple analyses of various data and research information will yield the best solution. Discovering the best call center communities requires digging beyond the traditional 300 MSA (Metropolitan Statistical Areas) Search, from which most companies derive their data. You must go beyond the obvious to find the 2,000 plus other locations throughout the United States and Canada ready to be capitalized for the benefit of their communities and, most notably, your company. The research conducted to find these locations should include:

• Understanding Your Employee's Psychographic Profile: A profile of the typical call center employee must be identified in order to evaluate their availability in a community. A typical call center employee usually has the following demographic traits: 25 to 32 years old, some college education, and a household income of $25,000 to $35,000.

• Reliable, Consistent Data: Consistent, reliable information is critical to the success of the project and can be very difficult to unearth. There are 25 to 30 sources that must be explored to retrieve the critical information needed to understand a community. Examples of these sources include the Bureau of Labor and Statistics, Federation of Tax Assessors, Economic Research Institute and the US Census Bureau. Inconsistent data can cause an entire analysis to become skewed. Therefore, the analysis must be set up based on an "apples-to-apples" comparison.

• Compare Data Utilizing Models: Comparative models need to be set up in order to compare statistics. By establishing weighted modeling analyses, a corporation is able to interpret the data, rather than glancing over the statistics.

• Understand the Competition and Labor Base: A true understanding of the real costs of labor and the presence of competition is critical in choosing the right location. This requires employee interviews, coordination with economic development groups, community visits, and job fairs to draw final conclusions. This process can be very time consuming and requires significant resources.

• Find the Right Real Estate: Even though real estate is not the driver in the decision, in the end it dictates how a decision is made. Retail conversions and build-to-suits may be the only alternative in some of the best communities. Additionally, the availability of qualified brokers, contractors and real estate experts is usually non-existent in many of the most-suitable cities. Seek people with call center experience to assist in negotiations and construction. Never narrow your decision down to one building in one city. Always have multiple back-up options.

• Negotiate the Best Economic Incentives: Economic incentives can bring significant value to a project. Let economic incentives be the "icing on the cake" for a location with the right labor force. Many of the smaller communities provide pretty substantial packages and incentives for call center users, from free land to cash grants. However, negotiating incentives and actually getting them will require you to seek external tax advice. Be prepared to seek a specialist.

Following the process outlined above ensures that your corporation will make a knowledgeable decision. Relocating to a non-saturated call center market, based on keen community research and market information, promotes efficiency, value and savings for your call center business unit.

How Do You Know it Works?

Some of the pioneers to test alternative site selection strategies are the third-party call center outsourcers such as Convergys, TeleTech and APAC. These companies take calls for corporate users and provide various services in these locations ranging from high-level technical support to low-end customer service. How efficiently they operate their call centers affects profits. Smaller communities offered them the best alternative by providing minimum competition, lower wages, lower turnover, quick staffing and economic incentives.

In a recent research report from Deloitte & Touche, it was determined that between 1997 and 2000 the number of new jobs announced in smaller communities has grown almost three-fold, from just 4,655 in 1997 to more than 12,800 in 2000. Now consultants across the world are recommending that corporations consider these alternative locations. The future of the call center industry may be in these communities, so it should definitely be in the minds of corporate users who are seeking to lower operating costs in this slowing economy.

About the Author:

King R. White is a founding member of the Site Selection Consulting Group of one of the largest global real estate service providers, Trammell Crow Company (Dallas, TX). This division is an independent global consulting group of Trammell Crow Company that exclusively provides corporations with strategic planning, demographic analysis, labor analysis, tenant representation, project management and facilities management services to call center users. The author can be reached at 214-979-6193 or kwhite@trammellcrow.com.

With the current economy slowing and corporate expenditure under intense scrutiny, corporations are investigating the operating efficiency of their call centers and seeking alternative methods to reduce their operating costs and increase profitability. While many companies consider outsourcing the solution, in reality, corporations can "do it themselves" through alternative site selection strategies.

A CFO's first question always is, "How much can be saved and how much will it cost?" Considering that over 70% of a call center's annual expense goes towards labor costs while less than 5% is spent on real estate, the answer is clear - relocate call centers to locations with less expensive labor and minimal attrition risks. (See chart, "Typical Site Relocation Return On Investment".)

Research has concluded that corporations can expect approximately 10-20% labor costs savings by relocating away from a saturated call center environment. Other savings include attrition, savings achieved by lower turnover (usually 15-30% annually in new locations), economic incentives, and improved productivity and customer service. The total savings from labor cost, training, and real estate usually ranges from $3,000 to $6,000 per employee per year. Initial investment varies depending on the amount of furniture and equipment reused, severance packages, relocation packages for management and training costs. Many investment costs can be offset through local and state economic incentives, which vary from community to community. Overall, relocating can prove to be a very valuable business plan when analysis proves that the return on investment will be achieved in less than two years.

How Do You Find a Desirable Site?

Some corporations conduct site selection studies internally. Others outsource the function to various advisors, including site selection consultants, real estate companies or, at times, a combination of these resources. You must carefully consider how you conduct your analysis and whom you use to conduct it. The decision should always be labor not real estate driven - so be wary of consulting local, traditional real estate brokers.

Simple demographics will not provide the answer; multiple analyses of various data and research information will yield the best solution. Discovering the best call center communities requires digging beyond the traditional 300 MSA (Metropolitan Statistical Areas) Search, from which most companies derive their data. You must go beyond the obvious to find the 2,000 plus other locations throughout the United States and Canada ready to be capitalized for the benefit of their communities and, most notably, your company. The research conducted to find these locations should include:

• Understanding Your Employee's Psychographic Profile: A profile of the typical call center employee must be identified in order to evaluate their availability in a community. A typical call center employee usually has the following demographic traits: 25 to 32 years old, some college education, and a household income of $25,000 to $35,000.

• Reliable, Consistent Data: Consistent, reliable information is critical to the success of the project and can be very difficult to unearth. There are 25 to 30 sources that must be explored to retrieve the critical information needed to understand a community. Examples of these sources include the Bureau of Labor and Statistics, Federation of Tax Assessors, Economic Research Institute and the US Census Bureau. Inconsistent data can cause an entire analysis to become skewed. Therefore, the analysis must be set up based on an "apples-to-apples" comparison.

• Compare Data Utilizing Models: Comparative models need to be set up in order to compare statistics. By establishing weighted modeling analyses, a corporation is able to interpret the data, rather than glancing over the statistics.

• Understand the Competition and Labor Base: A true understanding of the real costs of labor and the presence of competition is critical in choosing the right location. This requires employee interviews, coordination with economic development groups, community visits, and job fairs to draw final conclusions. This process can be very time consuming and requires significant resources.

• Find the Right Real Estate: Even though real estate is not the driver in the decision, in the end it dictates how a decision is made. Retail conversions and build-to-suits may be the only alternative in some of the best communities. Additionally, the availability of qualified brokers, contractors and real estate experts is usually non-existent in many of the most-suitable cities. Seek people with call center experience to assist in negotiations and construction. Never narrow your decision down to one building in one city. Always have multiple back-up options.

• Negotiate the Best Economic Incentives: Economic incentives can bring significant value to a project. Let economic incentives be the "icing on the cake" for a location with the right labor force. Many of the smaller communities provide pretty substantial packages and incentives for call center users, from free land to cash grants. However, negotiating incentives and actually getting them will require you to seek external tax advice. Be prepared to seek a specialist.

Following the process outlined above ensures that your corporation will make a knowledgeable decision. Relocating to a non-saturated call center market, based on keen community research and market information, promotes efficiency, value and savings for your call center business unit.

How Do You Know it Works?

Some of the pioneers to test alternative site selection strategies are the third-party call center outsourcers such as Convergys, TeleTech and APAC. These companies take calls for corporate users and provide various services in these locations ranging from high-level technical support to low-end customer service. How efficiently they operate their call centers affects profits. Smaller communities offered them the best alternative by providing minimum competition, lower wages, lower turnover, quick staffing and economic incentives.

In a recent research report from Deloitte & Touche, it was determined that between 1997 and 2000 the number of new jobs announced in smaller communities has grown almost three-fold, from just 4,655 in 1997 to more than 12,800 in 2000. Now consultants across the world are recommending that corporations consider these alternative locations. The future of the call center industry may be in these communities, so it should definitely be in the minds of corporate users who are seeking to lower operating costs in this slowing economy.

About the Author:

King R. White is a founding member of the Site Selection Consulting Group of one of the largest global real estate service providers, Trammell Crow Company (Dallas, TX). This division is an independent global consulting group of Trammell Crow Company that exclusively provides corporations with strategic planning, demographic analysis, labor analysis, tenant representation, project management and facilities management services to call center users. The author can be reached at 214-979-6193 or kwhite@trammellcrow.com.