A Changing Climate for Call Centers

Curtis Franklin Jr., Executive Editor | 3/9/2012 | 21 comments

Curtis Franklin Jr.
How important is offshoring to your financial services company's information strategy? If you're like many CIOs in the field, you've spent a nontrivial amount of time coordinating the activities of call centers in multiple locations and making sure international support and sales efforts appeared to be a seamless 24/7 entity to prospects, customers, and partners. If a bill gaining support in the House of Representatives becomes law, the economics around those call centers could change in substantial ways.

The US Call Center and Consumer Protection Act (HR 3596) has a rather straightforward purpose: Remove incentives for US companies to set up call centers outside the US. With the backing of the Communications Workers of America (the largest union representing telecommunication workers) and 77 co-sponsors in the House, including Democrats and Republicans, the bill has a reasonable chance of passage, even in an election year.

Of course, it would still have to pass the Senate and get the president's signature, but for the moment, let's pretend those could happen. What would the bill really mean for companies that depend on or are contemplating international call centers?

First up on the list of effects would be the loss of federal grants, loans, or loan guarantees for five years for any company that moves a call center out of the US. That would be a particularly bitter pill for companies with international operations, which often depend on government loans and guarantees to expand their business, carry out marketing programs, or finance capital purchases for new facilities. Financial services companies wouldn't be hit with the sort of inventory-financing difficulties that the loss of government loans and loan guarantees might mean, but there are still significant liabilities attached to the loss of such programs.

The penalties wouldn't stop there, of course. According to ComputerWorld, the bill contains provisions that would mandate a 120-day notice before a call center could be moved out of the US, require call center operators identify the country where the center is based, and require the operators to transfer the caller to a US call center if the caller requests it.

The first of these provisions wouldn't be a huge operational deal for most companies, though it would provide ample time for opponents of the move to turn it into a big deal for corporate PR. The other two are intended to be disruptive to operations (and they would be) by adding to the script for call center operators, breaking the flow of interaction with the caller, and providing an opportunity for a significant delay in the transaction as the call is transferred to a US center.

As I mentioned above, there is no guarantee the bill will become law. In addition to the institutional hurdles that must be cleared, the governments of India and the Philippines are lobbying against the bill and can deploy significant resources to this cause. Regardless of whether the bill passes in anything like its current form, its existence is an indication of the mood in Washington and much of the country. In a still-fragile economy, companies must be sensitive to the wishes, preferences, and, yes, prejudices of their customers. CIOs in financial services companies would do well to have contingency plans at the ready should the political and economic climates change for international call centers.

Keeping a close eye on Congress isn't a bad idea, either.

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David Wagner   A Changing Climate for Call Centers   3/12/2012 11:11:24 PM
Re: Protectionism and Corporate Responsiblity
You make a great point, outsourcing is a choice and I have no problem with their choice, but if a company chooses to go outside the it's boarders then they should not reap breaks from the government to do so.

I absolutely agree that no company should get a tax break for offshoring jobs. Not quite sure why we ever did that. Does Curt or anyone else know the history of this tax break and the thought process behind it?

David Wagner   A Changing Climate for Call Centers   3/12/2012 11:09:34 PM
Re: Protectionism and Corporate Responsiblity
I am not completely sold on the fact outsourcing actually does reduce cost.   I was speaking about this with a colleague recently, because outsourcing has hit us hard.  Sure outsourcing makes sense is some cases and not so much in others.

@Technocrat- The outsourcing equation has changed significantly in recent years. When the outsourcing craze started in the 1980's, it was a no brainer to do it. But labor costs have risen in the countries we've been outsourcing to so that now people have to take care to figure it out.

David Wagner   A Changing Climate for Call Centers   3/12/2012 11:06:55 PM
Re: Real people, any people
@Curt- I agree that xenophobic is an accurate term. However, I also select racist with intention. We all know that it is late night talk show fodder that people don't like how their call centers have moved to India. Now, the truth isn't they didn't all go to India. They went all over.

But the stereotype is so engrained in the American mind, that I think they assume all of these jobs went to non-whites. And the people who are complaining are mostly white men clinging to power.

There would definitely be a different reaction to this if all the jobs went to Australia.

But point taken that for some percentage of people it may not be race.
Technocrat   A Changing Climate for Call Centers   3/12/2012 8:42:46 PM
Re: Protectionism and Corporate Responsiblity

Well Said Curtis and I agree.  I think taxes are probably the best way to "entice" corporations to do their civic duty.   Can't quite get over how sad it actually is to have to resort to that, but the facts are quite clear.  


And I also couldn't agree more that this issue has been politicized to no end,  to the detriment of citizens and those outside the U.S.

CurtisFranklin   A Changing Climate for Call Centers   3/12/2012 1:38:24 PM
Re: Protectionism and Corporate Responsiblity
@megadl wrote:

Outsourcing exists because there is a need for it.

Absolutely, and that need is for reducing the cost of a particular part of doing business. There are some parts of the equation, like the difference in wages between countries, that a single nation's legislature can't address. There are other parts, like the way international operations and transaction are taxed, that a legislature can address. I think these latter issues are legitimate subjects for legislation. The xenophobic window dressing of identifying the location of a call center and offering the option of dealing with a US-based center, are distractions at best, and genuinely counter-productive at worst.
CurtisFranklin   A Changing Climate for Call Centers   3/12/2012 1:34:16 PM
Re: A Changing Climate for Call Centers
@angelfuego wrote:

I don't mind where the call center is located, just as long as the representative is able to address my needs. 

That's really the key, isn't it? I've had perhaps one or two instances in the last couple of years in which language was a real problem. Aside from that, I simply want to be able to pick up the phone, have someone help me solve a problem, and then get on with my day.
CurtisFranklin   A Changing Climate for Call Centers   3/12/2012 1:31:52 PM
Re: Protectionism and Corporate Responsiblity
@Technocrat wrote:

But I think in the Global World in which we live it is paramount that a country promote employment of it's citizens.

I absolutely agree. The tricky part seems to be figuring out how to do this while not demonizing people living in other countries. I tend to think that the tax code is the most effective way to direct behavior -- provide a favored tax position to those companies behaving in ways beneficial to the nation as a whole -- but that seems to be politically more difficult than simply (in effect) calling people in other countries names and saying that they're stealing "our" jobs.
CurtisFranklin   A Changing Climate for Call Centers   3/12/2012 12:42:49 PM
Re: Real people, any people
@David, I'm not sure I'd call the provisions "racist" -- I think "xenophobic" is more accurate. Either way, it's not a good thing, We're seeing legislators and politicians around the world prey on the fears of people who are enduring difficult economic times. It's almost always an attempt to mask the fact that the government can't really do anything effective about the problems. In this case, turning the call-center staff in another country into scapegoats is playing to the worst in human nature.
Technocrat   A Changing Climate for Call Centers   3/12/2012 12:19:54 PM
Re: Protectionism and Corporate Responsiblity

@megadl   I see your point, but I am not completely sold on the fact outsourcing actually does reduce cost.   I was speaking about this with a colleague recently, because outsourcing has hit us hard.  Sure outsourcing makes sense is some cases and not so much in others.  This whole argument of reducing cost is a bit of a Red Herring in my opinion.   Companies have been outsourcing for years, and their cost have been reduced, so they pass this savings on to a consumer based that has no disposable cash to buy their products ?

Seems to me to be counterproductive at best, I am sure most would rather a little higher price on goods( they are increasing anyway) and the income ( resulting from being employed) to afford them.  One thing is sure the cost of living never seems to go down, cutting corporate cost or not.

megadl   A Changing Climate for Call Centers   3/12/2012 11:41:21 AM
Re: Protectionism and Corporate Responsiblity
The repercussion of this new bill could make it very difficult for companies to exercise the freedom of choosing between outsourcing call centers and having them locally. The way businesses are able to better improve their services is to lower their costs and in order to do that, they have had to resort to outsourcing. Outsourcing exists because there is a need for it. Pushing companies to open local call centers could ultimately result in more local jobs however, it could also come at the price of increasing the costs for companies, unless the tax cuts are enough to offset the benefits of outsourcing, companies might start lowering costs elsewhere, which might not bode well for either the company or its consumers.
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