Call Center Boom in Canada as more US Companies March North

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MONTREAL - US companies are marching into Canada to take advantage of lower phone and labor costs to outsource their call center activities or to start some on their own. The result is a call center boom here.


It is a boom the Canadian government plans to keep going through increased incentives. Three US companies recently won grants to set up call centers in Montreal - Insight, Ryder Travel and Telespectrum.


"There's a lot more activity on the government front," Robert Acoca, director of sales and marketing for Sodema, a leading multi-lingual call center based here, said.


"The politicians have identified an industry that creates a lot of jobs and so finally they have put some money on the table which is great - for the Americans and for us."


Established Canadian call centers like his own are less likely to get money. "We have to grow by ourselves." But he believes incentives for US firms are good for the whole Canadian call center industry. "It means more jobs and an expanding number of call centers."


Price has a lot to do with call center growth. Many American companies are attracted by the weakness of the Canadian dollar - an American dollar is now worth C$1.45. US financial service firms find this especially attractive.


Nor does price enter the equation only from the Canadian side. US telephony faces tremendous price pressure because of unused AT&T phone capacity has expanded the amount of idle phone time.


The long-distance giant, Acoca said, has reduced outbound residential calling and stopped calling all residential markets with $7 or less in long distance usage - the bulk of the business.


But even given excess US capacity and the downward pressure on US prices as a result, Canadians feel their prices are more than competitive.


"US prices are in the low twenties per hour, anywhere from $20 to $22 and that's around C$35 while our market rate is C$28-C$32 so we can offer services at very competitive prices," Acoca said.


Another plus for Canadian vendors are the numbers US companies bring with them. "Let me give you an example - a major bank in Canada will have 5 million card holders. In the US you're talking about 30 to 40 million per bank.


"The numbers are simply so much more impressive. If we do 15,000 to 20,000 hours a month you're talking about C$350,000 a month. Now that's small for the US but huge for Canada."


The labor force in Canada and especially in Quebec is another attraction for US companies because they can find a high quality work force at very competitive prices.


Canadians have a neutral English accent which is important when companies telemarket in the US. In addition, Quebec offers a broad range of foreign language resources from Arabic to Russian and Spanish.


Moreover, US call centers are already facing labor shortages, especially in areas like Omaha, NE, where many call centers are located.


The migration north has already put some pressure on the Canadian and especially on the Quebec labor market. "They take jobs away from us and that makes labor more difficult to obtain," Acoca said.


He noted, however, that in outsourcing business labor shortages don't push up prices. The cost structure is such that hiking pay $1 an hour in call centers that do 500,000 hours a year boosts overhead by $500,000.


"We compete on working conditions and on client representation. People would much rather represent a large US bank on the phone than front for some small company."


But Acoca stressed that the entry of US giants has not been a competitive problem. "They have US contracts most of us don't. Take Sitel or Market USA. A lot of the business they bring to Canada is done for established US clients."


In addition, he said, there seems to be plenty of work for everybody with Canadian call centers getting overflow US business.


"One of our clients is a US bank. They need 2 million hours a year and use 10 call centers like ours to deliver that output. If they can save $2-$3 an hour on a volume of 15,000 hours it's a $250,000 a year saving for them."


Sodema also has a contract with a US telco to contact the American ethnic market, especially in Los Angeles and New York, and "there is a good chance they will grow that program and become more of a global call center."


If they do, Sodema would start handling global calls from anybody dealing with that company. The multi-lingual labor pool in Montreal, Acoca said, is very deep.


"So many languages are spoken here that we would have no trouble setting up a total Spanish language call center." With more US companies targeting Latin America, Quebec may come to rival Miami as call center Mecca.


"We're doing 8 languages now and the client will be rolling out in 14 languages before this year is out."
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