Evidence of No-Call Closings Unclear
A review of local media coverage by DM News has revealed that there have been at least four publicly announced call center closings since the beginning of October in which the DNC list was implicated. These include:
· FutureCall LLC slashed 137 jobs last week at its call center in Colorado Springs, CO, and may cut 50 of the remaining 63 jobs this week if no new work is found, the Associated Press reported. An executive vice president quoted in the report blamed the no-call list and said that FutureCall's current plan was to shut down the center down completely but that the company was seeking new clients.
· The Montana Standard's report of the closure of a Teleperformance USA call center in Butte, MT, resulting in a layoff of 100 workers. The newspaper quoted Teleperformance's vice president of human resources as saying "new federal regulations" affected the company's operations.
· The Hawk Eye, Burlington, IA, reported that APAC shut a local call center and slashed 100 jobs. Workers told the newspaper that the closure had been expected and was because of the no-call list. However, a company spokeswoman told DM News that the closure resulted from a company-wide review of APAC's capacity and use and was not being attributed to the no-call list.
· The Courier-Journal of Louisville, KY, noted that its parent corporation, Gannett Co. Inc., closed its telemarketing division, including an office in Louisville, on Oct. 1 as the no-call list activated. The newspaper quoted a Gannett spokeswoman as saying three full-time and 166 part-time workers were affected.
Gannett and Teleperformance USA representatives did not return phone calls by DM News.
Earlier this month, the Labor Department reported that unemployment in October fell to 6 percent from 6.1 percent in September and that non-farm payrolls rose by 126,000. However, American Teleservices Association executive director Tim Searcy said that figure doesn't reflect call center job losses, which are difficult to track and may be offset temporarily by the holiday seasonal job increase in the retail sector. Impact from the no-call list should be more visible in January and February, Searcy said.
In response to public pressure to implement the national no-call list, the ATA warned that many of the industry's employees stand to lose jobs. Often, these workers are difficult to employ -- single mothers, the disabled and people without college educations -- and live in rural areas where jobs are scarce, according to the trade group.
The ATA has estimated that the no-call list will affect 2 million workers, both those directly employed by the telemarketing industry and those who indirectly owe their jobs to revenue the industry generates.
According to U.S. Bureau of Labor Statistics 2001 data, the latest figures available, 437,510 Americans work as telemarketers. However, when counting employees by industry category, the bureau groups employees based on job description and places other workers who may use telemarketing in their jobs, such as insurance, wholesale and real estate sales agents, in other categories.
According to Direct Marketing Association figures, 4.1 million workers are employed in the outbound industry, Searcy said. The figure includes only self-declared telemarketing workers in outsourcing, not in-house workers and others embedded in other industries.
The ATA estimates that outbound call volumes have fallen 50 percent since the inception of the no-call list. As a result, it can be predicted that half of the call center workers no longer will be needed, which is how the ATA gets its 2 million figure, Searcy said.
Despite industry urgings, the Federal Trade Commission never commissioned a study of the economic effect the no-call list will have on the teleservices industry. What evidence exists has been largely anecdotal.
Call center industry analyst Sheila McGee-Smith, president of McGee-Smith Analytics, said the industry estimates are probably exaggerated. The outbound segment makes up only one-third of the call center industry, and a sizable portion of outbound providers enjoy no-call exemptions, such as business-to-business callers and existing-relationship marketers.
Overcapacity isn't a new issue in teleservices. In the mid-1990s, the success of outbound telemarketing as a sales channel produced a wave of call center construction that went overboard, said Art Schoeller, senior analyst at The Yankee Group, Boston.
Too many players got involved in call centers, and the industry crashed right before the Internet boom began, Schoeller said. This time around, call center providers foresaw the national no-call, and so transitioned their capacity into unaffected business lines such as inbound.
National no-call has been a long time coming, and industry groups have failed to rein in the most egregious disregarders of consumer preferences, Schoeller said.
"Consumer frustration has been building for years, and response rates to outbound campaigns have continued to decline, just as other channels have been declining," he said. "Some of the holdouts who tried to fight to the bitter end will go under, and some of them deserve it."
The no-call list will increase costs per acquisition and make the sale of marginal products unprofitable via outbound telemarketing, McGee-Smith said. High-end items, on which the effect of increased costs per acquisition will be lessened, will stay profitable, she said.
Teleservices providers can migrate to higher-ticket items, or take advantage of the growing market for inbound service, McGee-Smith said. Companies do much of their inbound work in-house, and many are looking at the cost advantages of outsourcing.
Nevertheless, the advent of overseas call center staffing and online sales and service may be narrowing inbound opportunities for call center outsourcers. Recently, a trend has emerged of companies blaming the closure of inbound call centers on increasing Internet sales. Examples include:
· Cheap Tickets Inc., a subsidiary of Cendant, will close its call center in Honolulu, where the company was founded, by year's end. Cheap Tickets told the Honolulu Star-Bulletin that call volume has been decreasing due to consumers becoming more familiar with online purchases.
· Southwest Airlines, which told economic officials in Little Rock, AR, on Nov. 4 that the company would close a 713-employee reservations center on Feb. 28. According to the Associated Press, the airline said that an increase in Internet sales made call center jobs unnecessary.
· In October, Ticketmaster announced that its Virginia Beach, VA, call center will close Dec. 18, eliminating 573 jobs. The company said 40 percent of its sales occurred online.