Low Cost East Germany Pushed as US Call Center Site

BERLIN — A German government agency is pushing East Germany as a low-cost, incentive-rich location for US call centers mounting German or pan-European DM campaigns.

The Industrial Investment Council(IIC) is based in the once and future German capital and is financed by the Bonn government and the governments of the six “new” states that made up the former, so-called German Democratic Republic.

Its mission is to attract foreign capital able to generate jobs in a region of Germany where a 20 percent unemployment rate is not uncommon. As in other countries call centers are seen as job-creating machines.

And while the agency offers the usual tax and other incentives that have become the rule in call center rivals like Ireland and Scotland, the Germans are pushing low cost, a minimum of red tape and no union interference as added attractions.

“In Berlin you can get permission to set up a call center in 24 hours and you don't need a license the way you do in West Germany,” Frank Martens, the IIC's TK said during the DMA conference in San Francisco last month.

Martens admits that Germany as a whole and East Germany in particular came late to the call center boom but argued that the Germans are making up for lost time and are determined to make the East the next Ireland and Scotland.

He touts the $30 billion investment in state of the art telecom infrastructure in East Germany, which he claims is the most modern in the world.

The GDR's telecom structure was badly decayed when the Berlin wall fell with telephone cables still stamped with the Nazi swastika, meaning the communist investment in modernization was close to nil.

Today East Germany houses 50 call center operators with 95 call centers employing 7,400 agents, a miniscule 0.12 percent of the region's work force. Most of the centers are bunched in the Berlin area.

IBM and Allstate have call centers in East Germany; so do mail order giants Otto Versand and Quelle as does Mannesmann, an industrial heavyweight.

Real estate and labor costs are cheap, much cheaper than in pricey West Germany. Labor markets are flexible, staff turnover is low and the governments offer generous incentives to foreign companies.

Trained staff is much easier to find than in West Germany, Martens said, and cited Dun & Bradstreet, Otto and Telegate as proof that DM companies are more than satisfied with available personnel.

Berlin offers one of the largest multi-lingual labor pools in the world, Martens said. According to the Federal Office of Statistics Berlin has 20,500 native English speakers, 11,000 Italians, 9,000 French and 6,500 Spaniards.

Numbers are similar for Eastern Europe with 34,600 Poles and 23,500 Russians residing in the Greater Berlin region. In addition, the city has 140,000 students many of whom speak foreign languages. Finally, there is a labor pool of Germans who used to work for the Allies.

Labor market flexibility keeps costs much lower even than in Ireland and Scotland. Call centers don't pay bonuses that are standard in West Germany.

A survey of call center operators found that 40 percent pay only performance related bonuses, don't pay holiday and/or Christmas bonuses and that more than 80 percent don't pay a 13th month salary, standard practice in the West.

Real estate is cheap and available. The region has a glut of newly-built office space with vacancy rates up to 34 percent. Buildings in top locations rent for as little as $6 a square foot.

The IIC has been in business since late in 1996 and is only now getting off the ground. It has an office in New York and plans a presence at major US trade shows.

An English-language website can be found at www.iic.de

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