Negotiating the Best Deal When Selecting a Site

Ironically, locating a teleservices center used to be easy, because there were few really suitable places. You were dependent on the quality of the telecommunications infrastructure, and if that wasn’t up to snuff, no amount of ready labor or cheap real estate would make a site acceptable.

Now, with telecom plentiful and very good nationwide, you can expand your search list to many areas that would formerly have been off limits. With that in mind, here are some of the things to consider when placing a new center or expanding an existing one.

Real Estate. Outside the major cities, this is one of the things, oddly, you have to worry about least. Space for call centers is plentiful and customizable to your heart’s content.

What you should look for depends entirely on the kind of call center you are creating, and the way that center relates to the rest of your company. For example, company culture will determine whether you will add seats to the existing center over time – perhaps doubling or tripling in size – or open multiple centers and keep them small. There are advantages to either method, but again, it depends on internal factors more than external.

People used to stay away from cities like New York and Los Angeles because the cost of office space was prohibitively high (as are the taxes). In recent years, though, cities and their near suburbs are more popular for some industries despite the high real estate costs. Some financial services businesses, for example, want their call centers closer to their trading desks and corporate headquarters, particularly when the call center is used to respond to Internet inquiries as well as voice calls.

Cities are beginning to awaken to the notion of call centers as job creation engines (except for New York – the city that never met a tax or regulation it didn’t like). Enterprise zones are areas that are tax-abated or have other incentives to allow businesses to open at lower cost, provided they hire a certain number of people.

While this is a good thing, and is starting to show results, people looking at urban locations for their centers have to balance these zoned advantages against higher urban telecom costs, poor services and infrastructure, and possibly deficient educational systems.

Another way to think about your real estate selection is from a facilities point of view: Is it somewhere people will want to work? You’re trying, after all, to hire and retain hundreds of people, keeping turnover low. Therefore, safety and security are issues. And along with this go amenities that cost relatively little, but attract workers who will stay and keep them from burning out.

Telecom. Take it as a given that you need more than you think you do. Imagine the most complicated and bandwidth-hungry application you can conceive of using, then double or triple it. If one location doesn’t make this possible, walk away. Someplace else will make it happen.

The last thing you want to do is commit to a locale that keeps you from using something you’ll come to need in three or four years. That was the case with ISDN a few years ago. People who wanted to run multisite call centers were stymied. They could either get a dedicated T1, or use one of the smaller, cheaper ISDN call routing systems that were coming out in 1994 and 1995. But with ISDN coverage woefully incomplete in the United States at that time, there were a lot of unhappy call center managers (and vendors, who couldn’t make sales to centers not covered by ISDN).

Within the United States, sophisticated telecommunications is the norm. While it is important for your call center site to have sophisticated telecommunications, you can find this level of sophistication even in the hinterlands.

And don’t forget the Internet. In the near future, the telcos will carry much of their voice traffic as data packets across newly crafted IP networks. But until then, you’ll still need the best, strongest Internet backbone you can find. Many more applications than just e-mail are going to depend on this. Maybe you’ll get it from a carrier like AT&T or MCI Worldcom, or maybe from one of the new alternate carriers like Qwest or Netcom. In any case, this is something that needs attending to before you commit to the location.

Government Incentives. There’s nothing like getting something subsidized to make a location more attractive. There are lots of ways governments sweeten the pot:

• Real estate tax breaks. They may give you a percentage off the cost of running your center for a few years into your operation, particularly if you’re considering a specialized office park that’s had government input, or an economically depressed area.

• Job creation credits. These are incentives based on the number of people you hire and keep on the payroll for a designated period of time. (This is in the authority’s interest because they make up the loss in the personal and sales taxes that the hired workers end up paying.)

• Along with that come training subsidies. To get you to locate in an area with lots of underemployed workers, they may offer to pick up the cost of training. This is a good incentive – ask for it if it’s not immediately on the table.

• Coordinated sweeteners. That is, a state or county can couple one or more tax advantages with favorable rates provided by the local telco, and/or something delivered at the local level by the town or county authorities.

The area of government incentives is one of the most creative (in legalistic and accounting terms). There’s no reason not to ask for what you want and see if it can be delivered, because call centers are so advantageous to a community that there’s often no reason not to make them happy. But remember that leverage is a function of size; the more people you might hire, the redder the carpet that’s rolled out for you.

A company that’s bringing jobs and hi-tech facilities into a city is worth incentives. If two or more locations are competing on an even playing field with regard to telecom, labor and amenities, then incentives are a critical lure – and something a call center planner should insist on. n

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