Callback for phone-in help centers

Call centers became a mainstay of economic diversification in Las Vegas in the 1990s and early 2000s, as banks, retailers and other businesses sought out the city’s abundant, affordable labor.

Developers built speculative offices with open floors and acres of parking spaces in anticipation of a steady stream of customer-service operations. And for the better part of 15 years, companies filled up those buildings in droves, starting with Citibank in the late 1980s and continuing through 2004 with major brands including Ford Motor Credit, Williams-Sonoma, Lillian Vernon, Sallie Mae, Expedia, Zappos.com, AAA and HSBC.

Then it stopped.

“It started to die down very slowly, and then there was nothing,” said Somer Hollingsworth, president and chief executive of the Nevada Development Authority. “And we had been big in call centers. I thought we were doing something wrong.”

‘A SIGNIFICANT BACKLASH’

The authority’s recruiting efforts weren’t the problem, observers say. Rather, a nationwide push to move call centers to overseas markets with cheaper labor was behind the slowdown.

But observers see signs of new life in the domestic customer-service sector.

Companies including Dell, CapitalOne, Delta Air Lines, AT&T, Netflix, Apple and JPMorgan have either brought call centers back to the United States or made calculated decisions to keep new customer-service functions in-country. Hollingsworth has fielded nearly half a dozen serious requests for information from call-center operators in the last year, compared with no queries in 2004 and 2005.

“We’re getting a lot of calls from around the country now,” Hollingsworth said. “We’re taking a look at them, and we’ll try to bring some of them in.”

Paul Stockford, chief analyst at customer-relations and communications company Saddletree Research, said a “general unhappiness” with offshored call centers is spurring a nationwide repatriation of customer-service operations. And Las Vegas, where a deep, round-the-clock labor pool and relatively low wages drew in numerous call centers a decade ago, stands to benefit economically from the return of customer-care businesses.

“(Overseas call centers) have become politically unpopular,” Stockford said. “It’s just not appropriate to have an agent on the other end of the phone who doesn’t speak English as a first language. It’s very difficult to communicate and get things done to a customer’s satisfaction.”

Offshoring customer service began around 2000, when e-commerce sent consumers online to conduct financial business and retail transactions via e-mail and Web sites, Stockford said. In developing nations, companies found a ready supply of educated workers who could write well in English, and who also commanded roughly 7 percent of the wages U.S. workers earned, Boston research firm Celent reports. Thus were written customer-service functions sent overseas. Forrester Research of Cambridge, Mass., reported in 2002 that 1.7 million service jobs could decamp the United States between 2003 and 2010.

But companies may have taken offshoring too far when they routed customers’ phone calls across the globe as well. Language barriers that didn’t exist with the written word emerged once consumers and service representatives connected by phone.

“You had consumers complaining, ‘I couldn’t understand a thing they were saying, and they had to transfer me around because they couldn’t understand me,'” Stockford said.

The result: a “significant backlash” among dissatisfied consumers and growing concerns about the safety of personal financial details sent outside the country, Stockford said.

Add to that a law pending before the House of Representatives that would require customer-service workers to reveal their locations and give consumers the option of working with a U.S.-based representative, and you have a growing pressure to restore call-center jobs here.

Brad Cleveland, president of the International Customer Management Institute in Maryland, said simple growth is also spurring a resurgence in domestic customer-service operations.

The economy slowed right after the terrorist attacks of Sept. 11, 2001, and that meant less business for the companies who serve consumers. And many businesses felt Web correspondence would largely replace phonecentric customer service within a decade, so they reined in spending on new call centers altogether, Cleveland said.

Broad automation, however, generated more service needs than ever. Investment brokerages allow stock trades online, for example, and utilities enable customers to modify their accounts online. Even municipal governments are launching call centers, centralizing citizen phone-ins on everything from questions about tax assessments to reports of potholes. The upshot: a proliferation of contact points at which consumers might need real-time assistance or advice, Cleveland said.

“Companies are finding that they’re not displacing the fixed sum of contacts, but growing the pie of people who need to reach agent-assisted services,” Cleveland said.

HOMESHORING A TREND

New customer-help jobs in the United States aren’t confined to call centers.

Companies are also “home-shoring” — bringing on independent contractors who handle customer calls from home offices.

Technologies such as high-speed Internet access and voice-over-Internet-protocol phone service have made homeshoring practical for many home workers. And because it eliminates the expenses of maintaining a call center, homeshoring is “almost always less expensive (for businesses) than a bricks-and-mortar call center,” said Mary Bartlett, vice president of talent management for Florida homeshoring company Arise Virtual Solutions.

A report from Massachusetts research firm IDC predicted that the number of homeshoring workers in the United States will triple between now and 2010, from 100,000 to 300,000 agents.

Southern Nevada will see some of that growth.

Arise, which has 42 corporate clients including Walgreens, Virgin America and AAA, had two agents in Las Vegas in 2006. Today, the company has 134 local agents, with plans for 500 here by year’s end. Arise will nearly double its roster of representatives by the end of 2007, from 5,000 to 9,000 workers nationwide.

“Based on the inquiries we’re getting, we don’t see this (homeshoring) trend dropping anytime soon,” Bartlett said. “Everyone wants that immediacy. People are not satisfied when they call a phone number and have to press a bunch of different options.”

GOOD FOR THE ECONOMY?

Las Vegas is well-positioned to recapture a share of the resurgent domestic call-center market, industry watchers say.

In addition to an expanding work force that’s accustomed to graveyard and swing shifts, the city harbors the large fiberoptic networks that telecommunications-oriented companies need, Hollingsworth said. And because of the local economy’s heavy emphasis on hospitality, the labor pool is also well-versed in effective customer service — “something companies have to train like crazy in other parts of the country,” Hollingsworth said.

Call centers haven’t traditionally paid high wages; the operations that opened in Las Vegas in the 1990s and early 2000s averaged around $9 an hour, Hollingsworth said.

Yet, experts said customer-service centers can boost local economies in several ways.

Some analysts estimate that one call-center job creates five additional positions in support services such as information technology, human resources and training, among other areas, Cleveland said.

“You have to look at the job situation holistically,” he said. “The ripple effect that call centers create in the economy is potentially huge, and a lot of the jobs created beyond the immediate call center are higher-level jobs with higher salaries.”

A spike in call-center queries would spill over into the real estate and furniture markets as well, helping developers fill large office spaces and driving major purchases of office furnishings and equipment, Hollingsworth said. Customer-service operations also tend to bring in big volumes of jobs all at once — 100 or more positions per company, he added. And the four or five call-center operations that have contacted the development authority in recent months have quoted higher-than-average wages ranging from $18 to $30 an hour.

Starting pay for Arise agents ranges from $10 to $14 an hour, though high-performing representatives who handle complex service calls make more than $20 an hour.

“If the wages and benefits are there, call centers can offer a move-up for a lot of people in town,” Hollingsworth said.

Most important, consultants say, are the long-term prospects for customer-service operations: Call centers are an increasingly important business function in every sector of the economy, Cleveland said, and are thus unlikely to disappear.

Stockford agreed that focusing on attracting customer-service jobs could be a long-term boon to Southern Nevada’s economy.

“Unless customers go away,” he said, “there will always be a need for customer service.”