Tips for Choosing A
Call Center Site in Europe

By Terri Heath, SERGESKETTER & ASSOCIATES INC.

Call Centers have been steadily growing in the United States and are expected to continue to grow at a 6.5% annual rate well into the next century. European Call Centers are growing at a much faster pace. Presently, the European Call Center market is growing at approximately 40% per year, adding over 75,000 positions annually. An indicator of potential growth in Europe is to examine the present number of Call Center employees in the United States: a total of 3% of the work force. In Europe, Call Center employees compose only 0.2% of the work force in a marketplace 30% bigger than the U.S. Marketing research from Datamonitor indicated that European Call Center agents will grow from 350,000 in 1997 to over 600,000 by 2001. The European Direct Marketing Association predicts by the year 2000 telemarketing will account for 20% or $4.4 billion of Europe's $22 billion direct marketing industry.

There are many factors to consider when selecting a Call Center site, especially one that is overseas. These factors include decisions regarding the market to be served, the labor pool available, telecommunication needs, costs and incentives involved, other Call Centers located in the vicinity, and support provided from the region. All of these are important and specific to the company entering the new market with its Call Center. While there is no perfect region, there are locations that can meet the requirements of the American firm.

"One of the pitfalls of European site searches is generalizing by country when you should think very much in regional or local terms at an early stage in the process," says Bruce Donnelly, Vice President of Plant Location International, a subsidiary of Price Waterhouse LLP, which specializes in site selection consulting. A prime example of this is Germany. Often, Germany is generalized as being an expensive country with restrictive laws; on the contrary, one of its states, Saarland, has low costs, including personnel and real estate, and flexible laws, allowing Call Centers ease of operation.

Your Market
When evaluating where to locate, an important consideration is the market your company intends to serve. The European market is different from the United States' as there are language and culture differences that vary by country. Even in serving all of Europe, it is important for your company to keep in mind the countries that represent your largest markets. Most often, these are the countries that you want to serve without an accent and by people living in that particular environment.

In Europe, Germany and France represent 46% of the European Union's GDP. Additionally, Germany is Europe's largest economy, while France is Europe's second largest. Therefore, often these countries are the most important markets for U.S. companies entering Europe, and companies need to factor the importance of their largest markets into their decision on where to locate.

Stephen Miles, Managing Director of Lands' End Europe, states, "Through our Call Center in Saarland, Germany, our customers are talking to someone who understands the economy, the environment, the weather, the people, the customs, and everything else." Lands' End understood the importance of locating within one of its most important markets.

The Labor Pool
Your firm needs to understand the types of skills that are required, including the education level; specific knowledge-related skills, such as computer software; and multi-lingual capabilities. You need to evaluate the availability of the workforce to ensure that there are enough employees available in that particular location. Another factor to evaluate is employee turnover at other Call Centers in the region. High turnover equates to high cost, so it is a factor to consider. An additional factor is the productivity of the workforce that you will be hiring; again, looking at other Call Centers can demonstrate whether employees from this area offer a strong work ethic with high productivity.

Many companies seek multi-lingual capabilities to serve the European market. Some recent research has indicated that native language skills for some industries and applications are required in order to provide high quality service. Often, only a native speaker can effectively communicate the nuances in language that can impact the effectiveness of the transaction. People that understand and live in that culture are needed for applications that require more thought and problem-solving; those that are centered around standard, rote responses do not demand the same degree of cultural understanding. But, as Sara Chesters, a Senior Consultant with Viking Office Products, commented, "People like to do business with their own culture."

Locating in an area with the right people for your company should not be underestimated in importance. "Buildings you can build, buildings you can modify, telecommunications you can pay to have anything laid in the ground. The one thing you can't do is get people unless you're in the right area," commented Stephen Miles.

Telecommunications
Many countries and regions within Western Europe offer the same level of technology related to telecommunications. But, it is important to know your particular Call Center requirements and the availability and costs of this technology in each region that you are considering. With Europe's recent telecommunications deregulation, costs are competitive and therefore very similar from one area to another.

Costs Involved and Subsidies Offered
The costs involved with a Call Center are an important factor in its success although this is only one part of the equation. A fiscal analysis needs to be thoroughly completed, but it should be evaluated in conjunction with the objectives that the Call Center is trying to accomplish.

In examining the costs of a Call Center operation, a recent study conducted by the Center for Customer-Driven Quality at Purdue University demonstrated this breakdown in expenditure by category. Human resources represents 68% of the cost for Call Centers, telecommunications costs represent 13%, and real estate represents 4%. When examining different regions, all three of these costs are particularly important to evaluate, especially the labor rates. When comparing costs, it is also important that you compare apples with apples. In a few countries in Europe, such as the Netherlands and Belgium, companies must pay employees 13 months out of the year. Therefore, it is important to compare annual salaries rather than monthly wages in order to gain an accurate picture. Additionally, you should examine the loadings (benefits, social costs, etc.) on top of employees' salaries to understand the complete labor cost implications for your company.

It is common for regions to offer companies subsidies because of the employment and economic stimulation that these new firms will create. Therefore, as you consider locations, speak to government entities about the subsidies for capital investment and personnel training; additionally, ask about any on-going subsidies, especially with regard to personnel training.

Other Call Centers
You should benchmark against other Call Centers in an area under consideration to learn from these companies' operations and the decisions that they made. You should also note the number of other Call Centers in a region. Some areas, such as Ireland, are experiencing high agent turnover because of the large number of Call Centers that have already located there and the demand for native speakers of particular languages. Some areas will give your company exclusivity and not allow a competitive company within a certain radius of your Call Center.

Regional Support
When establishing a Call Center, particularly in a new country, it is vital to have strong support from the government and economic development agency. These entities can either facilitate or delay entry depending upon the level of bureaucracy and support that are given. An economic development agency should assist the company in the entire implementation process by locating available real estate and all the necessary suppliers that the firm needs. The amount of time that elapses from the decision point to an operational Call Center has a financial impact, so the quicker that it can be completed the better. America Online, for example, opened one of its European Call Centers in less than two months' time.

Summary
With the explosive growth of Call Centers, especially in Europe, it is important to approach this large market with strategic and careful thought in locating your Call Center(s). By evaluating the above issues, you can determine which region or regions offer your company the best opportunities for success.

You also must evaluate your best Call Center strategy for Europe. Many believe that two or three Call Center locations for servicing Europe is much more effective than a single, consolidated Call Center. You need to determine the right number of Call Centers that will achieve optimal effectiveness for your organization based upon your company goals in Europe. It is more effective to scrap the U.S. model for Call Centers and learn as much as possible about the European model. Companies often fail that simply try to adapt a U.S. Call Center model into a European environment.

You can learn more about overseas regions promoting Call Centers through targeted conferences. Two premiere conferences are the International Call Center Summit held in April each year and the International Call Center Conference held in September. These conferences focus on strategic issues that companies face when establishing an overseas Call Center. By attending these conferences, approaching economic development agencies within countries of interest, reading articles on this subject matter, and visiting regions under consideration, you will be better equipped to make the right decision for your company.