Oh Canada: eBay Closes B.C. Contact Center

| Contact Center/CRM Views and Analysis

Oh Canada: eBay Closes B.C. Contact Center

In what cynics say is another death knell for nearshore contact centers in Canada, and one more piece of evidence that beneath globalization is headquarters nationalism, online auction giant eBay is closing its Canadian contact center, which is located in Burnaby, British Columbia; Burnaby is part of the Metro Vancouver area.

Yet this move is one more illustration why traditional bricks-and-mortar centers are obsolete...

The Canadian Press reports that 700 agents will lose their jobs by the end of September as eBay pulls its work back across the border: to its Salt Lake City offices plus to other offices worldwide.

"While it is a difficult decision to close our Vancouver facility, we believe that consolidating our North America customer service operations will help accelerate our efforts to continually exceed buyer and seller expectations," the wire service quoted Chad O'Meara, vice-president of customer service for eBay Marketplaces.

It is too bad to see eBay shutter its shop. Despite the fanfare around the 2010 Winter Olympics, British Columbia including Metro Vancouver has been hard hit by the downturn and can ill-afford to lose this employment.

Naturally the eBay closure has become one more issue in the provincial election, which will take place May 12. The Globe and Mail reported that Opposition New Democratic Leader Carole James pointed to it as evidence to support her party's claim that Liberal Leader and sitting premier Gordon Campbell and his government has not been doing enough on the economy.

"'I'd like to see him take some time to talk to those [eBay] workers,'" she said. "'Gordon Campbell continues to say everything is fine while we continue to see these kinds of job losses, we see forest workers lose their job, we see some of the worst job losses in the country, here in British Columbia. So the first thing is to acknowledge there is a problem.'"

In response Campbell said B.C. businesses are going through difficult times but his government's tax regimes have helped ensure things aren't worse.

"'For the 700 people, that is not a good thing... I understand how difficult it will be for them, but I think they know we have done everything we can,'" the Liberal leader told the newspaper.

eBay is only the latest contact center to pull out of Canada, including British Columbia. West slammed the doors on its Victoria area center last year. Convergys and Dell have closed centers as well.

In fairness to eBay the closing is in many respects understandable. The firm, like many others has been rocked by a tough economy, even for low-priced goods sold on auction and through its online merchants. Its latest financial report, released in April, cited the downturn behind a drop in net income in 1Q 2009 to $357 million from $460 million in 1Q 2008.

By the same token Convergys, Dell, and West have also had to look at ways to cut costs. Padlocking redundant facilities when there is spare capacity elsewhere makes sense.

The high and unstable Canadian dollar related to the U.S. currency has made closing Canadian contact centers a viable option. It has climbed from as low as 62-65 cents in 2001-2002 to parity and higher in mid 2008. After dropping to 78 cents recently it has climbed back up to 86 cents. Site selectors figure that 80 cents is the highest Canadian currency can go to make it worth while to set up and keep nearshore contact centers there.

Yes Canadian workers are somewhat better educated, have a strong work ethic, and the government-sponsored healthcare system removes the benefits costs and makes working part-time more appealing. Yet those advantages are not for many firms enough to make up the spread and offset the comfort factor of locating/keeping operations on home territory.

It is this last issue that sticks in the craw, rightly or wrongly, of Canadians, Irish, and others that have seen American companies pull back Stateside in tough times and not just in contact centers either: these moves have been occurring in IT and in manufacturing as well. And it is causing resentment leading to possible political action.

The Globe and Mail reports that Canada is threatening legal action to force United States Steel Corp to resume production at two Ontario steel mills it acquired in its takeover of Stelco in 2007. The paper said that U.S. Steel, which took its first quarterly loss in five years due to auto production declines, is laying off more than 9,000 employees at six North America facilities.

"When U.S. Steel acquired Stelco Inc. in 2007, it committed to a series of undertakings regarding, among others, capital expenditures, research and development and production," said federal Industry Minister Tony Clement in a statement. "U.S. Steel has recently cut production and laid off employees at its Canadian operations.

"I am concerned by the actions of U.S. Steel in cutting operations in Canada and by the impact this will have on its workers. While I recognize that these are challenging economic times, we expect the company to live up to its commitments.

"I have sent U.S. Steel a demand letter under section 39 of the Investment Canada Act, asking the company to comply with its undertakings. A demand letter is the first step in the enforcement process under the Investment Canada Act."

No one is going to expect similar action with eBay, but what it does do is make the economic development agencies leery about attracting and keeping contact centers, especially when there are incentives involved even if and when the currency differential widens for a long period of time, or to serve domestic customers.

Canadian and American communities have seen contact centers pack up when the goodies stop coming. One development agency official called the process by the name of a prominent teleservices company.

In the case of brand name firms like eBay, and Dell closing operations, no matter the PR sends a signal, rightly or wrongly, to customers that all may not be well with them, making them leery about being customers. And that's not a good thing in today's economy,

eBay's Burnaby contact center is one of the coolest designwise and operationally I've ever seen, with plenty of light, curving space, glare-free interiors and virtually no sound; the agents use e-mail rather than voice. Yet in some ways it is the last of an era; the equivalent of the Pennsylvania Railroad's T-1 steam locomotive which appeared just as diesels were beginning to take over and the S.S. United States ocean liner that sail as travelers took to the skies.

For the future of contact centers is not in bricks-and-mortar facilities but in agents' homes where more can be accomplished for less: today's business mantra. Home agent programs i.e. telework can achieve gains of $10,000 to $20,000 per agent/year.

That may be the way forward for eBay, and for other companies caught up in the financial squeeze of both the downturn and a strong Canadian dollar. When Convergys shuttered operations in Alberta, it hired a number of the laid off staff as home-based agents.

eBay should do likewise, which may enable keeping some if not all of its Canadian workers while maintaining its presence in Canada. It can get some help from TransLink, Metro Vancouver's transit agency whose buses and nearby rapid transit line serve the eBay site. It offers an online telework kit.

While eBay is on a cost-saving run it should shutter its Salt Lake City site and move the agents there home too. The Salt Lake City area has become the center of a galaxy of home agent operations, the most prominent of which is JetBlue.

After all, eBay is the ultimate home-based business. What is more appropriate than contacts being handled at home, and at home and abroad?

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