July 2009 Archives

I was pleased to read that call center outsourcer Ryla is planning to hire an additional 600 full-time employees for its center in Saraland, Ala.

According to the article, Ryla offers a range of customized customer contact services, including inbound customer care, tech support, help desk, outbound data collection, surveys, automated messaging, retention programs and back office process support. It also focuses on delivering on-demand, project-based solutions requiring quick ramp-up for crisis response, seasonal retail and political needs - a growing niche in the contact center industry for which there are few providers. Founded in 2001, the company currently employs 550 full-time staff at its Saraland facility and 2,500 company-wide.

The only thing I wondered is what contracts the company recently won -- and what is driving the current growth.

This news is like a shaft of light breaking through the storm clouds - because, let's face it, for the past couple of years we've been witnessing a lot more call center closings than openings. At the very least, most companies are cutting back staffing at their centers. It's a stark contrast compared to 2006, when it seemed two centers were opening for every one that closed or downsized.

The way I look at it, there are two basic reasons why the call center industry is shrinking right now: Number one is the economy. People simply aren't buying goods and services the way they used to, so call volume has dropped significantly. This is especially true for the retail and ecommerce segments, which have been hammered by the recession. It's also true for the travel and hospitality industries as well. Yes, it's true that some industries haven't had to make serious cuts yet - for example, banks, utility companies, insurance companies and service providers still need to provide live customer service for years to come, simply because that is the nature of those more "commodity-type" industries.

That leads to the number two reason why I think the call center industry is shrinking right now: These companies are increasingly automating their customer service using IVR and Web-based self-service options. Now, you might argue that that isn't really "shrinkage" - that it is, in fact, growth, because the companies that deploy these automated systems tend to save on labor costs and gain new efficiencies (dare I say even improve customer service?). And consumers are growing increasingly accepting of these speech-enabled self-serve systems. So when I say automation is causing the industry to shrink, what I really mean is that it is reducing demand for live agents - not that it is causing a reduction in call volume. And of course, the vendors of these automated systems only stand to gain from the trend.

One thing I've learned in my past few years of covering the industry is that there's no reliable way for measuring all of this. For example, people frequently ask me if there's any "running list" of contact center outsourcers in the U.S., including the clients they serve, how many agents they employ and how many inbound/outbound contacts they handle -- or, say, any other combination of interesting stats -- and I can tell you that no such resource exists that I know of. One reason why is that most outsourcers go to contract under strict non-disclosure agreements: which outsourcer a firm uses is considered a "competitive advantage," so it's usually information that the outsourcer is prohibited from sharing. Sometimes an outsourcer will list some of its top clients on it Website -- just to validate and position itself in the marketplace -- but very often you can't tell whether the clients listed are current or past ones - nor do you have any clue how big the contract is/was. Another thing to consider is that many firms jump around from outsourcer to outsourcer (a friend of mine once joked that its like switching insurance carriers, you just never stay with the same one for long) - and then there's also the fact the many companies are multi-national and thus have centers and customers overseas or near-shore as well.

So the bottom line is, it's extremely difficult, if not impossible, to measure the growth of the industry, and, by the same token, the effects of the recession on it, simply based on the number of reports about this center opening or that center closing - nor is there any reliable source for tracking its growth or shrinkage, due to things like automation or battered consumer confidence, either. (However I will give some credit to the leading market research firms covering the industry, such as Datamonitor -- I do think they do a pretty good job of providing a picture of the industry's overall health.) That's why I recommend taking any reports about the industry shrinking or growing with a grain of salt.