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Call Center Industry in Canada May Require Drastic Change

March 03, 2008

The success of the call center industry within a specific region can often depend upon those in power in that region. For Canada, New Brunswick has remained a call center capital. However, this dynamic industry is demanding change in government thinking.

According to economists, global competition, the high value of the Canadian dollar and the tight labor market are changing the future of the call center business. Independent economic consultant, David Campbell, argues that the area should put more emphasis on attracting financial services and hedge fund centers, which tend to pay higher salaries.

New Brunswick has a goal of becoming self-sufficient by 2026. Campbell warns that this goal will never be realized if the region continues to offer incentives to call centers that pay employees no more than $10 to $12 per hour.

“Those jobs filled a need, but now that we have low unemployment, we need to look for jobs that will contribute taxes that will pay for government services,” Campbell shared in a statement. “Essentially, we were attracting jobs that did not generate enough taxes to pay for the government services covering the worker.’’

As a result of his research, Campbell estimates the province needs to bring in jobs that pay salaries of at least $40,000 and $50,000 a year if it expects to get the kind of tax revenue it needs to become self-sufficient. The region will also struggle to persuade former residents to return or attract immigrants if it offers mostly lower paying jobs.

New Brunswick used government incentives in the early 1990s to greatly increase the number of call centers located within the province. Call centers for major companies — such as the Royal Bank, Purolator Courier, and IBM (News - Alert) — now operate there.

Much like other locations, New Brunswick has found that more sophisticated contact centers tend to remain, especially those in IT and financial services. Call centers that live from contract to contract and whose basic operations include calling out to sell everything from phone services to car insurance, have proven to be transient.

Statistics Canada recently released a report that said call centers traditionally have been viewed as regional economic tools and located in small urban centers with high unemployment and a skilled workforce. This report also warns the higher dollar has eroded Canada’s advantage as a preferred location for call centers.

It has been estimated that India has successfully captured as much as 60 percent of the world’s offshore call center business, with hundreds of thousands of workers answering calls for clients such as British Telecom, Dell, and AOL (News - Alert).

Statistics Canada cites that call centers are no longer just about cheap labor; they need to offer more value-added skills. For Nova Scotia, where about 20,000 people work in the industry, Teletech Holdings will lay off 485 workers at its Halifax call center by the end of April. On the other hand, Citco Group announced it may create as many as 325 jobs over the next six years.

At the end of the day, the call center and contact center industries will continue to change. The critical element for debate is whether that change is for the better or to the detriment of those it involves.
 
Susan J. Campbell is a contributing editor for TMC (News - Alert) and has also written for eastbiz.com. To see more of her articles, please visit her columnist page.
 
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