Labor Void Threatens Domestic Contact Centers
10 March, 2022
A Gap in Talent is Following Closely Behind
By Jason Sterns, VP of Business Development
The U.S. labor market is unrecognizable.
Economists are at a loss trying to predict what pattern will emerge. In the olden times – the days prior to COVID-19 – economists would describe the economic elephant in detail as each of them examined the beast’s tail, the other the trunk, while another described the ears. But at the end of the day, they would all agree they were describing the same animal.
That’s not the case anymore.
Today, when one economist is describing the labor market, she may be describing an aardvark, while another is describing a zebra while a third is attempting to explain a creature from the Andromeda sector at the far side of universe.
The Organization for Economic Cooperation and Development reports that between the fourth quarters of 2019 and 2021, the labor-force participation rate—the share of the population ages 15 to 64 either working or looking for work—dropped 0.7 percentage point in the U.S. It’s no wonder why business operators are tapping out.
We thought we had it figured out after the Delta variant crippled the national economy. We did learn, however, that each emerging variant of COVID exposed a new weakness in the labor and business model of domestic contact centers. This labor void accentuated several gaps:
↓ Productivity/Capability Gap
- In-house contact centers are unable to manage the volume of customer calls they are receiving. The recorded message, “higher volumes than normal” doesn’t begin to address the wait or hold times callers have to endure when they call their preferred brands. On the other end of the line, agents who remain in the centers are overworked with little support from their managers. And while they are overworked, they aren’t getting the training they need to handle ever more complex calls.
↓ Political & Legislative Understanding Gap
- Some so-called emerging nations got it right while the U.S. federal and State governments got it wrong – recognizing contact center agents as essential workers. While medical personnel were deservedly recognized as essential workers, you could make a legitimate argument that contact center workers should have received the same designation as Amazon warehouse workers or UPS/FedEx delivery drivers. This omission demonstrated how tone deaf many of our political leaders are when it comes to the economic contribution of domestic contact centers and the role they play in our economy.
↓ Available Labor Gap
- Where have all the agents gone? It’s not a rhetorical question, it’s a legitimate inquiry. Have customer care agents traded in their headsets and computer monitors to work in their homes as hair stylists, financial planners or Instagram influencers? In addition to paying premium hourly wages, some domestic call centers are paying sign-on bonuses, with one New Mexico provider offering an extra $1,000 as a perk.
↓ Willingness to Work Gap
- Agents have options. To begin, jobs that required a desk in an office can now be performed at home. And some jobs now performed at home didn’t exist three or five years ago (Hint: TikTok). Lots of agents simply aren’t willing to work long hours for unappreciative managers. In fact, the Labor Department reported that 52% – more than half – of all small business owners said that it has gotten harder to find qualified people to hire compared to a year ago.
↑ Cost Gap
- To attract, recruit and retain agents, domestic centers have to commit more money every quarter – some estimates put the price tag at 4% – to cover the cost. They have to spend more money on recruiting advertisements and staff to attract agents. They have to pay more per hour to train their new agents and then more again to keep them, including adding or expanding benefits. And then the cycle begins all over again.
Domestic contact centers are emptying out and prudent companies shouldn’t wait until their centers are completely devoid of life signs before they seek alternatives. The cost of keeping these centers operating is rising all the time. The U.S. Labor Department recently reported that its employment-cost index – its quarterly measurement of wages and benefits paid by employers – showed costs continued to rise at the highest rate in the past 20 years.
There is, however, a solution – Nearshore and Offshore providers can remove these pain points and let companies focus on their core business. The benefits of moving an outsourced service have been clear for decades but the current labor void is making decisions ever more critical. Some observers would say that the labor void is firmly in the “red” for many industries and its time they realized the contribution an outsourcer can offer their business processes.
Let’s start with price.
Nearshore and offshore providers offer price per agent savings that can be at least 50% cheaper than a domestic resource. An outsourced option can offer immediate and tangible cost savings – savings that can redirected to fixing a broken supply chain or investing in R&D.
Companies don’t have to compromise on quality either. Qualified and capable English and Spanish-language agents offer empathy, insight and skills that match any domestic centers. Many nearshore contact center markets – like Jamaica and Belize – are high octane tourist destinations so the customer care DNA is spread throughout the workforce. If someone hasn’t worked in the hospitality industry, then they know someone who has. The tourist and hospitality sector is prevalent in these markets.
Furthermore, with the labor force facing underemployment because of a lack of tourism, customer care providers have a lot more flexibility to scale quickly to meet demand back in the U.S.
Outsource call centers continue to step up in the face of renewed challenges to effectively recruit, train and retain talent and raise the bar on quality and offering exceptional service at a lower price point.
It’s unclear whether the U.S. labor void is a white-collar issue, or a blue-collar issue? It’s not clear if it’s isolated to select industries or is washing over the entire economy, but what is clear is that it’s negatively affecting a key component of our customer care supply chain and there’s a solution available to companies focused on their customers.