Deciding how and where to locate contact centers in today’s climate is like attempting to dock a ship in rough waters. Such conditions including changing winds and deep, strong currents require the utmost attention to what is going on and considerable skills to navigate the operation successfully into the safe harbor.
With rising customer expectations for superior customer experiences (CXs) and their threat to change companies, reduce spending, and/or make negative social comments about them, it has become even more critical to land quality personnel at the right price. Whether they work on-premise or at home.
To help steer contact centers to make the best decisions about where to dock their agents we reached out to John H. (Jack) Boyd, founder and principal, The Boyd Company, a leading site selection expert. Here is our virtual conversation.
Q. What changes do you see in the demand for customer contact agents? For example, do you see automation leading to shrinking or slowing growth in the demand for contact center agents?
Automation and the use of robotics are a major trend today for companies in a wide range of industries in order to cut labor, benefit, and training costs, and reduce turnover.
Contact centers are no exception where outbound telesales centers can leverage AI to more quickly identify sales targets and for inbound centers to more easily provide customer support and solve problems.
Q. So, to be sure that would mean a lower demand for agents? And if so, would that now mean that automated channels are the default and people (agents) are the backup when customers fail to obtain satisfaction?
Yes, that is an accurate overview. Overall demand for contact center agents is on a downward trajectory due to automation and AI applications with people increasingly performing the role as backup when customer problems are not yet resolved.
Q. The Bureau of Labor Statistics (BLS) forecasts continued declining labor supply growth and labor force participation rates to 2032. Will there be a smaller supply, but also shortages of contact center agents once automation has been accounted for? And if so, what factors are responsible for this?
According to our 2024 BizCosts.com survey, there is a significant shortage of contact center agents, with many companies struggling to find and retain qualified staff.
This is due to high turnover rates, skill set deficiencies, wages not keeping pace with historic rates of inflation, and the repetitive nature of the work. Also the ever-growing public backlash over automated and unsolicited sales calls.
“Overall demand for contact center agents is on a downward trajectory due to automation and AI applications…” —Jack Boyd
Looking longer term, we do see automation getting the upper hand over BLS forecasts of a declining labor supply growth and falling labor force participation rates. This should provide some welcome relief to contact center HR managers and their current hiring struggles.
Trump Administration Policy Impacts
Q. What impacts do you see on the contact center labor supply and costs from the actions by the Trump Administration?
Let’s look at these in turn.
Federal government downsizing, privatization
The Trump Administration plans to slash a whopping 75% of the two million federal workforce, which is not unlike Elon Musk’s massive job cuts at Twitter when he first bought and re-engineered it.
President Trump, coming from the private sector, also plans to privatize as much federal contact center activity throughout the government as possible. This Trump initiative will create business opportunities for the contact center industry.
Diversity, equity, and inclusion (DEI) pullback
There is a massive pullback on DEI initiatives – first led by the banking and financial services industry – and extended to virtually all sectors of the U.S. business community.
Supported by the Trump Administration and GOP states, they are moving away from DEI and towards meritocracy in their hiring and human resources policies.
Nearshoring/offshoring
President Trump’s focus on reshoring businesses to the U.S. through tariffs, federal procurement policies, and his “bully pulpit” will create opportunities for lower-cost U.S. markets to attract call centers that have “nearshored” in recent years to the Caribbean and Central and South America.
Also, outsourcing centers like those operating in India and the Philippines are especially at risk of losing market share, jobs, and new investment to reshoring.
But the absence of concrete policy statements, possible incentives, tax reforms, or penalties for taking jobs offshore at this early stage of Trump’s new administration makes it impossible to project the number of job losses. But they could be substantial.
Yes, Trump’s Administration and its trade policies are causing uncertainty in outsourcing markets. But they also present opportunities for countries that wish to negotiate new favorable trade deals with the U.S. An example would be a Central American nation that may wish to expand its call center industry with new U.S. accounts in exchange for cracking down on illegal immigration or drug trafficking.
Q. With the Trump Administration’s efforts to reshore American jobs, do you see more U.S.-customer serving contact center jobs moving back to the U.S. from Canada? In turn, will contact centers located in Canada only serve its domestic market?
I do not see a meaningful shift of Canadian contact center operations south to the U.S. under the Trump Administration.
Since call centers don’t ship physical goods, they are not directly impacted by tariffs. But other factors might come into play like future incentives, regulatory relief, and ties to federal procurement contracts.
As to the second part of your question there’s always been a healthy mix of servicing both the Canadian and U.S. markets from a Canadian-based contact center, and I don’t see this changing.
The province of New Brunswick continues to stand out as a contact center location with its excellent bilingual English and French-speaking workforce. But it has the potential to be much more than that. We see the province under Premier Susan Holt build on its contact center successes in some new and exciting technology sectors, including cybersecurity and digital health.
“In an industry with persistent turnover challenges, allowing some degree of remote work is necessary…”
At the same time, Premier Holt is continuing with the province’s tradition of political savviness exemplified by former Premier Frank McKenna. He, along with partners at NB Tel, established New Brunswick as a North American location of choice for new contact center operations.
Premier Holt has already traveled to Washington, D.C. and lobbied Congress against U.S. tariffs. She has also met with Maine Senator Susan Collins on cross-border issues, which are vital to contact centers serving the vast U.S. market.
Immigration restrictions and crackdowns
Trump’s immigration posture is less friendly versus Biden’s for H1B, F1 student visas, and H4 workers. I do not foresee this having a major impact on the contact center industry – where AI is easing recruiting challenges –while a new influx of laid-off federal government workers will be joining the labor pool.
We also do not see Trump’s crackdown on illegal border crossings having any impact on a company’s ability to recruit Latino workers.
Trump has wide support within America’s Latino population, which has long been an important hiring segment due to language proficiencies and cultural affinities to the high-growth Latino market in the U.S.
Q. Further to reshoring and immigration restrictions, would these moves, even when accounting for the influx of federal workers into the labor force, result in an even tighter labor supply and higher employment costs for contact centers?
Considering that many of the jobs that the Trump Administration plans to bring back are also in the higher-paying manufacturing sectors that will draw the best and brightest from other employers?
Our firm’s BizCosts® data bank is not projecting any significant inflationary wage pressures nor a meaningful tightening of the supply of workers, Latino or otherwise, for contact center employment brought about by our nation’s heightened measures to secure the southern border.
I see little, in any, cause and effect here as we are dealing with two very different sets of population. Trump’s reshoring initiatives will focus primarily on the manufacturing sector. So, the overall shift of laid off federal workers going into the contact center industry will be minimal at best given an overall mismatch of skill sets and salary expectations.
Return-to-Office (RTO)/On-Premise Centers
Q. Regarding the return-to-office (RTO) trend, are you seeing it also at the contact center level?
While the RTO trend has momentum today, we do not see it having a material impact on the contact center industry where the model will continue to be a hybrid one, with over 80% of the industry being either fully remote or a hybrid. In an industry with persistent turnover challenges, allowing some degree of remote work is necessary for successful recruiting and retention.
The real game-changer, as I noted before, will be the continued proliferation of AI and how it is embraced by the workforce. We are seeing more workers within companies rationalizing working on-site as the preferred way for career advancement. Especially as more and more jobs are lost to AI and automation.
Q. Are you seeing any changes in the size of on-premise contact centers?
Contact centers are getting smaller and the labor force is shrinking due to automation, the wider adoption of AI technologies, and the continuation of the massive work-from-home (WFH) contingent within the contact center industry.
Q. Smaller from what to what?
Throwing out the mega contact centers with 1,000-plus workers, I would peg today’s “average” size now shrinking from 175 to 150 seats; however, we are just at the cusp of AI and its wholesale adoption by the contact center industry with more shrinkage to come.
Q. What amenities (if any) are companies now offering in their on-premise centers?
We are seeing contact centers that have more on-site agents install larger baskets of worker amenities as effective recruiting and retention tools.
“…select mixed-use areas with access to shopping, retail, and other recreational amenities.”
Some examples are more comfortable chairs and workstations, upgrades to gyms and dining options, and state-of-the-art analytics and dashboards.
On-site childcare, pioneered by Amazon, is a highly valued amenity given the soaring cost of private childcare (almost doubling the rate of overall inflation) and recent cutbacks in some federal childcare programs.
Q. What factors, in rank order, are governing contact center site selection and are these changing?
- Broadband infrastructure. This is an essential building block for incorporating AI into the contact center equation.
- Workforce. As has always been the case, a contact center is only as good as its people.
- Time zones. Agents need to be available when the customers are, to serve companies’ markets. This is especially important for contact centers with a global footprint and centers with the financial services sector meeting new Securities and Exchange Commission (SEC) “T+1” settlement cycles.
- Insulation from natural disasters. This is always a factor but underscored by recent wildfire disasters in California and destructive hurricane events in Florida and the U.S. South.
- Utility reliability. There is a major spike in utility demand that is being driven by AI data centers, which are putting new and severe pressures on power grids and impacting greatly site selection decisions.
- Operating costs. Not just labor, but also utility costs, especially electric power due to the impact that AI data centers are having on power grids.
Q. Noting these factors, where would you recommend contact centers to locate their facilities? And where should they recruit remote agents? You had mentioned earlier about lower-cost U.S. markets, so where are they, and do they apply to both on-premise and remote hiring?
Once you have decided to site your contact center in a city or metro area, select mixed-use areas with access to shopping, retail, and other recreational amenities. Make sure you carefully examine safety and crime prevention efforts as these factors continue to be a concern in many urban settings.
Aside from labor, telecommunications costs are major site selection factors for our contact center clients. Most call centers these days use VoIP (voice over Internet Protocol) rather than traditional 800 services from telecom companies.
VoIP is the preferred technology because it’s generally less expensive, more flexible, scales easily, and integrates well with modern software like CRM systems or AI tools for routing and analytics. It also lets our clients easily establish remote agents locally, nationally, or around the globe.
Most VoIP providers have pretty much equalized VoIP rates over geography but what does vary significantly is how states and municipalities tax VoIP services. Add-on taxes and surcharges on VoIP services can be large and they can be deal-breakers once our search gets down to two or three finalist cities.
Our BizCosts® data bank shows states like Idaho, Nevada, Montana, Delaware, and Oregon (where our client Royal Caribbean located one of its first centers out of Miami) are among those states having low VoIP taxes and surcharges. Among those states with relatively high VoIP add-on costs are Illinois, Arkansas, New York, and Oklahoma.
