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January 5, 2003

Teleservices industry provides Tucson a stable workforce base

From: Inside Tucson Business, AZ - 05 Jan 2003

Inside Tucson Business

While other local industries suffered, the teleservices market remained strong in Tucson during 2002. Industry experts expect another steady performance this year.

"I think it is going to remain strong," said Paul Hawkins, call center manager for CSD (Communications Service for the Deaf) and chair of the teleservices industry cluster, which is now part of the Information Technology Association of Southern Arizona. With some exceptions, the local industry remained steady throughout the 9/11 disaster and the economic troubles of 2002, Hawkins said, so the outlook for 2003 remains strong. "I think it is a very stable industry. Call centers nationally continue to grow."

One of the reasons that the market remains steady is its reliance on inbound call centers. Most of Tucsonís call centers perform inbound call services, rather than the outbound or telemarketing services. A couple of local centers perform phone surveys. Inbound services are always needed to support customers, Hawkins said, and that need doesnít change with the economic climate.

Travel-related call centers have faired the worst over the past year, Hawkins said. In fact, Spherion closed its local offices in 2001, affecting more than 300 employees. While travel-related companies are suffering in the down economy, others call centers are still performing quite well. CSD is considering expansion this year, Hawkins said. America Online has expanded by more than 1,000 employees in the past few years.

During that time, few local call centers have closed. First Data left, but was immediately replaced by Apac Customer Service, which employed an equivalent number of employees.

Addition of call centers slows

While some small firms also have been added over the past two years, the addition of new call centers has slowed. Few recruitment efforts are in place to specifically attract these companies to Tucson.

"To my knowledge, GTEC has never focused on the attraction of call centers to our region," said Steve Weathers, president of the Greater Tucson Economic Council. "However, we have worked on a number of call centers as requested by the companies themselves and our various partners--the state, city OED, the county or the chamber, etc."

Weathers said Tucson continues to be on the radar screen for companies that use call/service centers, though. These companies look for a wide range of employee types, which Tucson can offer.

"Tucson has a great mix of workforce to meet these needs going forward," Weathers said. "We also offer a good mix of public and private assets, which make for a very good business case when evaluating various sites."

The teleservices industry employs more than 15,000 people locally, or about 5 percent of the workforce, Hawkins said. Much of the employment base comes from students, as well as people looking for a second income. The skill level varies, but almost always includes customer service experience and the ability to type and/or use various computer programs.

There are pipelines for employees to improve their skills and move up the employment ladders. For example, the Train to Gain cluster program provides employees training to reach other high-tech positions. The cluster is working on some programs with Goodwill Industries to provide a pipeline training program into call center employment.

Industry turnover rates

Many local call centers continue to hire new employees as turnover runs its course. The average annual turnover rate at call centers in Tucson exceeds 40 percent, Hawkins said, but that is on par with current national averages. In 1999, the industry reported a national average of 26 percent for annual turnover of full-time phone reps at inbound call centers. Turnover was closer to 33 percent for part-time employees, which made up more than 5 percent of the total employment base. These numbers fluctuate greatly from center to center, though.

DM Federal Credit Union, which employs 25 people on average at its inbound call center, reports a fairly stable employment base with turnover well below industry averages and currently is not hiring new employees. On the other hand, America Online, which employs more than 1,500 call center reps at three Tucson locations, is continually hiring. Last year, the company hired about 300 new representatives at a starting wage of about $8 per hour. TeleTech is currently hiring for positions starting at $9.15 per hour. Those positions have an average tenured hourly rate of $12 per hour.

"The TeleTech Tucson Customer Management Center handles inbound customer inquiries for an international shipping and packaging company," explained Carol Hahn, a representative for TeleTech. "The center employs over 900 in a 100,000-square-foot facility."

Average industry wages

Wage increases have slowed for the industry in the past few years, Hawkins said. As new call centers entered the market, the wage levels increased rapidly, but with few new call centers recently that competition has subsided somewhat. The average wage in Tucson is around $8 to $9 per hour.

According to a national 2000 survey, the top hourly pay for full-time agents ranged from $6.90 to $40, with a median of $15. That survey indicated 91 percent of computer industry call centers employed some reps at $15 or more per hour. Other industries ranged from 62 percent to 86 percent in reaching that higher level of pay.

As area companies continue to fill such positions, Tucson reaps the benefits of this steady revenue stream.

"As I have said and will continue to say, all jobs are good jobs and bring economic benefit to the region. More importantly, they put direct economic benefits (paychecks) into the pockets of Pima County citizens," Weathers said.

© Inside Tucson Business