At this points it’s a bit of a local politico story, but New York Sen. Charles Schumer is proposing legislation to tax companies 25 cents each time a call is transferred to a foreign country. While call center off-shoring and outsourcing is prevalent in many industries, larger U.S. service providers and cable MSOs have leaned on the practice at times to help keep customer support costs low.
According to reports, the proposal also would require companies to tell their U.S.-based customers when their call was being transferred and to which country.
Connected Planet’s take,
Susana Schwartz:
While much of the nation’s focus is on BP’s attempts to plug a devastating oil leak, much of New York’s attention for the past few months has been on plugging an enormous $9.2 billion hole in its budget. As a New York resident, I question whether Schumer’s proposal is really altruistic in nature or just a potential ploy to make more money for the state, but either way it resonates well with the message of “localization” for boosting job markets (not only in telecom but all vertical markets). The biggest advantage of this type of legislation could be an improvement in customer service or in the coveted “customer experience” game, where customers of wireline, wireless, data and TV services all complain of frustrating “scripted” responses to their complaints or botched activation of their orders for new services or offerings.
This also could be a move to further protect subscriber and customer information as well as ensure privacy. As it stands today, people have no idea who is looking at their personal and financial information, whether bank account numbers, credit information or medical history. When speaking to someone in India, Indonesia, Ireland, South Africa or somewhere else, a customer rarely if ever knows just how the information is routed or stored, and rarely is there recourse should that information be compromised, as nothing more than a “first name” is ever known — and I doubt that name is ever really genuine.
According to numbers from the Technology Marketing Corp., the U.S. lost 250,000 call center jobs to India and the Philippines from 2001 to 2003. But in 2007, Cornell University conducted a study covering almost 2500 centers in 17 countries that found that most call centers serving U.S. customers were operated in the U.S. The study found most centers, except India, served domestic markets. Two-thirds were in-house for companies serving their own customers and had lower turnover rates than subcontractors. Also turnover, ranging from 25% to 50% annually depending on the sector, steeply reduced productivity.
Of course, any push to keep call centers in the U.S., or in this case in New York, will possibly increase operations costs for telcos but open up more opportunities for generating revenues. For example, Verizon is big in New York, and recently it was positioned as the leader in on-shore hosted call centers by Ovum In its new research report, “Decision Matrix: Selecting a Hosted Contact Center Service in the U.S.,” and by Gartner in its “Magic Quadrant for Communications Outsourcing and Professional Services, Worldwide.” Maybe the U.S. will end up being the next hotbed for call center outsourcing!
With all the hype around cloud computing and becoming “enablers” for others in the value chain, perhaps this type of legislation will galvanize network operators to look at how they can do more to provide services not only for their own customers domestically, but for service providers, content players and other stakeholders around the globe.
That’s our take on this. Let us know what you think in the comments section below:
This is a pure political move by our intellectually and certainly business challenged government leaders in Washington. Shumer should be working \"positively\" with business in NY to create more competitive workers through education, training and other incentives to raise the VALUE of doing work in and from New York. His approach is laughable and unfortunately for the uninformed voters of New York, it\’ll drive work and revenues away from the State through a politically motivated attempt to \"legislate value\". Where\’s the .25 cent penalty going to go….the SEIU, ACORN, or to pay for the additional 16,000 IRS workers Shumer\’s wants to hire to legislate healthcare! This guy is an albatross for New York, the U.S., and an embarrassment!
This is more 5 watt light bulb thinking with regard to trying to keep jobs in the United States. It\\\\\\\’s another clear example of government regulation that is driving jobs and business *out* of the country. As our government places more controls and higher taxes on businesses and entrepreneurs, they increasingly find it hard to do business here. Companies are in the business to make a profit for their stakeholders and thrive in the marketplace which will drive a positive economy. Legislation such as Charles Schumer is proposing is counter intuitive that process. It sounds great in the classroom, but real business won\\\\\\\’t buy it. If customers don\\\\\\\’t like having their calls answered by off-shore call centers teams, then they will eventually stop using that business. It\\\\\\\’s self-regulating, and smart companies will adapt to what their customers want. Government should stay out of it.
Greetings,
As much as I, like most Americans, have valued the ability to buy at “The China Price” I, as a person who got my first programming job in healthcare computing in 1975, have had to accept that wage arbitrage has destroyed my ability to get work.
To the point of this article, there is no way that US-based call center workers can have a wage that will ever make them competitive with call center workers in Bangladesh or the Philippines (to name just two). These workers are using inexpensive technology to learn new skills and feed their families at something approaching a 1st-world salary while at 3rd-world costs of living.
We have seen the Chinese exploit this difference in manufacturing, which cannot come back to the US with any kind of impact on our labor market. US customers have learned to accept horrible call center policies in the name of least cost servicing.
Just as the credit card companies rushed to Delaware and Nebraska seeking libral policies for their business, call centers have rushed out seeking least costs (and escape from consumer protection, BTW). I feel that leveling the playing field in favor of the US worker is justified in this case.
CJ
endevco at gmail
More of the same from those who can’t build, design or deliver anything but anti-business roadblocks. I have no use for citizens of the states of New York, Massachusetts and California who continue to return their socialist politicians to office. America has a dire need for CONgressional term limits!
It is greed that move the call center jobs to India and elsewhere and this is a great approach to counteract that. I hope that it is adopted on the national level.
Consumers don’t really get a choice in the matter. Location of call centers is not the prime determinate in selecting a credit card, for example. But when there is an issue, the language barriers, cultural disconnects, and general lack of connection or empathy suddenly becomes very important. The lack of control over personal information is a very real threat.
Some businesses (AT&T comes to mind) have moved some support back to North America. Charging a premium helps to encourage that. American consumers and the economy will be the big winners.
I think this is a part of political strategy of USA. Well if it really helps to the economy, why not?
This is very controversial move from the government. But if it willm improve their economy, there is no reason to disagree with it.