A Rational Technology repost.Real estate, electrical power, and communications networks are very important considerations for outsourcing firms but they are not nearly as important as a talent pool which they can tap for their operations. You can build up the first three in a matter of weeks or months but save for a massive and expensive relocation exercise, it will take years to build up a base of people.
Call centers, our prime example of outsourcing, feel this problem acutely. It starts at the hiring line: following the current industry average, a call center will take in only five agents out of every one hundred candidates that apply. Along the way, there is the problem of attrition: out of these five people hired at the start of the year, three people will have quit by the end of the year.
Let's see how these numbers work out. Call centers measure their capacity according to the number of seats that they carry. A seat, as the name implies, is the workspace of an agent, consisting of a telephone and a computer terminal. Since a call center is usually a round-the-clock operation, a single seat translates to three agents, alternating on three work shifts.
A typical starting size for a small call center would be around 100 seats, which translates to 300 agents. To meet this requirement, they need to have interview 6,000 candidates. This is just at the start. By the end of the year, they will have had to take in an additional 180 agents to take the places of the people who have left; this means interviewing an additional 3,600 candidates per year to maintain the 100 seats.
Clearly this poses a serious challenge to an aspiring outsourcing city like Dumaguete. Our colleges and universities have an annual output of only 5,000 graduates. Not all these graduates will be qualified, and not all those qualified will necessarily take up employment with a call center. It's a population problem, all right, but the quite the reverse of what doomsayers are preaching: we don’t have enough people.
Rather than be daunted by this issue, let's look at ways of addressing it head on. The most obvious approach would be to increase our pool of people. It might be increased enrollment for our existing schools, increasing the number of schools, or expanding the search area beyond the confines of Dumaguete. These will have their attendant issues and will take time to implement, but it is something that we will have to look into.
Another approach would be to shoot for a higher hiring rate, going beyond the 5% industry standard. Thus far, products of the Dumaguete education system have gotten very good marks from call centers. In the first few batches of screening, 30% of Dumaguete candidates were taken into call center programs. Encouraging statistics, indeed, but let us not become complacent: these numbers are typically high at the start, but eventually taper down once the initial excitement wears off.
On the other hand, it’s more important to ask: what did the passing candidates have in common? What did the Dumaguete educational system do right? How can this advantage be sustained and developed further?
Finally, let’s look at attrition. Retention is generally a problem of the call center itself, yet the reality is: half of the agents that leave a call center do so because they are lured by higher pay from a competing call center. For a city of our size, we may have to consciously limit the number of call centers setting up shop, lest we end up with an over-expanded market that will collapse under its own weight. It’s not a protectionist strategy, just common sense. What this exact number is has yet to be decided, but again, something else that the city must look into.
Given the size limitations we have as a call center hub, what are our other options then? Why, move up, of course, but that’s a topic for next week.