BREAKING NEWS:
A new bill proposed by Senator Gallego (D-AZ) looks to create a list of businesses that shift their call center operations offshore, including businesses that outsource to third party providers (i.e. BPOs). 120 days prior to an enterprise contracting that work (or a call center moving existing operations), a business would be required to notify the Secretary of Labor and be added to a list tracking these businesses. Failure to do so would result in a fine of $10,000/day that a business is in violation.
The effect of the list? According to that bill, those businesses shall be ineligible to apply for or receive any direct or indirect Federal grants or Federal guaranteed loans for 5 years after the date such employer was added to the list. Think about that; conservative estimates state that 75% of commercial loans for businesses have some sort of Federal guarantee. That would mean that these loans would be out of reach for a business handling calls in a foreign labor market!
This appears to be fairly ironclad with no clear loopholes. For example, if you are planning to get a loan BEFORE offshoring, that’s not going to work. There is a clear claw back provision that can be exercised to recall that funding.
Now this stick is accompanied by a carrot; Federal contracts would have a preference for callers not appearing on this list. So, while a business may have enough private funding to have little worry about securing loans, this could shut the door on any sort of work tied to the Federal government. Additionally, all calls (inbound AND outbound) would be required to disclose their physical address – regardless of their country. If the agent handling the call is not US based, they MUST provide an option to transfer the call to a US based agent.
There aren’t many exceptions. Emergency services seem to be exempt, and there is a provision that states that customer service calls are exempt IF it is an inbound call and the consumer knows or reasonably should know that the employee or agent is physically located outside the United States.
Interestingly, similar provisions around disclosures and transfers would apply to AI calls as well. Businesses who participate in this industry (i.e. all call centers) would be required to certify their offshoring strategy with the FCC annually, and anyone who falsifies this or fails to certify would be in violation of the Federal Trade Commission Act and subject to enforcement by the FTC.
Contact Center Compliance will be monitoring this, working with lawmakers to attempt to provide insight into the potential negative side effects. We will also be tracking this in our regulatory guide, a great tool many of our customers use to follow the bills we are tracking. Reach out to one of our compliance experts today to learn how you can have this visibility as well.
Thoughts from Isaac Shloss, Chief Product Officer:
I’ve been in call centers for most of my career and, in that time, I watched the shift from US based call centers in almost any medium sized town to a largely obsolete industry with US jobs being few and far between. As memory serves, Dell was one of the big pioneers in this industry, sending their inbound technical support calls to workers in India. There was some negative consumer pushback at first, but soon we saw wide industry adoption. Later, countries like the Philippines, Columbia, and South Africa started tossing their hats in the ring, and US call center jobs quickly faded away.
As an IT leader, there was obvious trepidation around this move. Was my job next? Would I even be needed since I had more agents in Asia than North America? I, like many of my peers, saw that unfortunate reality happen on one occasion, so I definitely oppose this, right? Before jumping to that conclusion, hear me out…
If you are a CXO in the industry, you’ve seen the P&L enough times to know how tight margins can be in the call center industry. One of the largest costs you have on that sheet is labor; the cost of employing hundreds of workers is insane. Now, looking at my last call center job, we had 45,000 agents supporting a wide variety of brands, and I can guarantee that the readers of this article have interacted with many of them. Now, imagine I was paying US minimum wage to just those agents; before taxes, benefits, and all the other costs associated with running call center, you are looking at $326K/hr. to run that workforce. Big business, big pocketbook, right? Unfortunately, no. Because of regulatory costs, quality costs, and so much more, businesses have significant overhead when it comes to running operations, and when building pricing models, the cost of the agent, while significant, is often less than 25% of the formula.
The majority of big brands, in my experience, don’t handle most, if any, of their call center operations. Companies like the hypothetical ACME Widgets have found that, while they are the BEST at making widgets, they handle customer interaction poorly. They don’t know how to staff and scale call center operations in a cost-effective manner, and they certainly can’t keep up with all the regulations around them. Much like most people trusting their car repairs to expert mechanics, businesses see great value in trusting customer care and telesales to expert callers.
This cost of call centers is rolled into consumer prices, so the cost of moving all these offshore jobs will be felt in the US Consumer’s pocketbooks. If nothing else, wait times for customer service calls will go up as businesses try to do damage control by lowering staffing levels in their support teams. So, while seeing my job sent to a lower cost labor market was rough, I found another job and am much happier for it. Businesses are driven by profitability, so it’s hard to demonize a business attempting to keep costs low by utilizing lower cost labor markets.
