Convergys Relocation Statements Cause Anxiety Across Canada

This blog has experienced substantial and sustained traffic since last weekend's post, Will Convergys Close Kamloops Call Centre?

Based upon the search strings that visitors have been typing in to Google, Yahoo, MSN, etc. (which are then reported to me, the author of this site to which some of those searchers are directed), residents of communities all across Canada are anxious to find out what is happening with their local Convergys call centre.

For those of you who arrived here looking specifically for that information, welcome; despite the lack of a definitive announcement regarding which call centres will be affected, I'll do my best to point you to where you can find more information.

The back story is that Convergys President and CEO David Dougherty recently indicated that the company plans to move at least a portion of its Canadian operations to Asia. In his January 29 conference call with analysts (which is available for you to listen right now, online from the Convergys web site), Dougherty explained that currency pressures (namely, a Canadian dollar that has risen substantially since many of the company's Canadian operations were first opened) are forcing the re-location of some operations to other countries, such as the Philippines.

I provided a little more information the other day in a comment to the original post, but it doesn't appear that many visitors have found it buried in the comments, so here it is again (for the most part) below.

More bad news for Canada's call center communities, as a Datamonitor report released today (February 19, 2008), via TMCnet indicates that while Convergys may have been the first major call centre company to start pulling out of Canada, it certainly won't be the last to do move operations to the U.S. and other jurisdictions with favourable exchange rates and labour costs. According to the report, some of the strikes against Canadian call centre operations include:

1. The Canadian dollar has appreciated over 30 per cent, "which has effectively eroded profit margins and operating cost savings that many U.S. outsourcers had come to rely upon from their Canadian operations"
2. A tight and highly mobile labour market, which is pitting call centre employers against high-paying jobs in the oil sands, driving up wages and benefits
3. The absence of a significant Spanish-speaking labour force. Fully a third of American consumers now speak Spanish, and so American call center companies are increasingly turning towards "near-shore" opportunities in Latin America.

This bleak outlook confirms a trend described earlier this month when the Site Selection Group, a location advisory firm, released its annual Call Center Absorption Report February 1. Highlights from the report include:

1. "Canada and India saw a significant drop in job creation due to key issues such poor English proficiency in India and increasing currency valuation in Canada."
2. "Canada will continue to see slow growth due to currency exchange valuation which have made operating a center in Canada more expensive than the United States in most markets. Entry level wages have adjusted to US$10.00 to US$12.00 per hour due to exchange rates."
3. "The Philippines has clearly become the dominant, offshore location for English speaking call center services due to the Americanized culture. Wage rates have increased to US$2.50 to US$3.50 per hour."

According the Convergys web site, the company also runs Canadian call centres in Edmonton, Lethbridge, Red Deer, Brandon, Winnipeg, St. John's, Digby, Halifax, New Glasgow, Truro, Ottawa, Welland, and Windsor. Canadian operations employ over 12,000 people.

In his call with analysts Mr. Dougherty also mentioned that Convergys had hired a business development officer to round up new Canadian business, a strategy that might help the company insulate itself from a rising loonie which has thus far generated primarily negative impact. In fact, Igor Sarenac was named as Vice President, Business Development for Canada on January 16.

In a side note, it became apparent today that very few (if any) of the people I know in Kamloops are aware of the cloud hanging over Convergys' Canadian operations. Here I thought I had simply overlooked mention of it in the local Kamloops papers, but now it seems that the story simply hasn't been picked up locally.

Considering the number of Canadian communities in which Convergys operates, the story hasn't received much coverage (online , at least) elsewhere either. The first mention of it I've managed to identify in the Canadian press appeared in the Ottawa Citizen's Execs share scary thoughts for scary times on February 13. Then earlier today (Friday) in Welland, ON, the Tribune published Convergys shutting down in Canada?; Company closing unprofitable sites. Since the original Ottawa Citizen's article, a couple of bloggers (here and here, etc.) have made reference to it, but that's about it. Is our economy really so strong that this is not a story?

Wherever you are, if you have heard further reports about - or from - your local call centre, please click "Comments" below to share the news with Right Up Your Alley: Kamloops readers.