It looks like the booming economy and high Canadian dollar could team up to deliver a body blow to several communities across the country, as Convergys President and CEO David Dougherty recently indicated that the company plans to move at least a portion of its Canadian operations to Asia.
Mr. Dougherty explained during Convergys' 2007 fourth quarter conference call on January 29 that when the economy is strong the company experiences a variety of staff hiring pressures. Despite the fact that the company's stock price is down almost 44%
since this time last year, Mr. Dougherty is coming off a solid
operational year as revenue grew to over $2.8 billion dollars in 2007.
He expects to grow
operating income in 2008, as the company anticipates increased
profitability
via revenue growth, productivity improvements, and cost reductions.
During his prepared statements, Mr. Dougherty indicated that Convergys plans to shift some business from Canada to the Philippines. Employment in Asia has grown considerably; more than a third of Convergys employees are now employed there. Then, in response to a question later during the same call, Mr. Dougherty said that the company is responding aggressively to "currency challenges" and that, "we've got to take some pretty aggressive action to redeploy and move our business to reduce our exposure in some of the key areas where we're being hurt. Most notably we're being hurt today in Canada and we are taking action to close centres there and move work to other geographies".
It's not surprising to learn that the high Canadian dollar and tight labour market have increased the cost of operations in Canada, possibly past the point of continued commitment. One of the reasons the company opened a location in Kamloops back in 2000 was the high unemployment rate, which provided a large pool of potential workers. In 2001 the unemployment in Kamloops was 13.8%. Today it is much lower; the average unemployment rate in 2007 was 5.0%.
While Convergys has not announced which Canadian operations will be affected, if the Kamloops call centre did close it would certainly have a major impact on the local economy. The Venture Kamloops web site indicates that Convergys is this community's largest private sector employer, with over 1,200 staff working at the Valleyview call centre.
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.
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