Overcoming the cost of customer service in cities
Cost Factors in Major Urban Centers
In the past 18 months, we have seen more and more interest from companies looking for alternatives to operating customer care centers in or close to their headquarters in major urban centers like Toronto, Vancouver, New York, and San Francisco
Economists have several arguments as to why different cities and countries are more expensive than others. New developments, rising salaries, growing populations, and job market changes are all major factors, but there’s no cut-and-dry answer. What is clear is that many entry-level jobs are getting increasingly harder to fill, sustain, and support in expensive urban centers.
In particular, the following three factors play into this predicament:
PRICEY REAL ESTATE
Commercial real estate prices are ever on the upswing, with an average 9% annual growth in current large markets. Whether your organization owns or leases office space, the fact is you’re going to feel the hit, especially when you need to expand. Even when you’re not looking for lush corner offices or city skyline views, expanding your city footprint is going to be pricey.
HIGH COST OF LIVING
Your business isn’t the only one feeling the weight of expensive real estate. City residents face their own high rent – as much as $3400 for a 1-bedroom apartment in New York – as well as other high costs ranging from transportation to childcare to groceries. These costs end up pushing much of the lower and middle class away from the city into the suburbs, where it’s harder to convince people into the grueling commute back to the city for work.
EXPENSIVE LABOR MARKET
The only way someone can afford to live in these major urban centers is with the help of a handsome salary. As a result, the average salary in large urban metros is 18% higher than the national median salary – and in some cases even higher, like New York, where the average $100,000 salary soars above the $37,000 national median.
The Cost of Contact Centers in Major Urban Centers
An Indeed report acknowledges that contact center roles are just some of the jobs starting to disappear from most expensive urban markets (others include construction and logistics.) Why? Because the three cost factors we noted above mean that hosting these jobs and sourcing talent is both difficult and expensive creating a drain on your bottom line and on your customer experience.
The More Affordable Alternative
Outsourcing your customer care program to a partner located in a more affordable metro is the answer. If that seems too simplistic to be true, consider the following:
THE WAGE FACTOR
In small urban metros, average wages are about 11% lower than those in large urban centers. It’s also interesting to note that while wages are usually the lowest in rural places, wage growth is actually higher in these areas – so finding a happy medium in a smaller urban center is a good strategy for long-term consistency. Additionally, if you’re a US-based company, there are even further savings when you choose to outsource to Canada, thanks to an attractive exchange rate that can strengthen your buying power.
LOWER COST OF LIVING & REAL ESTATE
Office buildings, residential space, everyday living expenses, and local taxes are all more affordable in smaller cities. That guarantees a more diverse socioeconomic landscape. There’s also more affordable rent and real estate prices to consider, reducing the cost of overhead. All of these elements factor into the ability of an outsourcer to offer clients an onshore solution at an affordable rate.
DEEPER LABOR MARKET
With a wider population of people who can actually afford to live in these areas, there is naturally a deeper labor market. (Pro Tip: Check out smaller cities that punch above their weight class in post-secondary education offerings to gain access to an affordable yet highly educated labor market.)
In reality, you don’t actually have to worry about the details of each of those individual factors when you outsource. Depending on what contact center pricing model you choose, your investment covers it all at one straightforward rate – and when choosing an outsourcer in a less expensive metro, these factors can help elevate the ROI from your customer care operational spend.
Of course, we know that in any decision to outsource, affordability is just one part of the big picture. You’re also looking for a strategic partner who will be as committed to your customers and their experience as you are – a partner who is on top of technology trends, is dedicated to measurable results, and believes in employee engagement and empowerment.
Our clients appreciate the value-to-quality balance our operations in Atlantic Canada deliver. Get in touch to discuss how we can drive cost out of your business while elevating your customer experience.