Generous wages and benefits help heartland call center iQor compete with overseas outsourcers
In a column a few weeks ago, I wrote about "smallsourcing" and how U.S. workers are competing for jobs that small companies haven't chosen to outsource. Some of these jobs are in the very areas where the doomsayers said the U.S. had no chance of competing, such as information technology, Web development, and graphic design.
That U.S. workers have been competitive in these fields underscores my belief that the nation's workforce can be more competitive in other fields than is broadly understood.
Yes, outsourcing will continue and globalization will change the world's economic landscape. But the U.S. is hardly helpless. With smart processes and the proper incentives, U.S. companies can keep jobs here in America, and do so in a way that is actually better for the company and its employees.
Handles Big Names
Consider iQor, a call center and business process outsourcing company based in Columbus, Ohio, that's increased revenues at a 40% clip for the past four years. It's done this primarily by expanding its U.S. operations. IQor also gives its U.S. employees universal health insurance, and pays salaries and bonuses that are nearly 50% above industry norms.
IQor's services include customer management and other call-center work. The company also handles financial services and industry-specific tasks. IQor has big-name clients in finance, media, and telecom including Capital One (COF), the BBC, DirecTV (DTV), and MetroPCS Communications (PCS).
Handling the back-office functions for those kinds of companies is work that's largely been relegated to the scrap heap in the U.S., considered a source of little more than low-wage, low-value, and low-self-esteem jobs. A significant number of such jobs has moved to India and other parts of the world. Sure, some companies, such as Dell (DELL), have moved call centers back home after customer protests. For the most part, though, call centers and back-office work in all but the most specialized areas have been rapidly moving off U.S. soil.
Pulling Down $100K a Year
IQor, on the other hand, has 12 locations in the U.S. that house nearly half its 11,000 employees, including in such all-American cities as Columbus, Buffalo, and Greensboro, N.C. It also has operations in Canada, India, the Philippines, and Britain.
The best of iQor's front-line call-center workers make more than $100,000 per year, and that's not a typo. During the past four years, iQor added nearly 3,000 jobs in the U.S., making it the company's fastest growing region. IQor CEO Vikas Kapoor took an industry that's viewed as a lemon and has made lemonade.
There are a few lessons other CEOs might draw from Kapoor's approach. For one, the company's high salaries partly explain why it has a turnover rate of about 45%, less than half the industry average. To ensure that employees don't feel like a job at iQor is a dead end, the company creates career path programs that clearly lay out a worker's road to advancement. IQor regularly promotes employees who started out working the phones to management. And unlike many of its competitors, and an increasing number of other U.S. companies, iQor offers all its employees good health insurance and generous benefits packages.
Investing in Tech, Too
In other words, iQor invests in its people, and doesn't view them as expendable or replaceable. The company values tenure and seeks to promote from within its walls, a hallmark of companies with strong cultures. Yes, iQor expects high performance. But employees don't seem to mind. If they did, they wouldn't stick around. This is hardly revolutionary. Study after study has shown that overpaying your people is a key requirement for maintaining high sales growth.
That said, paying people more and setting them down career paths isn't sufficient to make iQor competitive against companies in cheap labor spots. IQor also invests in technology designed to make its employees more efficient, for instance, by using "virtualization" technology that lets the company run any of its customers' software applications.
Kapoor also hired a labor economist and a psychologist to build a screening and aptitude test to find the best prospects for working in a call center. Employees hired through this screening process were about 50% more effective on customer calls than their peers who weren't screened.
Close to Accounting
IQor also realized that it was paying far too much to headhunters to bring in employees who usually quit within a year. So it figured that paying its own employees much higher referral fees for leads on potential hires would be a better use of its money, and would build social cohesion among the ranks. In the past four years, iQor employees have referred more than 7,000 people to HR, and the company has paid out over $1 million in referral bonuses. Motivating a workforce to take referral bonuses seriously enough that management can replace headhunters is impressive.
IQor's success is based on the realization that although call-center work has a bad reputation, it's actually complex labor that can be improved through better processes and technology. It's closer to accounting or law in its intricacy than it is to fast food. Complex jobs benefit markedly from better talent, and iQor hires skilled people that lead to better outcomes than if it had decided to ship jobs overseas.
For all the complaints about disappearing American jobs, companies do have a choice. Yes, Indian outsourcing firms could benefit from applying iQor's management style. But their advantage shrinks dramatically when people become a company's primary investment.