Since the early 1980s, Northern Ontario has been experiencing a substantial shift from reliance on natural resource industries to a more diversified economic base. While the bulk of our economic activity in terms of total dollars is still derived from such industries (pulp and paper, lumber, mining, and transportation) more and more jobs are being created in the service and commercial sectors.
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In the last decade, there has been substantial growth in the number of call centres while jobs continue to be lost in the traditional resource-based sectors such as forestry. This in turn has helped create a perception that these centres only provide minimum wage jobs, and that we may be better off without them. This article will look at the actual experience to-date and the changing global consumer trends that are driving the demand for such services. Hopefully, this will provide the reader with a more balanced perspective.
The driving forces behind call centres
Like it or not, the huge United States economy continues to exert an enormous influence over Canadian business practices since our Gross Domestic Product is heavily reliant on U.S. market demands. The continuous need to meet changing customer requirements and needs and keep costs down are forcing companies to operate around the clock in a globally competitive environment.
Such business and societal changes and the resulting drive to outsource non-core operations have been the driving forces towards the explosive growth of contact centres. We may not even be aware of it, but Canadians are using them on a regular basis when they call their bank, insurance company, or make hotel and airline reservations.
These are what we call inbound operations, and comprise around 80 per cent of the contact centre business. Only 20 per cent is actually outbound, but unfortunately most people think that is the other way around because at one time or another, they have been called on the phone by a sales agent.
Canada as a logical service provider
The initial growth in call centres was in and around major cities like Toronto, with banks and large organizations filling in their building with their own telecommunications centres. American companies started looking at Canada as a natural place to outsource given the cost advantage (labour and health care costs, and exchange rate providing a 25 per cent savings), not to mention the cultural, technological, language, and time zone similarities.
How did Northern Ontario benefit?
The weakness in our communities (i.e. availability of a large pool of educated but albeit unemployed work force; empty office buildings) plus the availability of government support programs (at least at the beginning stages) combined with a vastly improved telecommunication infrastructure, has enabled our cities (and region) to attract a number of call centres. While I agree that these wages do not match those of the past, they still make a substantial contribution to the economy of the North. In fact, over 9,000 people making an average of $10 per hour plus benefits are now employed in contact centres across the five major cities of Northern Ontario. Most, but not all, are young people who may have left for greener pastures had not the opportunity for such jobs been present.
The spin-off effect can be substantial
Take for example the Eaton’s building in downtown Thunder Bay. The building has been totally renovated inside and employed many trades people for months. Trades still make good wages. The ongoing supply of goods and services and maintenance of new computers, workstations, and electronics will be provided mostly from local suppliers.
The value of the building has increased, so have the taxes paid to the city. Thunder Bay Telephone is deriving substantial revenues from the installation and use of hundreds of phone lines. The people working there are also contributing to the revitalization of the downtown core whenever they visit a restaurant or retail outlet.
Such experience has been repeated throughout the North.
The bottom line is that call centres contribute to the economic expansion and viability of our communities. They also allow a large number of workers the opportunity to move up into better paying jobs and are helping build a strong base of knowledge-based employees. More than 10 per cent of call centre employees and most outside technical support staff are already in well paid, high-tech positions. The challenge now is to develop more of these higher-end jobs so that families in the region can benefit from a higher disposable income and a larger share of the economic pie.
Frank Pullia is the Principal of Pullia Accounting & Consulting in Thunder Bay. He can be reached at 474-8294 or at frank@frankpullia.com
Contributions to this article were made by Brian Villeneuve, senior business consultant (contact centres) from the Ministry of Economic Development and Trade and Richard Pohler from the City of Thunder Bay’s tourism and economic development department.