Encouraging signs of an economic recovery are visible across the U.S. — cities and states are easing restrictions amid widespread vaccinations, businesses are reopening, the housing market is booming, retail sales are strong, and consumers are eager to spend.
So, where are all the call center workers? That’s what an increasing number of company leaders are asking as in-house and outsourced call center operations report severe staffing shortages and fewer job candidates. Despite an uptick in the unemployment rate to 6.1% in April, job applicant flow has been inconsistent, and the show rates dismal. Several call center outsourcing vendors have disclosed that training class show rates are down to 40%-50%, some as low as 20%.
Call center employers also report that attendance and schedule adherence are off, which are indicators of a competitive labor market. And in fact, employers across sectors are complaining that they cannot find enough workers to fill open positions and meet the rising customer demand. According to the National Federation of Independent Business, in April, 42% of small businesses said they could not find workers, up from 32% in December 2020.
Only 266,000 jobs were created in April, as opposed to the 1 million that economists had forecast. Some employers blame the enhanced federal unemployment benefits, which pay more than the minimum wage in some areas and has created a disincentive for people to work. A growing number of U.S. governors are moving to opt out of the $300 federal unemployment weekly bonus benefit in June, stating that it impedes job growth in their states.
Despite the disappointing April jobs report, Gad Levanon, head of the Conference Board Labor Markets Institute, has suggested that there will be strong employment growth ahead. He noted that the Conference Board Employment Trends Index, which aggregates eight leading indicators of employment, “significantly increased” in April, driven by positive contributions from six of eight components. Turning points in the index indicate that a turning point in the number of jobs is about to occur in the coming months.
The labor market is expected to accelerate as vaccinations increase and fear of COVID among job-seekers eases, schools open, and the $300 unemployment supplement expires. In addition, more than half of the states have already restored work search requirements for unemployment benefits under President Biden’s direction to the Labor Department on May 10th.
But aside from expanded unemployment benefits, there are other factors keeping potential workers at home, including fear of contracting COVID-19 in the workplace and the lack of school and childcare.
Work-at-Home Call Center Jobs Are Not the Panacea
The quick pivot to work-at-home models made by many call centers during the global COVID-19 lockdown provided frontline employees with the much-needed safety of working in isolation. Work-at-home call center jobs also offered more scheduling flexibility and lower costs for workers (e.g., no commuting costs or expenses for food, clothes, etc.).
However, quite a few employers and employees have since discovered that work-at-home presents a different set of challenges. For example, most call center workers don’t have an extra room or space that can be converted into a home office and are forced to share a workspace with other household members, including remote-learning children. In addition, many are plagued by the limitations of home networks (which are often shared with other household members), as well as technical issues with equipment, software and difficulties accessing company systems.
Work-at-home fatigue also become widespread over the past year. More than two-thirds, or 69%, of employees say they have been experiencing burnout symptoms while working from home during COVID, according to a survey by online employment platform Monster.
At-home workers are also struggling to cope with the isolation from their co-workers and the work culture. While feeling isolated has long been a top complaint among remote-working call center agents, the effects (e.g., depression, anxiety) have been heightened by the pandemic lockdown and social distancing. Most supervisors and team leaders who are used to daily face-to-face contact with their teams have not been adequately trained in remote engagement, management and collaboration techniques.
In previous articles, we pointed out the many advantages of work-at-home models as well as the disadvantages. Importantly, the most successful virtual operations have in place the advanced tools, technology and management expertise to deliver a seamless customer experience. However, others that have not invested in remote-work platforms, training, policies and practices are still afflicted by the same challenges they faced when transitioning to work-at-home in 2020.
Competition from Other Job Sources Are Putting the Squeeze on Outsourcers
The tight labor market has many workers rethinking their work options and potential career paths — particularly in the service and hospitality sectors, talent pools with transferable customer service skills that call centers often tap into during peak seasons.
Companies with deep pockets like Amazon are luring job-seekers to warehouse and shopper jobs with high hourly starting rates (averaging $17/hour) plus $1k sign-on bonuses in many parts of the country with an extra $100 for new employees who are vaccinated. Other restaurant and retail chains, including Walmart, Costco, McDonald’s and Chipotle, are following suit by boosting hourly pay for new-hires to $15/hour or higher.
Widespread hourly pay hikes are putting the squeeze on call center and BPO outsourcers, who have a finite wage that they can afford to pay workers since many clients expect competitive costs. Many U.S.-based BPOs are reporting to us that they can no longer compete in respective labor markets due to the economics of outsourcing, especially for client contracts that demand outdated compensation models that are not keeping pace with the current economic and labor realities that BPOs are facing today.
More and more BPOs have had to increase their hourly rate compensation models billed to clients, along with separate charges for supervisors, program management, attrition training, cost-of-living adjustments and other line items. For example, suppose a vendor has to pay call center agents more than $15/hour. In that case, the outsourcer’s all-in productive hourly rates must be north of $32/hour to be profitable while maintaining service expectations and delivering on contractual requirements.
Now Is the Time for Wage Earners to Stake Their Claim on a Career Path
But job-seekers are demanding more than higher pay to get back to work. The psychological impact of the coronavirus pandemic has many unemployed workers reassessing their occupations and how they want to earn a living. According to a Pew Research study, 66% of unemployed adults seriously considered changing their field of work, and one-third of unemployed adults say they have already taken steps to retool their skills by pursuing job retraining programs or educational opportunities.
Job-seekers are understandably concerned about their future and are reluctant to take just any job, but instead want to hold out for the one that offers the prospects for a career.
This career-oriented mindset presents an opportunity for call centers to attract high-quality job candidates by providing training and skills growth benefits. Entry-level jobs in call centers may not be “sexy,” but most of us who started as call center agents are now executives or entrepreneurs or have gone on to other professions like IT, marketing, consulting or training.
In the call center, frontline agents learn valuable customer service, problem-solving and decision-making skills that transfer to almost any profession. Now is the perfect time for wage earners to stake their claim on a true career path, so why not make it available to them?
Increasing Interest in Nearshore and Offshore
The call center staffing shortage in the U.S. is undermining service delivery and customer loyalty at a time when companies are trying to move past the turmoil of the past year and get their businesses back on track. If the current trends continue, we will continue to see an uptick in demand for nearshore and offshore outsourcing.
In the past six months, we have seen an increase in nearshore demand in the U.S. like we have not seen in the past 15 years. But some of the most popular global BPO markets are also struggling due to COVID, agent turnover and other related issues.
As a result, more clients are now asking us for call center and BPO providers in emerging offshore and nearshore markets — the next untapped, unsaturated viable outsourcing market.
Will On-Premise Call Center Jobs Make a Comeback?
Many on-premise call centers weathered the pandemic with the idea that, eventually, there would be a return to normal operations. With the vaccine rollout and COVID cases declining in the U.S., employers believed that the ratio of virtual to on-premise operations would tip in the direction of brick-and-mortar. This hasn’t happened… yet.
In fact, with the spread of new virus variants, labor market factors and competitive job opportunities, we are not seeing a trend pointing to a return to on-premise call center jobs… yet. And clients that do not approve or allow for work-at-home have been feeling the pain of COVID breakouts in call centers, recruiting challenges, poor show rates, attrition and retention issues and overall performance challenges.
After an unprecedented year of hardship, anxiety and unpredictability, workers are simply not ready to rush back to “business as usual.” Despite the challenges of working from home, most (81%) employed adults say they either don’t want to return to a traditional workplace or would prefer a hybrid schedule, according to a study by Harvard Business School. Of those surveyed, 27% want to continue working from home full time, and 61% said they would prefer a hybrid mix of time spent at-home and in-office. A recent report from FlexJobs found that fear of exposure to COVID-19 (49%) remains employees’ top concern. Less flexibility (46%) and less work-life balance (43%) were other key reasons for employees’ reluctance to return to on-site work.
In the coming years, employers will continue to evaluate whether work-at-home — whether full- or part-time — will become a permanent option for their call center employees. Mercer’s U.S. Coronavirus Business Impact Survey reported that 61% of employers hope to have half or more of their workforce back to the workplace by the end of the third quarter this year. However, 87% say they will embrace greater flexibility, with most planning for a hybrid model.
So, What Now?
For now, there is lingering uncertainty for workers, customers and call centers. But, as with any economic-, geopolitical- and now pandemic-related trends, the call center industry will ride the wave, and in time, return to default settings — with some much-needed tweaks to skills development, remote- or hybrid-work programs, and schedule flexibility options for workers.
Meanwhile, retailers and other businesses are asking their patrons to be patient for service — and the same holds true for call centers. Consumers will have to be patient and bear the brunt of longer hold times and other service-related issues. But this should be a short-term problem.
For the longer term, we expect emerging markets to gain market share — and U.S.-based BPOs with smart, tactical digital hiring practices and industry-leading retention programs to rise above BPOs that are still churning and burning through staff. And if you’re a BPO with domestic U.S.-only operations — global expansion is a must!