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The Science of Site Selection

November 30, 2007
Related Topics: Managing International Operations, Career Development, Candidate Sourcing, Employee Career Development, Featured Article
It's been 26 years since the World Bank first coined the term "emerging markets" as a broad marker for countries where per capita gross national income falls below a specific threshold, currently set at $10,725. Emerging markets constitute 80 percent of the global population and 20 percent of global output. Identifying the key countries for global business growth within the vast emerging market group has become a major ongoing research project for international banks, investment houses and consultancies.

    A.T. Kearney notes that many global companies are no longer choosing between Asia and Latin America but building operations in both. Sitel Corp., headquartered in Nashville, Tennessee, is a good example. With large facilities in India, the Philippines and other Asian locations, Sitel is one of the many BPO companies expanding rapidly into Latin America for lower labor costs and broader client offerings. Sitel pulls in $1.8 billion in revenue with 67,000 employees spread across 27 countries, including Mexico, Panama, Colombia and, most recently, Argentina and Chile.

    "The top three expenses for any customer care contact center are labor, real estate and IT," says Amit Shankardass, Sitel’s senior vice president for solution planning, who carries substantial responsibility for site selection. "If you include benefits and taxes, labor accounts for approximately 60 percent to 75 percent of the cost, depending on the location. In addition to the financial cost, the availability of a labor force and its work ethic must be considered in the overall labor cost."

    Sitel’s site selection research includes in-depth evaluations of unemployment and underemployment rates; labor costs, including the average starting wage and retail wages; major employers in the region, including competitors, and their wage rates; educational institutions and graduation rates; and the available workforce, including the population within a 20-mile commute. It also evaluates real estate and associated costs, taxes and potential support from the local, state and national governments.

    Sitel pulls in a number of resources to gather the data required to make site selection decisions. These resources include state and local economic development agencies, brokers, site selection consultants and the local American Chambers of Commerce. Sitel uses focus groups drawn from the local labor market to determine U.S. cultural affinity, work ethic, education levels and other workforce characteristics.

    To manage attrition and wage-inflation issues, Sitel takes a multifaceted approach. "Typically, we evaluate internal processes and review the site from an operations perspective to ensure that we are doing everything that needs to be done to retain valuable human capital," Shankardass says. "Also, external forces that are out of our control, such as wage inflation, necessitate creativity when trying to remain the ‘employer of choice’ in the given region."

GDP growth, inflation rates and salary increases for professional and technical workers, variable bonuses as a percent of base salary and turnover rates in select Asian emerging markets, 2004-2007
Salary increase7.407.797.808.10
Variable bonus15.0014.6715.1010.39
Salary increase12.1012.0011.2015.00
Variable bonus20.0031.9635.2130.00
Salary increase8.608.219.179.20
Variable bonus16.0022.0026.0020.00
Salary increase8.008.0010.678.74
Variable bonus9.804.0013.5316.46
Source: Watson Wyatt Worldwide

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Workforce Management
, November 19, 2007, p. 28 -- Subscribe Now!

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