Nearshore Americas

Sourcing Nova Scotia: Can a Small Province Bounce Back from Major Defections?

The devaluation of the U.S. dollar, staff poaching and negative perceptions converge to create a strained environment for contact center operations in Nova Scotia, Canada. Despite these and other challenges, there are many positive things that keep this sector alive and make the province an attractive place to do business.

Cameron Bruce, the president of the Contact Centre Nova Scotia and Director of Operations for the North America Inside Sales Division of Xerox, based in Halifax, touts several qualities that make Nova Scotia a perfect place for customer service, “When there is a requirement for customer relations we really do leverage the maritime culture in Canada.  It is almost an island mentality.  Our people genuinely care about people; they are not faking it.  If you are an inside sales rep and your customer is in Connecticut, if you care about the customer, you will know what is happening in Connecticut, and drive the relationship.  We need to market culture and kindness of people.”

Bruce also cited the lower cost of living that allows employers to pay lower salaries, the fact that the poverty line is much lower in Nova Scotia than in Ontario, the lack of harsh weather, a strong post-secondary education sector and access to new recruits every four months as positives that companies should consider when evaluating Nova Scotia as a sourcing destination.  The contact center sector also has had a high success rate for hiring university graduates for inside sales positions.

But, Bruce laments the way the industry is still maligned in the press and by university professors, “The image of the industry has improved over the last three years, but there is negativity towards it.  Due to ignorance, not understanding and people draw conclusions that they [call center employees] are kids in sweatpants calling them at dinnertime to bother them.  The education marketplace is not helping either.  They are misguided.  Professors tells their students that they better get a good score or they will be working in a call center.  One of the mandates of our association is to turn it around, offer a career opportunity and fulfill a training service around sales and customer service. There are a lot of good jobs, it is a good industry.”

Turnover is something the industry in Nova Scotia struggles with, as do call centers worldwide.  Amongst the lower paying ranks turnover is over 50 percent, whereas attrition in the higher paying strata is below 15 percent.  Bruce also pointed to the poaching hazard, “In some cases we have new operations starting up and when that happens we will see good staff move around.  Trying to sell ourselves as a good place to set-up contact centers can hurt us.  We become victims of own success.”  One way that contact centers can curb attrition, Bruce contends, is “by bringing higher value jobs to centers and creating a career path that can go from entry level to Sales Manager or beyond.”

Another positive/negative dynamic is the current strength of the Canadian dollar against U.S. dollar.  Seven years ago when centers first started opening in the province, the U.S. dollar was much stronger and companies enjoyed an immediate cost-savings.  The current economic climate has seen an increase in operational costs of about 25 points as compared to what they were in 2004.

Bruce isn’t concerned that the return of call center operations to the U.S., known as Rural Sourcing, is going to have a deleterious effect on the Canadian market.  “We haven’t seen it impact our province.  If something is closing it is because it is an outsourcer and that business has lost a customer.  But we aren’t seeing a return to the U.S.,” he declared.  Of the customer demographics, Bruce estimates U.S. companies account for approximately 75 percent, 24 percent are Canadian and the UK based Admiral Insurance claims around 1 percent.  Typically customers provide very positive feedback about their Canadian centers, but it is also possible they, “might also say we are getting more expensive,” says Bruce.  Even though he remains positive, it is evident that if there were an exodus from Canada to the U.S., the contact center industry in Nova Scotia would suffer terribly.

Closures and Clinchers

Bruce takes a long view when evaluating the sector he is passionate about, “It has probably declined a little over last two years and some companies are growing significantly.  Others lose a contract and pull a center out.  Convergys just pulled out due to losing a customer in the U.S.  We just completed a study that concluded there are approximately 12,000 employees in the call center space; there were 14,000 employees eight years ago.  I think we will start to see higher valued jobs replace lower value jobs.  The inside sales contact center space is growing.  We are still suffering from a recession, but when we come out of that the opportunity for sales roles in Nova Scotia is good.  I don’t see the decline continuing forever.”

The September 2010 closing of the Convergys call center on the Millbrook First Nations reserve, near Truro, resulted in the unemployment of 200 people, a potentially devastating blow to a small community.  Convergys closed another facility in the town of Cornwallis in March 2011.  Although the 300 employees were offered the chance to transfer to other Convergys centers in Dartmouth and New Glasgow, the closure had a demoralizing effect on the small communities that relied largely on Convergys for employment since its opening in 2004.  As quoted in the December 15, 2010 editon of cbcnews, Digby Mayor Ben Clevelend laid out the stark numbers, “The town of Digby is only a population of 2,200, and [the company] is centred between Digby and Annapolis Royal, a community of about 600 people, so it’s a large percentage of our population base.”  In a July 1, 2010 letter to the Herald Chronicle, Bruce pointed out, “In some communities, the contact centres have provided an alternative form of employment when traditional sources of work disappeared.”   However, as the Convergys closings illustrate, there is a danger for a company to have only one client (or only one big client), and an ever-present risk when communities depend so heavily on one employer.

Signature Styles which had 350 employees in 2010, laid off 80 employees and shut its operations in the Cape Breton Municipality of Nova Scotia at the beginning of June 2011.  The closure was yet another blow to the town of New Waterford, a community of 7,000 people suffering under an unemployment rate of 18 percent.  Cape Breton, an island off the Atlantic coast and part of Nova Scotia, is an industrial area of Canada that had long depended on the coal mining and steel industries until Crown Corporation Devco closed its last mine in 2001, leaving 6,000 people jobless.

The closing of Signature Styles is particularly harsh in light of the fact that the company, then still known as Spiegel Brands, was awarded an incentive of $1,200,000 in 2009 by the Nova Scotia Industrial Expansion Fund (NSIEF).  The government is now hoping to recover at least some of an additional $1,800,000 Signature Styles received from NSIEF in 2010.

Live Stream

One strong and constant prescence in Cape Breton is Stream, the Boston based outsourced customer relationship management firm with locations around the world, including the Canadian provinces of British Columbia and Ontario.  Illustrating how strong companies can play their hand, Stream held out on operating in Nova Scotia until, in 2001, they received an incredibly attractive incentive packagethat totaled $8,770,000, a sum made up of a $6,500,000 contribution from the Cape Breton Growth Fund, now called the Atlantic Canada Opportunities Agency and funds from other entities, such as a $973,000 loan guarantee to Harbourfront Development from Nova Scotia Economic Development .  Stream also received $1,300,000 in rent subsidies from Human Resources Development Canada to assist with the development of their contact center in Glace Bay.  A condition of the funding was that Stream would create and maintain 900 new positions.  In an interesting twist, Stream leased the former Devco General Mining Building for ten years.

According to its website, Stream recruits from Cape Breton University, Cape Breton Community College and Cape Breton Business College.  They currently occupy 100,000 square feet with a capacity of 1,111 seats to “deliver outstanding support services” in English and French-Canadian.  Stream has also issued a sterling endorsement for its host, “Cape Breton supports leading companies in the high-tech and consumer electronic industries and has consistently demonstrated the ability to efficiently implement new business.”  Not only has Stream honored its commitment to Cape Breton, it appears to have exceeded it.

X Marks its Spot

In the summer of 2002 Xerox Canada opened a TeleWeb facility in Dartmouth, Nova Scotia to service its North American customers.  As reported by cbc, Xerox was expected to first hire 150 people, and eventually fill 600 positions.  At that time, Mary P. Donato, vice president, Xerox Global TeleWeb Operations stated “From Halifax, as in Saint John and Irving, our TeleWeb specialists will be serving customers in Canada, the U.S. and Puerto Rico.  They will encounter all types of sales situations and several different languages, so we intend to recruit top candidates who will flourish in this environment.”  The company also had plans to increase its workforce in Saint John, New Brunswick by 50 people for a total of 900 positions.   Per the cbc article, Xerox stated in a press release, that the Dartmouth operation, like the one in Saint John, would not be a traditional call center. “It will combine a highly skilled sales force with leading edge Internet sales techniques.”  Like Stream, Xerox received attractive incentives from Nova Scotia, including a “training allowance of up to $1,000,00 and payroll rebates of up to $6,600,000.”  Xerox has enjoyed success with its Dartmouth location and there are no signs that they plan on abandoning the province any time soon, if at all.

Ocean Bright

Headquarted in Halifax since 1994 and specializing in “20 to 70 seat call center outsourcing applications,” Blue Ocean, could be considered a provider of boutique services to “global clients in the tourism, telecom, retail, financial and technology sectors…”  Their highly specialized agents interact with customers by phone, e-mail or web applications 24/7.

Blue Ocean employs a team of 500 professionals.  Working with Cisco Systems, Blue Ocean conducted a major upgrade of their call center technology platform to the Cisco Unified Contact Center Enterprise 7.5.  The new system allows the merger of inbound and outbound telephone contacts with Internet applications, including real-time chat, web collaboration, and e-mail messaging.  The unified capabilities assist a single agent with supporting multiple customer interactions simultaneously, regardless of whether the contact is on the phone or the web.  According to John Doane, Blue Ocean’s Director of Technology, “The latest Cisco platform is the leading system available to our industry right now.  It provides the most efficient, reliable handling of customer contacts and will ensure that our clients are ahead of their competition when it comes to customer contact mediums, including web-based applications, and insightful data on those interactions.”

Blue Ocean is always ready to rise to a challenge, as it did when the HR Department conducted an extensive effort to recruit a very special group of agents to service a client’s European customers.  Using social media and Google to their absolute fullest, and thanks to the diverse pool of talent in Halifax, the campaign was a success and saw the hiring of German, Italian, Spanish, Portuguese, and International French speakers to fulfill their client’s need.  Blue Ocean is deeply rooted in Nova Scotia and it appears they will be for a very long time.

Kirk Laughlin

Kirk Laughlin is an award-winning editor and subject expert in information technology and offshore BPO/ contact center strategies.

Add comment