Five call centers in Colorado Springs have either closed their doors or laid off employees since Dec. 31, resulting in the loss of 1,000 local jobs while the companies that operate those centers expand operations in low-wage countries.
Centers operated in the Springs by Alorica and StarTek closed Dec. 31 and March 31, respectively, laying off all 547 employees. Conduent will close its center Oct. 12 and lay off all 410 employees. All three centers worked with multiple clients in multiple industries. Cable television operator Wide Open West laid off 24 “loyalty specialists” in February. Wells Fargo will lay off 53 in October after shutting down its Consumer Lending Group Home Equity Fulfillment group.
The wave of cutbacks comes even as other local centers are expanding — the Pikes Peak Workforce Center lists more than 800 openings as of July for customer service representatives and at least five other centers have announced hiring plans during the past year. The Colorado Springs area is home to more than 41 “contact” centers employing about 15,000 workers, according to information compiled by the Colorado Springs Chamber and EDC.
But the push to outsource call centers overseas, where companies can pay workers much less, is the more dominant trend nationally. A Bureau of Labor Statistics report found that the United States lost 200,000 call center jobs between 2006 and 2014.
The Communications Workers union is pushing federal legislation, co-sponsored by Colorado U.S. Democratic Reps. Diana DeGette and Ed Perlmutter, that would make companies that move call center overseas ineligible for some federal grants and loans.
The bill would require companies with at least 50 call center employees to notify the U.S. Labor Department before relocating the service to a foreign country. Violators could be subjected to fines of $10,000 per day.
The bill also would require call center operations to tell callers the location of the center handling their call and give the caller the right to be connected instead to a U.S. center.
A spokesman for Colorado U.S. Rep. and gubernatorial candidate Jared Polis told the Gazette, “If the bill moves forward, Congressman Polis will study it with an open mind. In the meantime, Congressman Polis will continue to aggressively pursue policies that protect workers’ rights and help workers to develop their skills and land good paying jobs.”
A spokesman for Colorado U.S. Sen. Michael Bennet said, “Michael is concerned when businesses close operations in the United States and send jobs overseas. He believes we need to find ways to reward companies that invest in the United States while reducing incentives for offshoring jobs.”
Similar legislation has been enacted in Louisiana and is expected to be introduced next year in the Colorado General Assembly.
The Department of Labor provides training and income support for workers who lose their jobs as a result of imports or a shift of production or services to a foreign country. Officials from the Colorado Department of Labor and Employment and Pikes Peak Workforce Center filed petitions for Trade Adjustment Assistance for the StarTek and Wide Open West workers.
The StarTek petition said the positions the company eliminated in the Springs were being “moved to the Philippines and possibly Honduras” while the Wide Open West petition said the company laid off employees in the Springs because the work was shifted to a center operated by Sitel in Alabama and a Wide Open West operation in Nicaragua. The federal agency certified both petitions, entitling the laid-off workers to the training and income support benefits.
No petition has been filed on behalf of the Alorica workers, but six petitions filed on behalf of workers in Iowa, Florida, Nebraska and Oklahoma were certified between 2012 and 2106. Two others filed in 2016 on behalf of workers in New Mexico and South Dakota were denied and one filed this year on behalf of workers in Nebraska is pending.
The Conduent and Wells Fargo layoffs were announced in August, and no petition has yet been filed for those workers.
But the department has certified in the past 15 months four petitions for Conduent workers in New York, Oregon and Pennsylvania and denied two others for Conduent workers at a second Oregon location during the same period. A petition filed this year for Conduent workers in New Jersey is pending.
The department has certified two petitions during the past 2½ years for Wells Fargo workers in California and Pennsylvania, but denied five others during the same period for Wells Fargo workers in Iowa and Oregon. Two more petitions filed this year for workers in Maryland and New York are pending.
“In many cases, the (laid-off) workers didn’t or don’t know they are eligible for Trade Adjustment Assistance,” said Shane Larson, legislative director for the Communications Workers of America, a Washington, D.C.-based union that represents call center workers for AT&T Mobility, Verizon Communications and others.
“The big outsourcing companies like Alorica, Conduent and StarTek have been doing this year years, laying off U.S. workers and expanding in the Philippines.”
Larson said the union has successfully fought attempts to move call center work overseas, but he said “tens of thousands of jobs” have been lost in the call center industry. American Airlines and other companies have moved calls back to U.S. centers, citing poor customer experiences and other complaints.
Tammy Fields, the chamber’s chief economic development officer, said all three of the centers that have closed or plan to close work under contract for a variety of clients.
“That industry is very competitive and is more volatile than customer support centers” operated in Colorado Springs by insurance giants Progressive and USAA,” she said. “I’ve been dealing with companies in the customer support industry in Colorado Springs for 20 years and activity in this industry goes in cycles. There is a lot of activity when there is available labor. They try to capitalize on that.”
Centers operated by contractors such as Alorica, Conduent and StarTek struggle to find workers in a tight labor market like Colorado Springs, where the unemployment rate in July, the most recent month available, was 3.6 percent. Wages also have escalated in the industry, in part as a result of a voter-approved law raising the minimum wage over five years (ending in 2020) to $12 an hour.
Fields said the chamber hasn’t had much interest from call center operators in the past two years because of the area’s low unemployment rate and concerns that the industry has reached its saturation point, or capacity, in Colorado Springs.
“Because we have so many owner-operated call centers, it is more difficult for the third-party call centers to be competitive for employees. There is a lot of competition on the lower end (of wages) in the labor market for workers,” Fields said.
“We have tried to encourage some of these centers to open in the southeast part of the city, where there are more available workers, but, instead, they are clustered along Garden of the Gods Road and the north end of the city.”
Jennifer Pierceall Herman, industry relations manager for the workforce center, said the average starting wage for customer care workers in Colorado Springs — $13.25 an hour — is less than the average starting wage for customer service workers in either the restaurant or retail industries at $13.40 and $15.30 an hour, respectively.
She said the workforce center helped workers at Alorica and StarTek find new jobs by offering job search workshops, conducting job fairs, and a career fair for Conduent workers is scheduled for Sept. 19. She speculated that virtually all of the laid-off workers from the two centers quickly found new jobs in the industry since few attended the workshops and several local call centers were hiring at the time.
Tek-Experts, a Bulgaria- based outsourcing firm, announced plans in October to more than triple its 150-person Springs workforce by early 2019 to provide support to sales, software, service and customer relationship management operations of major corporations worldwide. Progressive said in February it planned to hire 900 people this year for customer service and inbound sales representatives, software developers, data engineers, several types of system engineers and others.
Investment giant T. Rowe Price said in June it plans to move 220 jobs to Colorado Springs and Owings Mills, Md., when it closes a 400-employee operations center next year in Tampa, Fla. The company said in an August email statement that it is “too soon to predict how many associates will choose to relocate to which of our facilities, or the impact on our workspace requirements.”
Two other centers announced expansion plans this week. Radial, owned by Belgian Post Group, is adding 513 seasonal workers at its Pueblo call center to handle increased demand from its clients, which include many of the nation’s largest retailers. EcoMark Solar also plans to double the size of its 10-employee call center in Colorado Springs to handle inquiries and leads from customers along the Front Range.
Colorado Politics’ Washington correspondent Tom Ramstack contributed to this report.