Do-not-call lists may force more call centers overseas

Penalties would still apply but costs are cheaper

October 05, 2003|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

More of your telemarketing calls during dinner may soon come from India.

Hemmed in by do-not-call laws with enormous political support at the federal and state levels and other pressures, the U.S. telemarketing industry is looking increasingly at establishing call centers overseas.

Federal curbs on telemarketing, if they surmount court challenges, would still apply to calls placed from overseas, but reduced labor costs would help telemarketers absorb the financial hit from the do-not-call lists, experts said.

"I would think that is inevitable," said John A. Challenger, chief executive of Challenger, Gray & Christmas Inc., a Chicago outplacement firm. "The do-not-call list will put more pressure to keep their costs down."

Moving a call center offshore won't save American companies from the law, or the $11,000 penalty that can come from each call of the 51 million people now on the list.

"They're still going to be subject to the same rules and scrutiny," said Carol Meyers, vice president of marketing for Unica Corp., a marketing management company in Waltham, Mass.

But labor and rent costs are significantly lower in other countries. The average telephone sales employee is paid $10,000 annually in India, compared with $40,000 in America, said Rich Tehrani, a publisher and editor at Technology Marketing Corp., which produces a telemarketing industry magazine in Norwalk, Conn.

Telemarketers had already begun moving operations offshore, from the Philippines to South Africa. Rapid advances in Internet-based telephony have made international calling as cheap as domestic calls. An estimated 250,000 jobs in the U.S. telemarketing industry have already shifted overseas, Tehrani said.

This isn't the first time the industry has had to adjust, even though many people were barely aware of telephone sales until several years ago when they proliferated.

Telemarketing dates to at least the 1920s. Stockbrokers of the day used the emerging technology of the telephone to call clients about hot investment prospects.

Sixty years later, the form had a resurgence as door-to-door salesman became an anachronism. The growth of suburbia, two-income households and fear of crime meant fewer people answering their doors during the day. The breakup of Ma Bell's monopoly and deregulation led to lower calling rates, which aided the economics of phone-based sales.

"Companies tried looking at direct [mail] marketing, but it didn't have the same personal touch as a door-to-door salesman," said Lisa Defalco, chairwoman of the American Teleservices Association, whose members run telemarketing call centers for other companies. "Telemarketing provided that personal touch."

Do-not-call lists at the national level and in at least 39 states will likely accelerate the biggest makeover of the industry in a generation, industry executives said.

"This could change it drastically," said John Feldman, a board member of the New York-based Promotion Marketing Association.

The Federal Communications Commission last week began fielding hundreds of complaints from people on the national registry even after the courts blocked another federal agency from enforcing the list on constitutional grounds. Many companies have decided to voluntarily refrain from calling numbers on the list.

Some telemarketers blame self-inflicted wounds for their woes, such as the introduction of predictive dialers - computerized dialing systems that get a salesperson's response only when someone answers the phone. The technology made telemarketers much more efficient, but also clogged household answering machines and accidentally hung up on people.

"These predictive dialers really brought this whole issue to the floor," said Bob Bulmash, founder of Private Citizen Inc. a Naperville, Ill., company that has lobbied against telemarketing since 1988. "The amount that people were getting hung up on just increased the anxiety toward telemarketing."

But the industry has survived other changes that brought predictions of doom long before do-not-call. Technologies such as Caller ID, the apparatus that shows the incoming number or caller, and the rise of the Internet were seen as major challenges. But telemarketing survived both.

Some in the industry even argue that the Internet helped telemarketing because it helped make people more comfortable with shopping at home and made them crave a live voice after frustrations with Web browsing.

Telemarketers rang up an estimated $660 billion in sales in 2001, according to the Direct Marketing Association.

Magic Chimney Sweeps has relied on telephone solicitation, but the White Marsh business is already looking at new ways to drum up sales.

"It's going to be complicated for us to deal with," said Kerry Pritchett, the owner who worries she won't have enough work to keep all of her employees. "We'll probably stop calling new people. I certainly can't afford to get an $11,000 fine every time I turn around."

Not every company thinks going overseas is the answer. Some are already rethinking alternatives, such as direct mail or better targeting customers who call the company.

Some are even thinking about calling people at work, said William Blundon, co-founder of Extraprise Inc., a marketing consulting firm in Boston.

"The vast majority of office phones will not be on the registry," he said. "The question then becomes the etiquette of calling people at the office."

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