For call center, quality service trumps appeal of outsourcing

October 24, 2004|By JAY HANCOCK

PHH CORP.'S ownership is switching yet again, and you know what that means: another long look at costs and profit projections, the type new proprietors always make.

Maybe they'll sharpen their pencils on PHH's Baltimore County operation. Hundreds of the 950 jobs there are telephone call-center positions - helping corporations manage vehicle fleets - and we all know call centers are ripe for shifting overseas where wages are far lower.

But nobody's learning how to say, "Hello, PHH Bangalore, how may I help you?" according to bosses.

"It just doesn't make sense to us that we could outsource this and give our clients the same level of customized service that we do today," says PHH President George Kilroy. "Whenever the issue of outsourcing a call center comes up, that might make sense in an order-filling capacity, but that's not the business we're in."

OK, but what about layoffs without outsourcing? PHH is being spun off as a separate company by owner Cendant Corp. Shareholders might like a few jobs nuked to give the new stock a happy bon voyage.

"Absolutely no layoffs are anticipated" at PHH's Sparks facility, Kilroy says. "As a matter of fact, all of our growth strategies are still in place. My guess is, over the next year, if we do anything we'll be adding people."

Adding people? No outsourcing? Growth strategies? PHH walks on the wild side, or at least the less-worn path, no matter who its shareholders are.

The company seems to treat workers better than many of its corporate peers do on the theory that a smart, stable work force will produce a quality product that brings new business.

How much better?

The average Sparks PHH worker has been there a decade. Only 9 percent of PHH's people leave in any given year, which is unheard of for call centers and the financial-service business, "something we take great pride in," says human resources chief Rita Ennis.

Almost all the jobs are full-time with benefits, and the average tenure of the 60 or so part-timers is 12 years, even longer than that of the full-timers.

PHH is the place aspired to by workers at credit-card giant MBNA Corp., another northern Baltimore County back-office operation that doesn't pay half badly. PHH covers 80 percent of medical premiums for employees and families; 72 percent is the average for U.S. companies, according to the Kaiser Family Foundation.

Half the people who have been with PHH at least a decade have taken advantage of its 100 percent tuition payment program. "We strongly encourage people who don't have their B.A. degrees to get them while they're here at PHH," says Ennis.

PHH offers a full match on 401(k) retirement contributions up to 6 percent of your salary. Pet insurance, too.

I couldn't get the company to divulge salary figures, but a lot of these jobs seem to be in the range of $30,000 to $50,000 a year and higher. "Those are technically call-center jobs, but the level of training, sophistication and pay is far greater than for someone who's trying to sell you a magazine subscription or a credit card," says David Iannucci, economic development director for Baltimore County.

PHH was founded in Baltimore in 1946 to manage car and truck fleets for companies that didn't want to hire their own workers to worry about tag renewals and oil changes - an early form of outsourcing. Today its workers in Baltimore County and international affiliates manage purchasing, financing, maintenance, insurance, accident emergencies and reselling of more than 1 million vehicles, including those owned by nearly a third of Fortune 500 companies, the company claims.

Earnings have been steady even if the ownership hasn't. Fleet-management revenue rose 2 percent to $1.51 billion last year, and profit not counting depreciation, taxes, interest and amortization increased 9 percent to $114 million. Revenue increased 9 percent for the first six months of this year, and EBITDA went up 15 percent.

In 1997 PHH was bought by HFS Inc., which merged with CUC International and changed its name to Cendant, which sold the fleet-management unit to Avis, which sold it back to Cendant, which is now spinning it off along with a PHH mortgage operation in New Jersey. Terry Edwards, who will be chief executive of the new company and based in New Jersey, says he can't guarantee more changes won't happen down the road.

"The fact that we're returning to our roots is something we never would have anticipated," he says. "The financial markets are difficult to call. For us it's business as usual. Put your head down and perform for your client."

Memo to the new owners: That's more likely to happen with a good 401(k) plan.

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