Like it or not, telemarketing is taking its place among Utah's high-growth industries.
Despite a reputation of offering low wages and no benefits to its part-time laborers, telemarketing has created thousands of jobs in the 1980s that otherwise wouldn't exist. And, although a majority of consumers confess they hate those annoying sales calls, the method of selling-by-phone has proved a cost-effective way to reach hundreds of potential customers (see related story).No precise figures tracking the industry's growth exist, but state officials are trying to change that. For now, Utah's Department of Employment Security lumps telemarketing under the generic catchall "business services," which includes numerous other small industries. Further complicating the task of separating out telemarketing jobs is the fact that many companies that don't fall under business services have their own in-house telemarketing operations.
But even conservative "guesstimates" of its impact on employment indicate why local economists, government officials and business leaders are now taking notice of what was thought an insignificant, backroom business.
In the past 12 months, AT&T, Sears, J.C. Penney and Holiday Inn have announced plans to open telemarketing centers along the Wasatch Front, projecting more than 2,000 jobs in the near future. Those operations will join NICE Corp., Automated Phone Exchange, American Express, Fidelity Investments, Delta Air Lines, Eastern Airlines and a host of smaller operations employing a combined total of up to 6,000 more jobs.
"We always have tried to promote growth from all areas, but when outside companies like Fidelity and Sears came in, it made a lot of people wake up and say, `Hey, we can be a major player in this field,' " said Kirk Green, director of urban development for the state Department of Community and Economic Development.
Although it's the sales calls, or "outbound" operations, that give the industry its troubled reputation, most of the telemarketers in Utah engage in the other end of the business labeled "inbound" telemarketing - taking orders, reservations or other requests by telephone from customers calling an advertised 1-800 number. Calls received by most phone banks in Utah primarily come from the western United States, while those fielded by American Express originate from anywhere in the world.
So why has Utah become so attractive to telemarketers?
It's a combination of things ranging from geographic location and speech accent to an abundant work force that will work for low wages.
Utah's location in the Mountain time zone enables customers on the populous East Coast to phone in orders during the evening, when it's late afternoon here. Also, Salt Lake is somewhat of a hub for telecommunications in the Mountain West, allowing for top-level service and attention to the estimated 2 million calls coming into Utah in a single day, said Jack Schiefer, who oversees AT&T's four-state area connected into the telecommunication giant's international network.
He said that during the past six years AT&T has poured $18 million into improving its Mountain West network to handle increased use partially attributed to telemarketing.
An unusual telemarketing quality of the Beehive State is its inhabitants' accent or lack of it. Unlike a New Englander or Southerner, Utahns have an appealing accent, which is important when doing business over the phone.
"Some accents are more easily understood and accepted than others," said Aldyn McKean, publisher of The Telemarketer, a nationally distributed trade newsletter. "But it's not a major consideration."
What has become a major consideration for any business wanting to locate here is the state's abundant, inexpensive and educated work force (see chart).
Some would consider an educated work force willing to work for low wages a contradiction in terms. But, despite the contrast, quality labor at a low price is the main reason why telemarketers are here. Telemarketing is a labor-intensive business, with narrow profit margins, so reduced labor costs can keep an operation in the black.
"Salt Lake has the advantage in that area," McKean said, noting Utah ranks second to Nebraska as a national telemarketing center.
Although it isn't the only industry to exploit Utah's low-cost labor, telemarketing seems to have taken the brunt of the criticism.
"We're concerned about the lower wages, they can be $7 per hour lower (than a union telephone operator) with no benefits because they are part-time," said a spokesman for the Communications Workers of America local 7704, noting that unionizing telemarketing employees is on the union's future agenda.
The Teamsters union failed in its attempt to organize the work force of NICE Corp. in Ogden, the state's largest telemarketing firm. But NICE doesn't apologize for its wages.
"These are entry level jobs and we make no bones about that," said NICE executive vice president Brent Welch. "It's not a career, but they are gaining valuable skills" in communications and computers. The hourly rate at NICE ranges from $3.50 to $6, while overall the local industry wage rate ranges from $3.50 to $8 an hour.
He said turnover at NICE is high at its facilities in Ogden, Provo and Cedar City. Most of their employees are students who need some part-time work and income. "We are constantly in the hiring and training mode."
That type of operation, however, can't be successful for all telemarketers, said Robert Salmon, who helped establish the American Express and Fidelity Investments telemarketing centers in Salt Lake City - two of the highest paying telemarketers in Utah.
"Utah's quality work force can be a two-edged sword," he said. "Utahns are career people, too, who want upward mobility, and if you can't provide that they won't work for you."
Salmon, who consults and directs the Center for Free Enterprise Studies at Southern Utah State College, explained that if the incoming telemarketing operations simply milk the inexpensive labor for what it's worth, their days in Utah - and the state's reputation as a telemarketing capital - will be short-lived.
"If you make it a turnover shop, I don't think that in the long run it will be successful here. It will get a bad reputation as not the business to be from."
On the other hand, Green added, as more of these companies come into Utah, the labor pool will start to dry up, forcing wages up as demand exceeds supply.
"You won't see wages skyrocket, but in the future they will increase," he said.