Why call centres no longer ring up big job gains

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From the early 1990s to the mid-2000s, Canada's call centre industry was a significant employment growth engine for the national economy.

According to a report prepared by prepared by Statistics Canada back in 2008, telephone call centres experienced exponential growth from 1998 to 2006, rising from $424-million worth of revenue in 1998 to $2.76-billion in 2006 -- an average annual increase of 27.7 per cent. Further, more than two-thirds of this revenue growth was generated by call centres located in Ontario.

After adding more than 90,000 jobs across Canada from 1997 to 2007, the business support services sector saw its employment decline by 28 per cent from 2007 to 2011. Nearly 33,000 jobs have disappeared since 2007. The losses have hit particularly hard in New Brunswick and Ontario. In New Brunswick, the industry lost more than 3,100 jobs between 2007 and 2011. Ontario's sector took an even larger hit, shedding almost 26,000 jobs since 2007 or a 40 per cent decline. While under the radar compared to other sectors, the employment decline in the business support services sector on a percentage basis has been much steeper than in manufacturing.

At a higher level, we need to understand that the customer interaction part of our economy (and the millions of jobs) is in the middle of revolution that we haven't seen since the introduction of the 1-800 number. There will be far fewer jobs associated with customer interaction in the future.

One of the challenges with trying to analyze the 'industry' is that it doesn't fit nicely into a specific classification as defined by Statistics Canada. For example, the call centre function for the banking industry is not separated out from the rest of banking activity.

We do have good data on those firms that outsource call centre activity and do the work on behalf of other companies. The telephone call centre industry (NAICS 56142) is defined by Statistics Canada as establishments primarily engaged in receiving and/or making telephone calls for others.

While we don't have employment trends specifically for the telephone call centre industry, Statistics Canada's Survey of Employment, Payrolls and Hours does report employment data for Business Support Services (NAICS 5614) on a monthly basis. Telephone call centres (the preferred term these days is customer contact centre) are the largest part of this sector.

There are several reasons why the call centre industry is in decline across Canada. First, the National Do Not Call List implemented by the federal government curtailed much of the outbound call centre activity across the country (i.e. those who call you). It is now much harder to use the telephone as a tool to reach customers.

The second, and much larger trend, is the move towards Internet-based customer interaction. From booking hotels to banking to tracking packages, people are increasingly using the Web and bypassing the need to talk directly to a customer service agent by the telephone. Even broader customer service functions are more and more handled automatically or by Web-based systems.

This second trend will have far broader implications for employment across Canada. There isn't a lot of data out there on how many people rely on the telephone as a primary tool of their trade. A high level look at occupational data from the 2006 Census suggests there could be several million Canadians that use the telephone as a primary way to interact with customers and colleagues.

We need to train workers for this new method of customer interaction. Instead of verbal communications skills, Web-based customer interaction requires excellent writing skills. Policy makers need to understand how this trend will impact the work force and make the necessary adjustments.

David Campbell is an economic development consultant and columnist based in Moncton, New Brunswick. He also authors a daily blog on economic issues in Atlantic Canada which can be found at www.davidwcampbell.com.