Xerox officials answer questions about Amazon's call-center announcement

More competition in Central Kentucky's call-center market

ctruman@herald-leader.comMay 14, 2012 

Last week's announcement that Amazon.com will locate a large customer service center in Winchester adds to the trail already blazed by Xerox with its service unit in Lexington that employs 3,000.

Amazon.com said it will pay about $15 hourly plus benefits. Xerox pays about $10 an hour, but said that it has no trouble finding enough people to work for that — and that if it did, it would move elsewhere.

Statewide, Xerox — which bought Affiliated Computer Services, or ACS, in 2010 — has about 5,000 employees in various business units, including an employee group that converts paper mail into electronic documents.

Does Amazon.com's move into the Central Kentucky call-center market, with a plan to hire more than 500 permanent employees and 600 seasonal ones, add a wrinkle to the Central Kentucky job market? And what does Xerox look for when it locates higher-paying research and management jobs in a state? The answer is surprising for a state in which most of the dialogue about economic development centers on being the low-cost leader.

Xerox CEO Ursula Burns, who is based at the company's headquarters in Norwalk, Conn., and Connie Harvey, chief operating officer of Xerox Services and the highest-ranking company officer in Kentucky, answered these questions and more in meeting with the Herald-Leader shortly after Amazon made its announcement about the coming Winchester call center. Here are highlights of the conversation, which has been edited.

Question: One thing that has come up that is going to change the landscape is that Amazon.com is coming into Winchester with a customer-service center hiring 550 full-time employees and 600 seasonal employees. They're going to pay about $15 an hour, with benefits coming to about $20 an hour, and it's an easy commute from Lexington. Does that make anything more difficult for you?

Burns: I would expect that any expansion in a tight economic area would put pressure on all the aspects of employment. ... But we have a business to run. We pay the market. So we'll continue to pay to market on the jobs we have in Kentucky, and as Amazon comes on board. So if it's a like job, we'll compete, obviously.

Harvey: If we look at our average employee in Lexington, first of all, they're not from Lexington. We have our Yorkshire location (off Richmond Road), and a lot of employees come from Richmond, Berea, Madison County way. And we strategically opened (on) New Circle because it has easy access to Scott County and Franklin County. ...

When we started putting call centers in Lexington, Winchester had a 500-seat call center for EDS (Electronic Data Systems, which Hewlett-Packard bought in 1998). And they closed that, and now it's reopening as a similar size call center.

So the population is there. And we have not, at least until this point in time, had trouble finding employees. If we started having trouble finding employees, we would not be putting more jobs here. So we'll see how it plays out.

Q: So no immediate increases in salaries, in other words?

Harvey: No. As Ursula said, we pay market, and the thing we all have to be conscious of is if we have a customer and we have 1,000 call center seats in Lexington, that customer probably has another 10,000 or 15,000 call center seats, either with us or with others, so at the end of the day we have to be competitive.

Q: How long do people work in call centers?

Harvey: Different call types have a different longevity. A lot of calls we do here are for health companies. ... They're taking benefits questions from the senior population, and the longevity in those positions is longer than those who are answering billing questions, taking complaints. We have people who have worked four to five years at the same call center. We have people who last six months.

Q: When you say you pay "market," what is considered market here?

Harvey: In Lexington, we usually pay $10 an hour plus benefits. And then obviously with seniority and advanced skill sets, that can increase.

The other thing to remember, when we're setting up a call center, there is usually a 1:10 ratio of technical support supervisors, managers, quality control people. So if we're opening a call center of, say, 200 people, there's probably another 50 people who are above that $10-an-hour salary.

We look at it, we've got to be competitive for the customer. We can give them a call center in India, we can give them a call center in Lexington, we can give them a call center in Lexington or Phoenix.

Q: Are those priced differently?

Harvey: Yes. And the customer makes the decision based on what their needs are.

Q: Xerox has about 3,000 employees in Lexington and 5,000 in the state. Is there a cap on the number of employees you would consider hiring here?

Burns: We don't put an arbitrary cap.

Harvey: There may an optimum number of people for a site, but not for any particular location. Our sites are usually chosen first and foremost by our customers — in this geographic region, in this time zone or in this area where we have an office.

... We have a large presence in London, Kentucky, a large site in Erlanger. We have employees in Louisville as well.

Q: These are all call centers?

Harvey: No. Probably over 50 percent of our employees in Kentucky are not in call centers.

Q: What do they do?

Harvey: They could be doing mailrooms, where we go to the post office and collect mail for our clients, image it and put it into a technology platform.

With our health care clients, we actually take the claims, adjudicate those and pay those.

Q: About the 10:1 ratio, if you have a 10:1 ratio, that means you would have an engineer or manager.

Harvey: All 3,000 jobs in Lexington are not call center. Probably a third of those, depending on where we are in our season, probably a third of those are hourly paid employees. ... If you look across Lexington, in general, it's maybe three hourly for one professional, when you take into account our technology development staff and management staff that is here.

Q: Is Kentucky a business-competitive state?

Burns: I don't expect a state to charge me no taxes, but you won't see me running to a state that charges me more taxes either. I don't want a state that has no regulation ... but a state that has too much, I'm not going to go there either.

But that's not where we focus our energies at all.

Do you have a good education infrastructure, so an employee we will want to move there? So they're like, I'm going to move them there but there's no place for them to send their kids to school?

Do you have good infrastructure? Can I get in and out of the state? Do you have good roads that are reasonable, ports, an airport, an energy source that's reasonable?

Those things, over a long period of time, are more important to me, to Xerox and to most businesses by the way, because we've done tax goes up, tax goes down.

We get ourselves caught in — and we will move out of — places that don't have good education, good arts, don't have a place people want to live.

That is a business-friendly state.

Cheryl Truman: (859) 231-3202. Twitter: @CherylTruman

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