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Business in Japan just became affordable Miyazaki helps call centers slash costs. (Advertisement).

A call center used to be just a place where operators answer questions from customers, handle orders and complaints and do sales on the phone. But in recent years, call centers have become important tools in overall corporate strategies.

When a call center was just a center with lots of phones, most companies were focusing only on getting customers and sales. But they slowly started to realize that retaining customers and increasing customer satisfaction were the real keys to long-term success. With new technologies such as OTI and CRM, it now is possible to have more effective call center operations and better customer relations. In fact, questions and complaints from customers can be excellent information sources for understanding market demand and developing better products, and that's why call centers are now regarded as important keys for the success of a company.

Now companies look for well-managed call centers that don't cost an arm and a leg. According to Shigemi Sasaki, Design Division Manager of the major office equipment manufacturer Okamura Corp., personnel expenses make up about 70 percent of the whole cost of a call center. Okamura has a lot of experience in designing call centers and offering total support, and Sasaki says the company has learned that a good call-center environment leads to a happier, more productive work force.

"Many call centers now have a lounge where the staff can rest," says Sasaki. Some are designed quite nicely like a showroom to provide a comfortable working environment for employees as well as to attract customers." He adds that it is important and economical to offer incentives to keep trained employees longer.

Sasaki also says that recently call centers have bigger booths with several people in one team. "It is easier to train new people with open booths. New staff can see how the experienced people deal with problems, and the experienced ones can also give advice easily when there are no walls between them." He says that smooth communication is the best way to train new people and to have them stay longer.

Having an open-booth system also provides flexibility. Most companies have peak business times when they receive more calls, and the open-booth system can help a company respond to those changes. Take the example of telecom giant NTT: It has more calls than usual in the spring, at the start of the fiscal year, and needs to hire temporary staff. By using the open-booth system, these temps can smoothly pick up the training they need by watching the veterans around them.

Some call centers have had luck finding staff because they are located in residential areas, where there are no other call centers around. Sasaki says that housewives and students are the gold mine of human resources. "A call center usually require lots of people, and since it is a center that customer don't have to visit, it doesn't have to be located in a metropolitan area, says Sasaki. "If there is a big university or a residential town nearby, that can be a good spot for a call center. If the staff doesn't have to commute a long way, it also helps a call center operate 24 hours a day, 365 days a year."

But Yoshinori Hirabayashi, Executive Director of call center solution provider HowCom, warns companies operating worldwide to not just locate their call centers in the cheapest place. Since the company was established in 1995, HowCom has been providing help desk operations for IT-related matters to various companies as well as advising companies on call center operations and staff training. Hirabayashi has seen some companies focus solely on cutting cost and decide to locate their call centers in cheaper markets such as China or Singapore. "It is of course true that having a call center in Japan costs more than having it in other Asian countries," he says, "but I wonder if people in other countries can provide the best support for Japanese customers." He warns that support systems and customer satisfaction levels are quite different in different cultures, and just being able to speak Japanese is not enough to provide suitable service.


Companies that are serious about raising the level of customer satisfaction among Japanese consumers often opt to locate their call centers in Japan. But where in Japan? Many companies focus on Tokyo, the nation's economic engine, but it is also the most expensive location in the nation -- if not the world.

LINC Media, a company offering bilingual support for foreign-affiliated companies in a variety of IT fields, including setting up call centers, recently analyzed a call center with about 40 employees in Tokyo. Costs were roughly JPY17 million per month, and salaries and rent accounted for more than half of the total. But once a company decides to locate a call center farther afield in a less bustling prefecture, costs often plummet.

Many local governments are well aware of the advantages of running a call center in their jurisdictions, and they've been doing their best to lure business. Call centers can create new employment, lead to an increase in office demand, and since operating a call center requires knowledge of computers and networks, it can have a good economic effect for local IT venture companies. Because of these reasons, many local governments are willing to offer various incentives and subsidies to companies looking for call-center space.

Okinawa is a famous example. The prefecture has set up its leased line to Tokyo and is covering 80 percent of the telecommunications fee for call centers. Hokkaido used to offer subsidies to set up call centers as well and has invited a number of companies to the area.

Miyazaki has been revising its subsidies since 2000, and, much like Okinawa, there is a fiber optic cable directly from the prefecture to Tokyo, which cuts communication costs. For the information service industry, the prefecture covers 80 percent of the telecommunication fee for three years (up to [yen]20 million per year). If construction of data centers or other sections is necessary, the prefecture also covers up to [yen]25,000 per square meter.

Steve Paulachak, Manager of Sales and Business Development in the BiOS Division of LINC Media, says, "When we did the cost analysis of call-center relocation from Tokyo to other parts of Japan, Miyazaki turned out to be the most affordable place." Paulachak has compared Miyazaki, Okinawa, Hyogo, Sendai and Saga by visiting real estate agencies, recruiting firms and companies in the same industry of each area, and concluded that even though the initial investment cost is not the cheapest in Miyazaki, the cost will be recouped in the shortest period of time. "The initial cost would be almost the same among the areas we analyzed, but Miyazaki offers good subsidies. We were hoping the initial cost would be paid off in 18 months, but actually, assuming that the company is to hire about 60 people, the company can recoup the cost in 10 months in Miyazaki," says Paulachak.

The biggest expenses for call center operations are rent and salaries, and the prefecture offers subsidies for both. It covers 50 percent of rent up to [yen]1 million per month for two years and [yen]300,000 (plus [yen]200,000 from Miyazaki city) per person for new employees. And even after the subsidies, Paulachak explains that it would still cost less than having the centers in other places.


In addition to the cost effectiveness, Miyazaki attracts companies with excellent human resources. HowCom started operations at its new call center in Miyazaki in October. Executive Director Hirabayashi says the prefecture is home to many college graduates still in need of jobs. "There are lots of young, intelligent people in Miyazaki. We've researched their employment rate, the population of college graduates and other factors, and realized that we can still find many talented young people there," says Hirabayashi. "If we just compare the cost, we could go somewhere else, but we thought Miyazaki was best because of the literate people there."

Besides, areas famous for call centers, such as Okinawa and Hokkaido, have drawn a lot of competition. CSK Communications, KDDI Telemarketing, Orix Call Center, IBM and others in Okinawa, and Bell Systems 24, Amazon Japan, Net Care, Sony Finance and competitors in Hokkaido very well could have already snatched up the best prospective employees in their areas.

There's more good news for companies trying to locate a call center in Miyazaki: The prefecture is now negotiating with HowCom to establish a special department in the universities in Miyazaki to teach students about call center operations.

This is the first such department in Japan, and there are only a couple of universities with similar departments in the world. The studies will include how to satisfy customers and how to train help-desk staff, and most of the course will be based on standards set by the Help Desk Institute, a global membership association for help desk workers. Once the students finish the course, they will be ready to work in call centers.

There is also good news for foreign companies. In Miyazaki, there is a bilingual college called Miyazaki International College, where 80 percent of the faculty is from overseas and almost all the classes are offered in English.


Miyazaki is also an attractive place for other IT companies. The government has worked to develop the prefecture's fiber optic network infrastructure, called "Miyazaki Information Highway 21," and has connected all cities and towns throughout Miyazaki. This helps companies with branch offices within the prefecture and also lets communication carriers cut their infrastructure costs and offer new services.

Attracted by the high-tech environment and the government subsidies, several companies have established branch offices in Miyazaki in the past year. They include Baxter, which opened a plant; Trans Cosmos, which set up a call center; Kohnan Electronic, with a new research center; and Asahi Kasei, one of Japan's leading chemical companies, with a plant.

The prefecture also has an industrial complex called the Miyazaki Techno Research Park, which focuses on research and development. It has attracted 14 companies so far, including the medical equipment maker Boston Scientific Japan, which established its Miyazaki Technology and Education Center there; the architectural consultancy Pacific Consultants, which opened its PaciCon Techno Center Miyazaki; and the software development and e-business consulting company E&M, which opened a branch office.

Miyazaki is originally known for its resort towns. Its calm weather attracts visitors from all over Japan. The famous Seagaia offers one of the best golf and leisure spots. There are 15 direct flights each day between Tokyo and Miyazaki by major Japanese airlines such as JAL, ANA and, most recently, Skynet Asia Airways, which connect both cities in an hour and a half. The earliest flight leaves Tokyo at 7:20a.m. and arrives in Miyazaki at 9:25a.m. The last flight leaves Miyazaki at 7:55p.m. and arrives in Tokyo at 9:25p.m., so even a truly busy businessperson can make a day trip there. It's just one more reason to consider Miyazaki as a key component to your company's overall Japan strategy.

Months to Recoup Initial Investment

Miyazaki 10.17
Okinawa 27.61
Hyogo 20.98
Sendai 25.17
Saga 12.02

Note: Table made from bar graph

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Author:Fujimoto, Kyoko
Publication:Japan Inc.
Date:Jan 1, 2003
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