Will Empty Call Centers Stay Empty? One Historical Example Says Not | Blog

The established delivery model of the customer experience management (CXM) industry has adapted quickly to the pandemic, with Work From Home (WFH) the norm for a workforce accustomed – until nine months ago – to working in offices, and the increasing use of digital technology to replace or supplement some human interactions. What does a historical example suggest will happen to CXM after COVID-19?

I’m never sure whether historical perspectives can teach us how to do things better, or whether they are merely of interest for interest’s sake, but there is an echo of the challenges facing the CXM industry in the evolution of the telephone exchange after the Spanish Flu pandemic of 1918-21. Telephone exchanges were reliant on dozens, even hundreds, of operators sitting in close proximity at switchboards, taking calls from customers and manually connecting them with other customers. They were the call centers, literally, of their day.

The telephone had been marketed to homes (in the US, at least) for a host of reasons. A famous 1910 ad for the Bell Telephone Company of Missouri entitled “When in Quarantine” promoted the telephone as a way of allowing life to continue as near normally as possible in an epidemic, at a time when smallpox, diphtheria, influenza, TB – take your pick – were common. By 1918, in the middle of the Spanish Flu pandemic, US phone operating companies were begging customers not to call unless absolutely necessary. The operating companies faced the dual challenge of increased demand driven by the industry’s successful marketing and inadequate delivery, caused by sickness and the enforced home quarantine (up to a third in some US cities) of their skilled workforce.

Today’s CXM companies have responded to the coronavirus pandemic in two ways that mark them out from the telephone companies of 100 years ago: First, they found ways within two or three months, to allow 70% of employees (according to Everest Group estimates), to work from their homes; second, they were able to offload some of the extra demand to technology (chatbots and interactive virtual agents), or to call centers in locations less affected by restrictions (see Navigating Uncertainties and Building Operational Resiliency: Customer Experience Management (CXM) State of the Market Report 2021 for details).

But as the promise of mass vaccination heralds the end of the COVID-19 pandemic, there may be parallels between the CXM industry of today and the telephone exchanges emerging from the Spanish Flu in the early 1920s. Office estates stood then, and stand now, underutilized; and proven technologies capable of replacing humans were and are available. You could be forgiven for thinking that the post-pandemic telephone company of 1920 would have pushed to minimize dependence on humans and to shift to an operating model resilient against future disruption. The technology to replace highly trained women making the connections manually had by then been in existence for 30 years. Seats that had been emptied between 1918 and 1921 would surely not be filled again.

But fill they did. When the epidemic petered out, telephone companies filled the spare seats in their exchanges to capacity. The number of both exchanges and operators sitting in exchanges doubled and quadrupled respectively – in the UK at least – between 1921 and 1951. Why?

My guess is two reasons. First, the technology of the day offered the benefit of being resilient, of not being human, but became widely available at a time when labor was priced at a level that made gains from capital intensive investment in technology merely marginal or non-existent; it was just as cheap to pay humans as it was to buy machines. Second, the desire to return to normal was stronger than the desire to safeguard against the influenza’s return. People just went back to work and as demand for telephone services expanded, so did the number of exchanges and exchange operators.

The situation facing CXM companies and their employees today is not so different: recession and mass unemployment logically benefit sectors that need to employ large numbers of people at the lowest achievable cost. The CXM industry will refill its seats in many offshore locations because, history tells us, most people will just go back to work.

CXM companies could actually end up recruiting more agents overall, and more cheaply, because some of those seats are in, or close to, employees’ homes – in effect, earnings for some agents will be discounted by the cost of commuting. The opportunity this presents for onshore expansion for enterprises looking to outsource for the first time is considerable. Those CXM companies able to recruit, train, and retain agents willing to work this way will benefit from a tech and brand-savvy, culturally proximate workforce at significantly lower operating costs.

In the end, the demise of the human operator in telephone exchanges in the industrialized world was brought about by the availability of electronic technology in the late 1950s. The new technology promised vastly more capacity and speed, and lower operating costs in a period of post-war economic boom, when unemployment rates were at historic lows and labor costs were rising. Let’s hope this time around, the confluence of technology and economic growth doesn’t take 30 years.

Have thoughts on what call centers will look like post-pandemic? Reach out to me julian.herbert@everestgrp.com to share them.

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