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More than 50 million Americans registered for the national do-not-call list, which went into effect Oct. 1, and early signs indicate the telemarketing industry is already suffering.

“We’re seeing a dramatic reduction in the size of call centers, and we’ve seen a number of call centers go out of business. But I think it will take another three or four months for this to shake out,” said Tim Searcy, executive director of the American Teleservices Association.

One company, Spectrum Marketing Services, Philadelphia, went of out business. Teleperformance USA closed call centers in Butte and Kalispell, Mont., laying off about 150 workers, and Future Call shut its Colorado Springs, Colo., center, eliminating 135 positions. Teleperformance and Future Call did not return calls seeking comments.

APAC Customer Services is also struggling. Net income for the third quarter was $300,000, compared with $1.1 million during the same period in 2002. APAC attributed the decline to reductions in telemarketing business from “several financial services clients.” It laid off 121 employees in the third quarter.

Some analysts say there had been a glut of call centers and that the National Do Not Call Registry is an easy scapegoat for the industry’s woes. Also affecting the industry has been the shifting of call centers to overseas locations.

“I have to wonder if some of the closing and downsizing has to do with the move of this part of the business offshore,” said Elizabeth Kislik, president of Liz Kislik Associates, a teleservices consultancy.

Cost of compliance
The industry also is coping with the high cost of technology upgrades needed to comply with federal regulations.

Philip Dachenhausen, director of operations at O’Currance Teleservices, said his company spent $800,000 this year on upgrades. O’Currance employs 250 people. Larger call centers, such as Teleperformance, which has 4,000 work stations, “spend millions,” he said.

Telemarketers and analysts agree the best defense is diversification. “People are trying to find other kinds of work, whether it’s b-to-b or movement towards in-bound customer care,” Kislik said.

John Habermann, VP-business development at consultancy Telemarketing Concepts, said, “I’ve gotten so many calls from companies looking for clarification as to whether b-to-b calls are exempt and how to comply if they’re only doing b-to-b telemarketing.”

“It’s fairly well protected against offshore,” ATA’s Searcy said of b-to-b telemarketing. “Most businesses don’t want offshore firms contacting b-to-b prospects.”

Not a complete fix
B-to-b telemarketing generates only a fraction of the revenue that consumer telemarketing does, so it doesn’t offer a complete fix for many companies.

Larry Kaplan, CEO of Tele Business USA, whose business is exclusively b-to-b, said it could be hard for consumer telemarketing companies to make the move to b-to-b because the required skill set is very different. “Other companies have tried to emulate what we do and have found they can’t,” he said. “They don’t have the trained people to do that.”

Synergy Solutions handled 80% consumer and 20% b-to-b before the Do Not Call Registry was implemented; that split is now 70% consumer to 30% b-to-b.

Synergy has relaxed its client screening criteria regarding size of program, size of company and length of contract to get more b-to-b work, said company president Lori Fentem. “We’re seeing an increase, but it takes 20 b-to-b programs to match the revenue of one consumer program,” she said.

Companies that focus on inbound telemarketing are also at an advantage. Dachenhausen said O’Currance, which only handles in-bound calls, is thriving. “We’re on the right side of the business,” he said, adding he expected many companies to shift their focus to in-bound telemarketing.

Most industry observers agree a mix of inbound customer service work and outbound marketing services for clients will increase a call center company’s chances of survival and success.

“Anyone who got a late start in compliance is more vulnerable, and certainly anyone dependent on prospecting is more vulnerable,” Kislik said.

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