Local PRC Demise: Who Or What Is To Blame?
March 13, 2008
By Tammy R. Lawson
MC Sun Staff Writer
On January 23rd, PRC, L.L.C. announced that its Fort Lauderdale, Florida based company had filed for Chapter 11 restructuring in U.S. Bankruptcy Court for the Southern District of New York, stating that business operations would continue as usual with no layoff plans to speak of-being reiterated on February 4th.
Four weeks later, the 26 year old company said it plans to eliminate approximately 850 jobs by closing three of five Iowa call centers and scaling back in others-Marshalltown’s location being one of the terminated sites by May-which will result in a loss of 275 jobs statewide.
What could have possibly happened in such a short amount of time to change their strategies?
Keep this in mind: Business Process Outsourcing (BPO) is the act of hiring a third-party company to handle business activities for corporations, and that’s what PRC Call Centers specialize in. The word ‘outsourcing’ has become a modern day term for large companies that move operations offshore in hopes of low overhead and high reward, sadly becoming the US norm.
According to bankruptcy dockets, PRC, formerly known in Marshall County as Access Direct, entered reported assets of $354 million and $261 million in liabilities along with three other affiliates. This company provides outsourced business solutions-or for a better known term, telemarketing services-which include sales, marketing, and customer service calls for clients such as British Airways, DirecTV, Wells Fargo, AARP, and Sprint.
By early 2005, strategic investor John G. Hall was brought aboard as CEO, and Richard Outram was placed as CFO in order to assist with internal reorganizing which to a point, paid off. Later that year, PRC posted a $22.6 million profit, an increase from $17.1 million the year before. But by the spring of 2007, online finance discussion groups touted “If you (PRC) are going to outsource to cut costs, please don’t blatantly lie about it…the American people are not stupid.”, suggesting that PRC may have gotten in over its BPO head, or wasn’t being forthright about overall intent.
By April 19th, the rumor mill was in full swing that PRC, in a closed door meeting, was planning to outsource its information technology (IT) operations to a small company in Pune, India, due to the unavailability of IT professionals in South Florida. By August 22nd, that insinuation paralleled true.
“A slower-than-expected ramp-up in call center activity for a major new client caused most of the company’s disappointing operating performance,” stated Standard & Poor’s credit analyst Andy Liu. According to Liu, PRC had incurred most of the infrastructure and training costs associated with the contract, but wasn’t able to staff enough call center operators to generate the revenue sufficient to offset the costs. (On the bright side, they have hopes of 90-100% recovery in the event of a payment default.)
In turn, poor execution of this new contract contributed to the resignations of CEO Hall and CFO Outram shortly after.
According to Alicia Miyares, Vice President of Marketing/Communications, policy prohibits disclosing the name of the client contract at this time, but whatever the excuse was for being India bound, replacing executive officers, and virtually cutting their overall workforce in half, reasons and severance packages must’ve been doozies.
Or, could the Do Not Call Registry have been a factor that helped in the demise of Marshalltown’s call center?
The list, which will be five years old in June, covers 150 million phone numbers, and according to online figures compiled by the job placement company Manpower Inc., call center jobs are expected to decline 3-5% through 2011, which is generous by some in the industry.
Incidentally, with the onslaught of people having their own outsourced-to-India customer service horror story, various companies got wise due to a loss of business, thus bringing their contact centers back to the US.
Furthermore, the Federal Trade Commission recently reported a high rate of compliance with the Do Not Call provisions, stating violators face civil penalties of up to $11,000 per violation. The FTC has levied $8.8 million in civil penalties since 2003, which includes the largest single fine-$5.3 million-paid by DirecTV.
Oh, and remember: DirecTV was one of PRC’s clients.
In a press release, new CEO Jerry McElhatton said, “We will remain focused on delivering top quality customer management solutions for our clients and on supporting the PRC employees who provide these services to their customers every day.”
Good luck with that and coming up with a new company name, but what happens to the Iowans, not counting the others, who are now destined for the unemployment line? Call centers in Marshalltown, Cedar Falls, and Des Moines have been sacrificed, while the ones in Ames and Cedar Rapids were spared. For now.
“I think the biggest thing that we can say is that we’re so sorry that we’ll be shutting down operations,” Miyares said. A telemarketing script was expected, but instead, her demeanor was enough to refrain from ‘killing the messenger’. “It’s terrible news to deliver, and unfortunately this is my job.”
“We gave all of our folks a 60 day notice, and really, our biggest focus right now is communicating with the employees that have resigned, and working with other area employers to see if we can help find these folks their next jobs.”
Miyares continued, “We’re going to be investing in classes, and our people will be taught how to build a good resume, and we’ll give them tips for good interviewing skills. Our folks can sign up to take those classes at the actual center.”
Employees have been given the option of transferring to one of the call centers that will remain in operation, and during a recent visit to the local PRC building, no one was overjoyed to comment without fear of being overheard or being caught. The manager was not keen on being mentioned in this article whatsoever.
But one woman spoke. ‘D’ said, “Nobody knows where they’re going to go yet or what they’re going to do. We’ve been told we can transfer to other centers within the company, but really, no one’s going to do that. Who is really going to do that? Who is going to uproot themselves to another eight-dollar-an-hour center in Cedar Rapids or Ames, and how do we know they won’t close, too?”
Miyares said, “The Marshall Town Center location has been there for a long time. Whether it’s hiring them, training them well, or with unfortunate situations like this, we want to make sure they know they’ve been great employees, and we want to really do our best to help them transition to their next job.”
So where does blame lie? Outsourcing? Do Not Call list? Bad management…or maybe, smart?
‘D’ summed it up nicely with one sentence. “Management tried to keep it as quiet as possible around us but we saw this coming.”
Well, of course. That’s the nature of the bureaucratic beast.
Marshall County Sun© Copyright 2008
