FOR NORTHERN MARIANAS?

Haidee V. Eugenio






With the demise of the once billion-dollar garment industry and a continuous decline in tourism, call centers may be the next major industry for the Northern Marianas (CNMI).
IT&E, the largest telecommunications firm in the CNMI and Guam with over 80,000 subscribers, is expanding its one-year-old 40-seat call center into one with 200 to 300 seats, at a time when many businesses are shutting down or reducing operations due to the local and global financial crises.
 “Call center can be an alternative industry for CNMI. And because the US economy is down, outsourcing is one of the ways companies can save more. But we are competing against India and the Philippines in the business,” Rob Harrell, executive director of IT&E’s Contact Centers Division, told ISLANDS BUSINESS.
An economic summit held in April also identified call center as one of four alternative industries in the CNMI along with agriculture, aquaculture and edu-tourism.
IT&E’s call center expansion also comes at a time when uncertainties about the federal takeover of CNMI immigration by November 28 abound. 
CNMI Governor Benigno R. Fitial, in his State of the Commonwealth Address on May 27, said the very premise of federalization indicates economic harm for the islands, adding that federalization rests on the assumption of significant immigration restrictions: restrictions on foreign workers, foreign investors, on foreign students, and Russian and Chinese tourists.
“Except for IT&E, all call center development plans have been halted because of federalization. Plans for a telemedicine operation have been shelved because of federalization.  Investors are concerned,” he said.
In 2006, We Manage Call Inc. proposed to put up what was supposed to be the CNMI’s first call center but the plan was later scrapped by investors, citing the impact of federalization and the annual federal 50-cent minimum wage hike in the CNMI.  The supposed first call center was proposed by Eric Van Der Maas and his co-partner based in Los Angeles.
IT&E, meanwhile, invested some $250,000 in the 40-seat call center, which will run up to $3.2 million when it expands. A typical call center investment is $8000 to $10,000 a seat.
“So if you’re running 200 seats, that’s $2 million bucks. It’s quite an investment to make, to really expand the services and (make it) very competitive,” IT&E executive vice-president and general manager Larry Knecht told reporters after giving the governor and other dignitaries a tour of the call center.
In May 2008, IT&E, then Pacific Telecom Inc., signed an agreement with Hawaiian Telcom.
IT&E provides 411 directory assistance to Hawaiian Telcom customers 24 hours a day, and is now exploring partnerships with other US-based investors to outsource similar services. Answering the calls of overseas customers is nothing new to IT&E, which has long been providing directory assistance to the CNMI and Guam.
From having only about 10 personnel when the call center opened in May 2008, IT&E’s call center grew to over 50 telephone operators, supervisors, and other personnel taking in 6000 to 13,000 calls daily.
IT&E chief executive officer Ricky Delgado said Hawaiian Telcom chose IT&E after searching for a company with an “established track record of quality service, the ability to minimize customer service impacts during transition, the ability to provide additional directory services, and the willingness to commit to stringent quality standards.”
Hawaiian Telcom’s previous directory assistance provider, Metro One Telecommunications, announced it was withdrawing from its nationwide directory assistance business in March 2008, or two months before Hawaii Telcom signed a deal with IT&E.
Besides Hawaiian Telcom, IT&E is also providing directory assistance to Oceanic Time Warner Cable, Sandwich Isles Communications and Guam IT&E Wireless. 
Besides IT&E, the other providers of telecommunications services in CNMI are Docomo Pacific and I-Connect.
Tax breaks
IT&E’s call center expansion hinges on tax breaks it is requesting from the CNMI government through the Qualifying Certificate Program, a decision which it expects to receive on or before Sept. 28, and current negotiations with prospective clients. 
Harrell said IT&E is now in communication with four Fortune 500 companies that may well become its new clients for its call center – the basis for its expansion to 200 to 300 seats. 
“These four are in the telecom, financial and tourism industries,” he said.
IT&E filed a qualifying certificate application with the Commonwealth Development Authority, seeking the maximum tax breaks and abatement for its $3.2 million additional investment for the CNMI’s first call center in Susupe.
IT&E applied for 100 percent abatement on business gross revenue tax, excise tax and capital gains tax, and is also seeking a 100 percent rebate on corporate income tax, all for a 25-year period.
Under Public Law 12-32 or the CNMI Investment Act of 2000 signed on Dec. 1, 2000, the government—through CDA—can grant rebates and/or abatements of up to 100 percent for up to 25 years to qualified investors to put up new investments in the CNMI or assist existing investors to expand their operations.
Among the activities targeted by the qualifying certificate program are the franchise restaurants, water parks, aquariums, cultural centers, theme parks, resort hotels and condominiums; golf courses, convention centers, dinner theaters, special events, CNMI-based airlines and other related activities, manufacturing of high technology products, internet related businesses and/or businesses engaged in internet commerce, and projects beneficial to the economic development of the Commonwealth.
Since its inception, the Qualifying Certificate Program has attracted 11 companies, produced immediate benefits of $28.12 million from capital expenditures, and generated a total of $100.59 million in taxes, local purchases, utility payments, and other community contributions over the seven years the program has been in place. Because IT&E’s current 40-seat call center will be expanded to 200 to 300 seats, it would result in additional jobs and government revenue that the CNMI currently needs.
On August 1, IT&E held a job fair to gauge whether there’s local workforce support in expanding its call center.  Some 400 applicants came in, and about 80 percent of them would qualify for call center jobs, said Harrell. The company is looking at hiring some 200 new employees not only for the call center but also as support staff. 
But the actual hiring for the possible call center expansion may take 60-90 days from the day of the job fair.  “We’re here to stay,” Harrell said.