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Outsourcing Behind Bars

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The United States Bureau of Prisons calls its UNICOR business services unit "The Best Kept Secret in Outsourcing."

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Having cemented a reputation as the world's go-to outsourcing destination, it appears that India's dominance of the global call center market has been usurped.

According to Vikas Bajaj of the New York Times, more Filipinos "now spend their nights talking to mostly American consumers" as "a preference for American English" takes hold in the call center industry.

A former U.S. colony, Filipinos begin learning American English in the first grade, unlike Indians, who are taught British English starting in grade three. And companies from AT&T (T) to JPMorgan Chase (JPM) to IBM (IBM) are willing to pay higher wages for agents their customers find easier to understand.

Writes Bajaj:

Executives say the growth was not motivated by wage considerations. Filipino call center agents typically earn more than their Indian counterparts ($300 a month, rather than $250, at the entry level), but executives say they are worth the extra cost because American customers find them easier to understand than they do Indian agents, who speak British-style English and use unfamiliar idioms. Indians, for example, might say, "I will revert on the same," rather than, "I will follow up on that."

However, there are thousands of native English speakers manning corporate call centers right here at home -- they just happen to be in prison.

The United States Bureau of Prisons calls its Federal Prison Industries (trade name: UNICOR) business services unit, "The Best Kept Secret in Outsourcing."

Here's the pitch:

Let's face it, outsourcing offshore can be a hassle. There are language barriers, varying monetary exchange rates, time differences, and simply visiting your call center can involve a transoceanic flight. When you outsource with UNICOR, your call center is located in the United States, and those issues disappear. Your company will enjoy all the benefits of a domestic operation, with the cost savings of going offshore. When you partner with UNICOR, your company is providing valuable job skills to federal inmates while it repatriates jobs back from overseas.

In the past, UNICOR, which is wholly owned by the U.S. government, is largely self-sustaining, and operates with "minimal taxpayer support," worked, by law, exclusively for federal agencies, making products such as license plates, office furniture, and clothing. In the early 2000s, when BOP Director Harley Lappin (now Executive Vice President and Chief Corrections Officer with Corrections Corporation of America (CXW) argued that call centers qualified as a service, not a product, and were thus eligible to be offered to the private sector.

Yet, there is one restriction for companies hoping to partner with prisoners -- they must already be actively considering shipping their call center services abroad.

"What I tell my customers is, if they are already overseas or looking to go overseas then they can work with UNICOR," UNICOR program manager Carolyn Sheedy tells me. "But," she says, "they do have to sign something first to that effect." (State correctional departments abide by slightly different rules, which have allowed prisoners to package products for Microsoft (MSFT), Starbucks (SBUX), and Costco (COST) subcontractors, as well as helping to build a Wisconsin Wal-Mart (WMT) distribution center.)

Once a company assures UNICOR they won't be displacing any "free world" labor, they can look forward to "low absenteeism," "locations throughout the country," and "low labor rates," which range from $0.23 to $1.15 an hour.

Though Sheedy won't reveal the names of companies currently utilizing UNICOR call centers ("We have non-disclosure agreements with our customers, so we can't give out any of that information," she says), UNICOR's website boasts that its "Outbound B2B Call Centers have performed data scrubbing, lead generation, and profiling for some of the top companies in America." It further highlights expertise in "credit card transactions through Interactive Voice Response," as well as specialized capabilities in the "vacation sales / travel industry." (UNICOR insists all customer data is "fully protected.")

In some areas, callers seeking government services are helped by guests of said government.

North Carolina's travel and tourism department uses inmates in Raleigh's maximum security women's prison to answer calls to the state's 1-800-VISIT-NC information line, in addition to answering calls for the North Carolina Department of Transportation and Amtrak.

And in New York State, a call to the DMV regarding your car's registration may be routed to Staten Island's Arthur Kill Correctional Facility or the women's prison in Bedford, N.Y.

Far from applauding the "repatriation" of American jobs, union leaders have bristled at the use of inmate labor, which they believe creates unfair competition and exerts downward pressure on outside wages.

"Quite literally, they're taking advantage of a captive audience," Tony Daley, research economist for the Communications Workers of America, has said.

However, UNICOR disagrees.

Their data shows that inmates who "worked in prison industries or completed vocational apprenticeship programs were 24 percent less likely to recidivate than non-program participants and 14 percent more likely to be gainfully employed." UNICOR also maintains that inmate work programs contribute "significantly to the safety and security of federal correctional facilities by keeping inmates constructively occupied," which allows prisoners to put their earnings toward paying court-ordered fines, child support, and restitution.

One thing prisoners working in call centers won't discuss is, not surprisingly, themselves. My attempt to engage the woman who answered my call to 1-800-VISIT-NC resulted in an offer to transfer me "downtown."

As North Carolina inmate/call center employee Teresa Culpepper told a reporter back in April:

"I'm not here to talk about prison life. I'm here to talk about tourism. You know we just go on and change the subject and go on to 'Is there anything else I can do for you?'"

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