CCS Outsourcing on a Growth Path

According to TPI's A Peak Time for Contact Center Outsourcing Report (April 2009), organizations' annual spend for contact centers are estimated to be US$300 billion and are expected to hold despite the economic weakness. Approximately 78 percent of this is spent on in-house operations, with the remaining 22 percent — more than US$66 billion — being outsourced. However, outsourcing spending has grown in the past four years, while in-house spending has been relatively flat.

In-house contact center operations today are often marked by dated technology platforms, declining budgets, deferred technology investments and a management emphasis on cost containment. At the same time, third party vendors have been implementing fundamental changes in best practices, customer service delivery, global sourcing strategy and effective use of technology leverage; making outsourcing CCS a profitable proposition. 

Performance improvement by service providers, significant cost reduction potential, growing executive-level acceptance of outsourcing as a business practice, declining in-house capabilities, and rising customer demand for multiple support channels have been the main growth drivers for CCS outsourcing in the last year, the TPI report says.

Lessons from the Recession

Coping with slow recovery from recession, clients want more than to just save money by sending call-center work overseas. According to Gartner's CEO Concerns: Peering Into 2010 and Beyond report (March 2010), there has been a major shift in CEO priorities since early 2010 from cutting costs to retaining customers and enhancing existing relationships. Client companies are now more conscious about how their customer-care calls are handled. Customer satisfaction is back as a top priority. The focus has shifted from closing the call quickly (to achieve efficiency targets and reducing the handle time) to doing all that is possible to increase client’s revenue and level of satisfaction. Outsource partners are now required to add value by meeting financially-related KPIs like increasing sales, improving debt collection, enhancing customer loyalty, etc.
 
The trend is leading outsourcing firms to grow aggressively again in the United States. High-value customers’ calls are increasingly staying within North America, where costs may be higher than offshore, but at-home operators can generate revenue. Simpler and lower-value tasks, which don’t present sales opportunities, are being routed to offshore operators in larger numbers than ever.

Destination Check

The options for offshore destinations have increased due to changes in the global services marketplace, while preferences in offshore destinations have changed. According to the TPI report, the Philippines continues to be the top choice for offshoring customer service for American English-speaking customers, as a “result of a better cultural alignment with the West and a less significant accent in the Philippines”. India remains an attractive choice for technical support work, more complex technical problem solving and back-office function support.

U.S. companies now also enjoy more nearshore options because of the expansion and new capacity in Mexico and Central America. The leading service providers have built modern global services delivery infrastructure here and implemented best practices that allow them to effectively and efficiently leverage their scale, volume, global capacity and technology to better serve their clients.

neoIT’s 2009 Latin America Contact Center Landscape Report holds changing demographics (increasing Hispanic population) in the U.S. along with cost considerations and overheating of traditional offshore destinations responsible for forcing U.S. corporations to explore Latin America as an outsourcing destination for their back-office and contact center operations. Geographic proximity, cultural affinity, and similar time zone with the United States further bolster the case to outsource to this region. Latin America scores not only as a large domestic market that contributes to the supply side by serving as a talent pool to recruit from, but also as a market that consumes services.

The report concludes that while certain countries such as Mexico, Brazil and Costa Rica have already established themselves in the outsourcing market, a host of other countries, like Panama, Colombia, Jamaica, are attracting business through aggressive marketing efforts or by offering financial incentives.

Adoption of New Technologies

Hosted contact centers are emerging as a solution for companies that have outgrown existing applications and systems, those which are expanding geographically or who want to utilize virtual agents. The fastest growing segment of hosted contact center adopters is the large contact centers (more than 500 seats).

Outsourcers are also investing heavily in IP-based virtual contact center architectures that enable business applications to be deployed at a single point on their networks but accessed and used by anyone with access to the network and permission to use the applications. As “Network as a platform” becomes the primary driver, the need to have geographically disparate yet accessible service is becoming key. Virtual contact center technology has not only changed the management of multi-site outsourcing operations, it has also opened the way for outsourcers to provide the same technology resources to other organizations.

In the next few years, enterprises are expected to move beyond contact center to a customer interaction network with hosted contact centers for both enterprise customers and service providers. These hosted contact centers will create a new, high-margin service revenue stream for service providers. They will provide a centralized contact center infrastructure that can deliver services to various divisions or satellite offices of enterprise customers. In a central office or data center, service providers will host the contact center infrastructure software, which will be shared by multiple business customers. Subscribing business customers will have IP or time-division multiplexing (TDM) infrastructures or a combination of the two.

The industry is also embracing cloud technology as contact center customers increasingly demand a faster, more responsive service. As applications are delivered over the internet or in ‘the cloud’, organizations hope to move away from complicated physical set-ups on-site and thus make significant cost savings. Applications can be updated virtually, meaning that agents will always have the most up-to-date customer information in hand. Cloud technology will also create greater scope for home-working, as well as dealing with more unforeseen circumstances, as contact center staff will be able to access the cloud wherever they are in the world. This will make relocation or expansion a seamless experience.

Solutions providing unified capabilities- allowing a single agent to support multiple interactions simultaneously, regardless of the communication channel the customer has chosen-are gaining popularity, especially in large size contact centers which can support thousands of agents.

Changes in Service Offerings

Most established vendors are now pitching for jobs that don’t necessarily need a large workforce but are niche, generate more revenue and return on effort. The ability to provide expertise across a range of different disciplines will become increasingly important as the contact center outsourcing market matures.

New entrants are trying to differentiate themselves with new technology applications and service offerings. The latter include ‘bundled’ services: customized services packages consisting people (advisors and management), expertise, processes technology and environment according to the needs and demands of clients.

Small companies are offering complete CaaS (Communication as a Service) solution for contact center automation and outbound notifications as a scalable service that delivers more functionality and better ROI than in-house communications systems. CaaS offers flexibility and expandability that small and medium-sized businesses might not otherwise afford, allowing for the addition of devices, modes or coverage on demand. Moreover, the advantage of a pay-as-you-go pricing model is only too obvious for today’s enterprise, where budgets are tight but the need to operate with the latest in communications technology is a necessity for competitive advantage.
Voice-based contact center services are rapidly moving beyond traditional "voice" communication to include a blend of voice and live-chat (i.e., text based) engagement. Interactions through text/SMS, video, and Web are becoming the most used channels for inbound interaction.

Outsourcers will move to focus heavily on consulting and expert support services – from contact center design to staff recruitment and training. This is because though vendors will continue to awe their prospects by adopting the latest in technology, it is the quality (of people and partnerships) that will define the success of an organization in the long-run.

Customer Remains the King

The industry is seeing increased social media customer interactions. Such interactions through popular social media platforms (Twitter, Facebook, etc.) are used to monitor and extract intelligence to provide better customer service, drive sales and drive customer loyalty.

Focus on the customer is set to increase. CCS providers plan to increase "proactive, value-add customer contact" programs, "sales and marketing" programs, and "collections" programs in their outbound customer programs over the next two years.

The ability of call CCS to contribute to business transformation has been accentuated by investments made by service providers on technology and platforms. In addition, leading service providers have built modern global services delivery infrastructures and implemented best practices that allow them to effectively and efficiently leverage their scale, volume, global capacity and technology to better serve their clients.

The CCS market is set to grow further as more companies recognize that they have access to suppliers at various price points and with mature skills.