Author: SharangSharma

The Contact Center Upgraded: Everything You Need to Know About Contact Center as a Service (CCaas) | Blog

While organizations are certainly familiar with on-premise technologies in contact centers, today’s enhancement on the premise-based technology model is delivering an exceptional digital customer experience, innovation, flexibility, and lower cost. Meet the Contact Center as a Service (CCaaS) operated on the cloud. To learn more about this fast-growing omnichannel cloud contact center solution being adopted across all industries and geographies, read on. 

Contact centers are becoming an area of strategic focus for organizations as they strive to deliver business impact through superior Customer Experience (CX). Traditionally, contact centers have run on technologies hosted on-premise with physical hardware such as servers, storage systems, security systems, dialers, and Private Branch Exchange (PBX) hosted in premises or in-house data centers. But that is changing.

Most organizations are now opting for cloud-based contact center solutions by migrating their existing premise-based applications to cloud and/or deploying cloud-native applications as they look to digitally transform their CX operations. In the past few years, the growing need to quickly deploy contact center technology and the increasing use of digital solutions such as Artificial Intelligence (AI), automation, and analytics has paved the way for a flexible cloud contact center offering called Contact Center as a Service (CCaaS).

With COVID-19 pushing the boundaries of innovation and demand for digitally-infused customer experience increasing, CCaaS is poised to be at the forefront of the digital transformation of contact centers. In this blog, we will explore CCaaS, its impact on customer experience, and the financial benefits from leveraging these solutions.

Understanding CCaaS and what it brings to the table

CCaaS (also known as hosted contact center) is a contact center solution that allows organizations to utilize third-party contact center software hosted on cloud. It provides all the essential components that comprise a conventional contact center such as PBX, Interactive Voice Response (IVR), Automatic Call Distribution (ACD), Computer Telephony Integration (CTI), voice and non-voice channels, along with other digital solutions such as omnichannel platform, workforce management, automation, and quality management. It is usually offered as a subscription-based (per seat, per user, per month, per transaction) model, and the CCaaS vendor is responsible for regular maintenance and upgrades.

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How CCaaS impacts customer experience?

With increasing customer expectations of service and support, improved contact center technology has been a key enabler of seamless service delivery. CCaaS brings together all the essential tools and technologies required by contact centers to deliver a superior customer experience. Here are three possible ways CCaaS can positively impact customer experience:

  • Less customer effort: Customers expect to connect with brands through multiple communication channels round the clock. Omnichannel solutions provided by CCaaS enable customers to easily connect across any channel at any point in time. Additionally, self-service solutions offered by CCaaS ensure customers’ queries can be solved without human intervention with low customer effort
  • Consistent quality of services: Enterprises and service providers are under greater pressure to deliver consistent customer experiences in each interaction. Intelligent routing and agent assist solutions in CCaaS ensure customers are connected to the appropriate agents equipped to handle customers’ issues. It enables organizations to resolve queries as quickly as possible, thus, keeping high customer satisfaction levels
  • Personalized experience: Customers these days expect brands to anticipate their needs and make personalized suggestions. CCaaS solutions enable organizations to collect historical data from multiple touchpoints, generate insights, and offer real-time tailor-made solutions to customers. Access to historical data also enables agents to understand the context of customer queries and solve them more easily

Does CCaaS adoption make financial sense?

A key benefit of CCaaS adoption is long-term cost savings. The business case depends on the size of the contact center, existing investments, the propensity to drive value through next-generational technologies, and the nature of the partnership with the CCaaS vendor to drive a successful transformation effort. Let us explore the potential cost savings that contact centers of different sizes can achieve practically:

  • Small contact centers with fewer than 300 FTEs can potentially realize 10-25% cost savings after CCaaS adoption. These smaller centers start driving cost benefits by leveraging digital solutions such as omnichannel platform, intelligent routing, workforce management solution, automation, AI/Machine Learning (ML)-based solutions, and advanced analytics along with CCaaS
  • Mid-sized contact centers with 300 to 1,500 FTEs can potentially realize 25-40% cost saving after CCaaS adoption. They can achieve economies of scale and drive value through the benefits provided by digital solutions. These contact centers can achieve additional costs savings by sharing IT assets across multiple locations, setting up analytics and automation hubs, and adopting unified operations
  • Large contact centers with more than 1500 FTEs can achieve 15-30% cost savings through levers available for small and mid-sized contact centers. However, significant existing investments in software and hardware, disjointed legacy solutions, and rigid operating models often hinder them from making greater savings

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Our recent research shows that as companies accelerate their cloud adoption journeys and scale their contact center operations, leveraging an agile and holistic CCaaS solution will increase many-fold. With many companies moving towards flexible business models, the future of CCaaS looks promising.

Do you foresee adopting CCaaS as part of your cloud adoption journey? Read our report Demystifying Contact Center-as-a-Service (CCaaS): Customer Experience Management (CXM) Market Report 2021 and share your thoughts by emailing [email protected], [email protected], [email protected], [email protected]

Outsourcing Your CXM Operations for the First Time – Here Are 10 Things to Consider | Blog

Over 70% of all Customer Experience Management (CXM) services are delivered by in-house teams, making this a huge potential market ripe for outsourcing. With our estimates pegging the global market at $325 to $350 billion a year, less than 30% ($89-$91 billion) is currently outsourced. Outsourcing can deliver numerous benefits for enterprises. But before jumping in, there are many planning, strategic, and tactical considerations to understand and address. To learn more, read on.   

Driven by COVID-19, outsourcing of CXM grew last year after a long period of remaining stable at about a 25% share of the market as the pandemic disruption led many enterprises to seek additional support to continue servicing their customers when their teams were unavailable or to respond to increased demand.

Another contributing factor to the growth was increased government spending on COVID-19 related services such as tracking and tracing vaccination programs, which were predominantly outsourced operations. Our blog CXM Market’s Dream Run – What’s Driving It And Will It Last? explores this in more detail.

We predict the outsourcing trend will continue to grow as enterprises realize that outsourcing of CXM can deliver the same positive results as in-house teams – helping to remove cost from the business and simply allowing them to focus on their core business by having a third party manage the complexities of large customer-facing operations.

If you are a new or less experienced customer of these services, many factors must be considered to ensure the transition to an outsourced environment goes as smoothly as possible. Here are 10 critical elements to think about:

Business requirements
  • Understand what you need a service provider to deliver. Be clear on your business requirements and required Key Performance Indicators (KPIs) and Service Level Agreements (SLAs) at the outset of any discussion
Documented processes
  • Document processes that a service provider can follow and use to train agents
    • If you don’t have your processes documented, be clear with service providers that this is the case and you may either need to build this in parallel to running the Request for Proposals (RFPs) or ask the service provider to build them before go-live
Sourcing strategy
  • Develop a strategy that specifies where you want support to be delivered from (onshore, nearshore, offshore or no preference) and determine if you are going to go with a sole supplier or multi-supplier strategy. This will be key before starting any procurement process as it will influence service provider selection
Technology strategy
  • Understand the digital transformation strategy for the business to ensure the service provider can support the changes required
  • Develop a clear technology strategy for the “run” business – are you going to dictate what technology is used for activities such as CRM or are you happy to leverage a supplier’s offerings?
    • This may be further complicated if you want to have multiple suppliers within your ecosystem as you need to be clear on where ownership of each technology will lie
Understand the supplier landscape
  • Understand the supplier landscape and the strengths and weaknesses of all the possible suppliers, including their footprint as well as their investments in technology and agent engagement. If you have unique or niche needs, are there suppliers in the market that can meet your requirements?

 

Understand the difference between procurement of goods versus services
  • Realize that the procurement of services is very different from the procurement of goods. While internal procurement teams are very effective at buying products, they may be less used to procuring services of this type and require additional support
Clear baseline of cost and performance
  • Understand the starting position in terms of cost and performance to baseline the value that is delivered through outsourcing as part of the business case
Business continuity planning
  • Factor in the use of service providers to existing business continuity plans for the current operation and plan for any potential impact or changes required
Stakeholder alignment
  • Align key business stakeholders with the use of outsourced service providers to ensure their support throughout the journey. Surprised stakeholders are much harder to placate than those that have been involved in the process from the start
Future expansion plans
  • Understand the expansion (or contraction) plans of the business to ensure any service provider selected can support future as well as current demand

While outsourcing can achieve many transformational business outcomes, know it is not a fit for every organization or in every context. Taking these right first steps and addressing the key issues above, will help set the foundation for a successful solution and prevent potential problems from transpiring at a later date.

To discuss embarking on outsourcing, please contact Sharang Sharma, Practice Director, [email protected]; David Rickard, Vice President, [email protected];  or Shirley Hung, Vice President: [email protected].

Learn how Everest Group helps CX managers deliver greater business value through CXM strategy optimization here.

CXM Market’s Dream Run – What’s Driving It and Will It Last? | Blog

During a global pandemic with a dire economic outlook, one surprising segment experienced its fastest growth in recent years – Customer Experience Management (CXM) services. Driven by increased demand for digital and other factors, this market seems to have long enough legs to extend into the coming years. But what’s behind this unexpected growth in CXM in an otherwise subdued economy, and will it last? For more on our analysis of this promising area, read on.

COVID-19 impact

As most major economies were shut down partially or almost completely in the first half of the year to contain the spread of the COVID-19 pandemic, businesses across the globe were adversely impacted in 2020. And while some industries such as high-tech or Fast Growth Tech (FGT) fared comparatively better than others like travel and hospitality, overall, the economy looked grim.

With such a dire economic outlook, it was largely assumed that the same would hold for the Customer Experience Management (CXM) services market, given the segment’s dependence on overall economic health for its growth. Gauged by the slow first half of the year, the downcast business outlook, and the huge challenge facing CXM service providers to shift to a Work from Home (WFH) model to continue running their businesses, Everest Group projected the market would shrink by 4-5 percent in 2020 compared to 2019.

Market stunner

However, in a complete reversal of early trends, the CXM market managed to grow at one of the highest paces in recent years, recording 3-5 percent growth in 2020 to stand at around US$90 billion. And it doesn’t look like growth is coming to an end for this sector, as the numbers reported by some of the largest publicly-listed CXM service providers in 2021 look robust and point towards an optimistic future for this market.

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This begs the question: Why hasn’t the CXM market been impacted as severely as was widely expected during the early phase of the pandemic spread? We see several underlying factors that have been at work. In our upcoming CXM State of the Market Report slated for release later this year, these factors will be explored in greater depth. Below we discuss some of the factors that contributed to the segment’s growth and raise questions that need to be addressed further.

The following factors are playing a role in CXM services growth:

  1. Increasing demand for digital: It is no secret that businesses have come to terms with the importance of digital Customer Experience (CX) after the events of 2020. They understand the need for digital CX, not only to create superior customer experience but also to ensure continuity of services in adverse times when traditional methods no longer work. Additionally, customers are increasingly leveraging digital channels to communicate with brands, further fueling the pace of change. Enterprises are exhibiting a new wave of urgency to adopt digital technologies such as automation, analytics, self-service technologies, and digital channels to better prepare for the future and reduce dependence on a human workforce. This new demand is helping the digital segment of the CXM market to post an annual growth of over 40 percent
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  2. Exceptional performance by certain sectors of the market: While most traditional businesses were severely hit as businesses moved to an online model, those that were already strong in this space did well. Industries such as high-tech and FGT fared exceptionally, and their success also translated into more demand for CXM services from this industry
  3. Demand due to COVID-19 response: Even mature markets such as North America and Western Europe saw good growth in 2020 driven by demand for government support in these regions. The massive push to contain the spread of COVID-19 and to vaccinate the masses fueled demand for CXM services. Programs such as contact tracing and vaccination support are expected to drive new growth for CXM service providers. However, these demand drivers are expected to wind down once the pandemic is controlled and the vaccination programs cover a large portion of the population

 

Here are some of the issues we see that need further exploration:

  1. Is market consolidation hiding within the growth numbers? Given the challenges that 2020 posed around the changing business model, not everyone could thrive and survive in this market. The CXM services market has a very long tail with thousands, if not a magnitude more, of small service providers catering to enterprises globally. It is highly possible that a lot of these small (typically under 50 seats) providers were not prepared to handle the challenges thrown by the pandemic and saw their clients migrate to larger, more organized service providers. Given that a lot of these small players go untracked, a large part of this growth could well be just moving business from one player to another, which, in true essence, wouldn’t be actual growth. That said, it does not mean that the market did not see new growth at all. Based on our research, several providers have been successful in bringing new business to the table. While it may be difficult to determine full impact of the consolidation of smaller service providers on the overall market, our view is that the market is still experiencing net growth
  2. Is CXM growth being driven by new demand or a shift from in-house to outsourcing? With major economies globally under pressure, a lot of new demand for CXM services seems unlikely, barring, of course, certain sectors that were highlighted above.  A lot of the work that was previously being done internally through in-house centers could have moved to an outsourced model, given enterprises’ inability and inflexibility to adapt to new working models. Our research pegged the size of the total CXM services market (including in-house and outsourced) to be around US$350 billion at the end of 2019, with outsourcing accounting for ~25 percent of that spend. While a strong possibility exists that the overall CXM services spend declined in 2020 due to the challenging economic conditions, we believe the share of outsourcing is increasing, thus, resulting in net growth for the outsourced portion of the market

Positive outlook

Despite these factors, the long-term prospects for the CXM services market look favorable, especially with a heightened awareness around the need for superior CX to build differentiation in the market. This change will be hinged around digital CX, where most enterprises lack enough experience and require third-party support to execute the vision they have for their business. Along with green shoots of economic recovery emerging in several regions after a difficult year, service providers who possess CX capabilities have plenty of opportunities to look forward to.

Sharang Sharma, Practice Director: [email protected]

David Rickard, Vice President: [email protected]

Shirley Hung, Vice President: [email protected]

Sitel Group’s Acquisition of SYKES Makes a Big Statement – What Does It Mean for the CXM Industry? | Blog

With one of the largest acquisitions in the contact center outsourcing market in recent years, Sitel Group is poised to become a powerhouse with its acquisition of SYKES Enterprises, Inc. This union will likely set off greater investment in customer experience management services (CXM) and more industry consolidation. Read on to find out what this big deal will mean. 

Giant scope gets attention

The contact center outsourcing market is huge, about 90 billion dollars in annual revenues, and the industry is seeing more attention and growth than ever. So, the announcement of the agreement of Sitel Group acquiring all of SYKES’ outstanding shares in a transaction valued at approximately $2.2 billion is another in a growing list of investments in this space, albeit a large one.

Over the last two to three years, most acquisitions by large contact center providers have focused on bringing new capabilities and technologies to an existing footprint, whereas the Sitel Group / SYKES deal calls out gaining additional global presence as one of the main reasons for the acquisition. We have not seen something of this scale for a few years, probably not since the Concentrix acquisition of Convergys.

Ripple effects of the acquisition

This acquisition forms a $4 billion customer experience management services (CXM) organization with over 150,000 agents, making Sitel Group one of the three largest organizations in the industry alongside Teleperformance and Concentrix. In this blog, we’ll explore what this acquisition means for Sitel Group, its existing and potential customers, as well as the CXM industry as a whole.

Here are a few of the key impacts we expect:

  • The pace of change within Sitel Group: Existing customers of both companies should be mindful as to the speed and effectiveness of the integration and changes to the senior leadership team. Moving too quickly on an integration of this type can cause delivery capability issues, but moving too slowly can lead to service degradation as people are distracted by impending changes and, thereby, lose focus on immediate priorities. Potential clients will also want a clear view of available offerings, service delivery models, and innovation roadmaps
  • Sitel Group scaling up: Sitel Group’s acquisition of SYKES opens up a plethora of new delivery locations, including in Australia, EMEA, and Central America. However, we can expect to see a consolidation of sites and locations over time, especially where both have strong presences. The global footprint will also reduce as locations begin to provide service in the same languages. We also expect that Sitel Group’s considerable work on improving profitability in recent years will benefit SYKES’ business, whose current operating margins are on the lower side in the industry.

In terms of vertical expertise, Sitel Group and SYKES have complementary strengths, with Sitel Group bringing presence in the retail, insurance, and public sector spaces and SYKES bringing strength in the technology and healthcare industries.

  • Client volume drop: While Sitel Group and SYKES share complementary capabilities and mindsets, one natural overlap is that they have many of the same clients, making it probable that they will lose some client volume. Clients will not want to aggregate their contact center outsourcing into one place, they will naturally want to diversify
  • Delays in fully leveraging new capabilities: Many CXM service providers are developing digital CXM capabilities as the industry moves at pace away from traditional “people in seats” models and focuses on delivering better customer experiences through digital interactions to drive better business outcomes. SYKES has a strong focus on digital marketing and automation capabilities which benefits Sitel Group, which has leveraged partnerships in those areas

While Sitel Group’s acquisition of SYKES will bring additional and much-needed digital capabilities to the new combined business, a company the size of the new organization cannot deliver change and adjust to new offerings and skills overnight. It may take some time to fully deliver new digital capabilities at scale.

Increased investments in the contact center industry

As the contact center industry aims to better understand the customer and improve customer experience, we’re seeing many investments in the market.

Service providers across the board are investing in technologies and skillsets to become more digital and get ahead of the curve to offer better customer experiences. They are finding organizations more willing to spend money to improve customer service, an area where in the past, they treated simply as a cost base that needed to be reduced, but are now recognizing its potential strategic and topline business impact. Smaller service providers are taking advantage of their agility and are quickly adapting to a digital-first CXM business, and larger providers are having to work hard to keep pace with the rate of digital adoption.

Watch for more deals in the future

Expect to see more public and non-public deals happening. With the size of this market and everyone working towards digital transformation, a trend that has further accelerated due to vulnerabilities exposed by COVID-19, the contact center outsourcing industry is really ripe for investment.

These deals will result in a consolidation in the marketplace but with bigger market growth. Penetration of contact center outsourcing could increase from roughly 30 percent to upwards of 35 percent in the next few years – resulting in a faster rate of growth than we’ve seen in the past decade.

It will not only be due to big service providers getting even larger. Smaller service providers will need to rapidly articulate their differentiation to remain relevant in a crowded marketplace, such as in a process area or industry domain; otherwise, they run the risk of being in a race towards the bottom.

Using Technology to Assess Contact Center Agents’ Language Skills | Blog

Do you know anyone who hasn’t had a frustrating experience because the contact center rep they interacted with didn’t speak their native language? We didn’t think so.

The truth is that while enterprises have multiple business reasons for establishing their contact centers in offshore locations in Eastern Europe, Latin America, and Asia Pacific, the reps’ language and communication skills often have a negative impact on the overall customer and brand experience.

And although many companies have developed their own solutions to assess candidates’ language capabilities, they’re plagued with multiple challenges, including:

  • Resource intensive: Developing language assessment solutions takes considerable time and resources. They need to be thoughtfully designed, particularly around the local nuances of the markets where they are being leveraged. This can escalate the development budget and timelines, and put an additional burden on L&D teams.
  • Lack of standardization: Most language assessment tests are developed by in-house experts in a specific region. This approach can be detrimental to organizations with operations in multiple geographies, because it lacks consistency across regions, and can leave gaps in the evaluation criteria.
  • Involvement of human judgment: Because humans are responsible for evaluating candidates, a lot of subjectivity comes into play. And human bias, whether intentional or not, can greatly reduce transparency in the candidate selection process.
  • Maintenance issues: The real value of these solutions depends on their ability to test candidates for unprepared scenarios. But regularly updating the assessment materials to keep the content fresh and reflect changing requirements further strains internal resources.

Third-party vendors’ technology-based solutions can help

Commercial language and communication assessment solutions have been around for years. But innovative vendors – such as Pearson, an established player in this market, and Emmersion Learning, which incorporates the latest AI technology into its solution – are increasingly leveraging a combination of linguistic methodologies, technical automation, and advanced statistical processes to deliver a scalable assessment that can predict speaking, listening, and responding proficiency.

For instance, technology-driven solutions may test candidates’ “language chunking” ability, which means their ability to group chunks of semantic meaning. This concept is similar to techniques that are commonly used for memorizing numbers. By linking numbers to concepts, a person can be successful in retaining large sequences of digits in working memory. Without conceptual awareness, memorization is hard.

During an assessment, through automation and AI, the candidate may be asked to repeat sentences of increasing complexity. Success in this exercise relies on the candidate’s ability to memorize complex sentences, which can only be done when they can chunk for meaning. A candidate’s mastery of an exercise to repeat sentences of increasing complexity is a great predictor of the candidate’s language proficiency.

Organizations that embrace technology-based solutions for language assessments can anticipate multiple benefits: reduced costs, decreased hiring cycle times, improved quality of hires, better role placement, freed time to devote to value-add initiatives, and improved customer experience and satisfaction. Ultimately, it’s a triple win for the organization, its candidates, and its customers.

Race to Reality: Full Contact Center Automation vs Fully Automated Cars | Blog

The contact center industry is changing considerably due to technology enablement. Contact center automation is rapidly becoming a priority as centers increasingly embrace technologies such as artificial intelligence (AI), chatbots, robotic process automation (RPA), and robotic desktop automation (RDA) to handle customer interactions on rote queries like account balances, package tracking, and reservation confirmations.

A similar transformation is also taking place in personal transportation. Advancing technologies and intense competition are driving amazing strides in the autonomous vehicle industry. While cars aren’t yet 100 percent self-driving, companies like Tesla are already offering advanced driver assistance solutions that can pretty much take control of driving, albeit with human supervision.

With the perceived nature of each of these two industries, it’s easy to assume that contact centers will be fully automated in far less time than the two to three years some believe it will take for autonomous driving solutions to get you from one point to another without human intervention.

However, this is an incorrect assumption.

Indeed, counter-intuitive as it seems, it’s much more difficult to completely automate contact centers than it is to automate driving. Why?

Driving involves a large, but still finite, number of scenarios that need to be programmed for. But a contact center environment can throw up potentially infinite unique problem statements and challenges that enterprises cannot possibly predict and program for in advance. Yes, AI helps, but even that can only get you so far. At the end of the day, the human mind’s problem-solving ability far exceeds anything that the current or foreseeable technology can offer. And while most people would be more than happy to let robots take over the wheels on the road, they still expect and require human touch, expertise, and judgment for the more complex pieces that usually make or break the customer experience. Technology just isn’t sophisticated enough to handle these yet.

The degree of contact center automation that can be leveraged within an industry varies by process complexity

Race to Reality blog image

Although technology use in contact centers is in the early stages, we are already witnessing higher agent satisfaction and lower attrition rates in an industry that has one of the highest churns globally. And as robots increasingly take care of customers’ simple, straightforward asks, we certainly expect agents’ satisfaction to increase.

Of course, agent profiles will continue to evolve as they are required to deal with more challenging and complex issues leveraging machine assistance. This will, in turn, demand greater investments into talent acquisition and upskilling programs.

It will be interesting to see how all of this plays out in the next few years as technology becomes increasingly advanced and capable. The only thing we can say with certainty is that the customer experience of the future will be much more pleasant as irritations like long wait times, inept IVR responses, and repetitive conversations with agents who hold incomplete information become issues of the past…or, shall we say, smaller and smaller objects in our rearview mirrors?

Chatbots are Getting Smarter, and That’s Good News for Contact Centers | Sherpas in Blue Shirts

Enterprises and their contact center operations are increasingly adopting self-service technologies to improve the customer experience. Over the past several years, chatbots have become one of the most embraced. And it’s easy to see why.

chatbots in contact centers

Chatbots are evolving…

First generation chatbots were software programs that could hold a natural conversation on a text-based channel such as chat, email, or social media. Modern day chatbots’ capabilities – interchangeably called virtual agents – have leapfrogged ahead through use of Artificial Intelligence (AI), machine learning, and Natural Language Processing (NLP), which allow them to understand free flowing language and generate real-time responses. They are no longer bound to a single channel, but instead cover the entire ambit of services, including voice support. This helps them fit well with enterprises’ broader omnichannel strategy, as they can deliver a seamless experience across channels.

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…and they know your preferences

Unlike earlier versions, today’s chatbots can even contextualize information in a conversation. Here’s an example:

Jim: I would like to know the status of my flight. It’s booking # PNR AZ12356.
Chatbot: Hi Jim, checking into it. It appears that your flight’s departure will be delayed by 4 hours, due to scheduling changes.
Jim: Can you cancel it and check for an earlier flight in the morning?
Chatbot: Confirming…
As per your request, I have cancelled your flight American Airlines 235 from Boston to New York. Based on your past bookings, I have three suggestions for alternative flights on the same day:

  • Delta 2897: Departs from BOS at 0430 hours and arrives at JFK at 0550 hours
  • Delta 2471: Departs from BOS at 0600 hours and arrives at JFK at 0720 hours
  • Delta 3167: Departs from BOS at 0640 hours and arrives at JFK at 0800 hours

Jim: Book one ticket in the second option.
Chatbot: Confirming availability. Based on your preferences, would you like me to book an aisle seat, and select a bruschetta omelet with coffee for breakfast?
Jim: Yes, that will be great.
Chatbot: Excellent. Your flight Delta 2471 from BOS to JFK will depart at 0600 hours on October 30, 2017. Your seat number is 4C. I have sent a copy of the ticket to your personal email id. Have a safe flight.

Notice how the chatbot contextualized the information based on unstructured and more natural language flow, and offered recommendations based on the user’s past preferences. These degrees of evolution have made chatbots much more self-service capable, and are significantly enhancing the experience that contact centers deliver to their client’s customers.

As with all technologies, chatbots come with risks

The end goal for today’s enterprises is to deliver the best possible omnichannel customer experience. Chatbots can help customers solve problems on their preferred channel of communication (voice and non-voice). However, the technology does have shortcomings. The well-known example of Microsoft’s Tay – a Twitter-based intelligent bot that had to be pulled down within 16 hours of deployment due to offensive tweets – highlights one technology gap that needs to be addressed.

Everest Group’s just released viewpoint entitled, “Chatbots Delivering Enhanced Customer Experience: It’s Easy to Get It Wrong” details how chatbots can fit in enterprises’ omnichannel strategy, the risks they need to be aware of, and how they can mitigate them.

What’s Driving All the Consolidation in the Contact Center Outsourcing Market? | Sherpas in Blue Shirts

Growth in the contact center outsourcing (CCO) market has slowed to ~4 percent – as compared to 5-6 percent a few years ago – primarily due to service providers’ focus away from the traditional cost-driven business model toward value-added services, omnichannel solutions, and high-value work that will shape the contact center market of the future. As it’s expected to take a few years for the new age solutions to reach maturity, providers across the board will have ample time to rejig their broader strategies with market realities, and come out on top of their game when the growth rate shifts again into higher gear.

The size of contract renewals has outgrown that of new contracts by almost three times over the past few years, implying that larger buyers are shifting their vendor management strategy, moving away from smaller contracts with multiple providers to a smaller group of providers handling larger parts of their operations. There has also been an increase in multi-geography contracts in the last several years, which indicates buyers are consolidating their global engagements across multiple countries to simplify their operations and offer a consistent customer experience.

Service providers are responding to this challenge by making sure they have adequate resources to meet the new buyer requirements. Many are doing so via acquisitions for scale and to fill capability gaps they may have, e.g., those related to value-added services, multi-channel capabilities, emerging geographies such as those in Asia Pacific and the Middle East, and rapidly growing verticals including travel & hospitality and healthcare.

Service provider acquisitions 2012 to 2016

Large service providers are also actively focusing on the United States as a buyer geography. In the last few years, we have seen multiple acquisitions primarily focused around the U.S. market. These include Alorica-EGS, Alorica-West Corporation, Convergys-Stream, and Teleperformance-Aegis. While at first glance the U.S. appears to be among the slowest growing geographies, one needs to remember that it accounts for almost half of the CCO market. As such, despite its low growth rate compared to other geographies, in absolute dollar terms the U.S. added more than US$1 billion in new business in 2015, one of the largest spending gains globally, and more than half the size of the entire Middle East CCO market.

Acquisitions aren’t just specific to the large service providers. Even the small and mid-sized players in the market are ramping up their capabilities and scale by absorbing smaller firms. For example, Capita and Webhelp have acquired several smaller firms within Europe, and Knoah Solutions, a comparatively smaller CCO player in the United States, acquired LL Contact Center in Tegucigalpa, Honduras, to expand its nearshore capabilities.

With the move to a more digital contact center experience, the market dynamics have changed significantly in recent years. As customers move away from traditional offerings, service providers can no longer rely on their key strengths within a set of domains, and need to make sure they have capabilities across the board.

While the focus will remain on organic growth, acquiring it through inorganic means seems inevitable. We expect to see more consolidation in the market in the coming years, not only to reduce competition but also to improve margins and stabilize prices that are already under pressure due to the increasing role of automation and RPA. As such, we can expect several more M&As in the coming years, as service providers try to secure their place in the new world order of the digital customer experience and the changing CCO value proposition.

For an in-depth review of the CCO service provider landscape, please see our newly released 2016 CCO PEAK Matrix.

 

Adapting to Evolving Client Needs – the New Mantra of Growth for Smaller Contact Center Service Providers | Sherpas in Blue Shirts

As a USD$70-75 billion market that has been growing steadily at 5-7 percent over the last few years, contact center outsourcing (CCO) has captured the interest of multiple non-CCO specialist service providers in the recent years. In fact, the more generalized ITO and BPO providers that have started CCO operations in the last decade have realized appreciable growth and success in recent years, some of them outdoing the market growth and growing in excess of 8 percent CAGR.

However, it’s not been an easy journey for these relatively new entrants, given their relative small scale and scope of operations compared to the incumbent players, some of which make billions in revenue through contact center services alone and have operations across all major geographies. To differentiate themselves, these new players have tried to stand out from crowd through innovation, and by tapping areas within the CCO space that have showed the maximum growth in the last few years and have emerged as value propositions for CCO clients.

Most of these high-growth players are, in fact, relatively smaller players, such as Genpact, HCL, HGS, TCS, and WNS. While many have had long-standing contact center capabilities, it has only been more recently that these firms have taken a more strategic go-to-market approach to pursuing the stand-alone CCO market. Their revenues from CCO operations are in the USD$100-450 million range, which is miniscule in size when compared to some of the bigger players such as Convergys and Teleperformance. To sustain their above market growth, these providers have adopted multiple steps to emerge as serious contenders. Instead of merely tapping the traditional CCO markets such as North America and Europe, these players have aggressively expanded their footprint in emerging buyer geographies such as Asia Pacific, Eastern Europe, and Middle East & Africa. By building their capabilities in languages specific to these areas, they have been able to cater to client demands better. They have also been making their presence felt in some of the fastest growing verticals in the CCO market, such as retail, healthcare, and travel & hospitality. Many of them have effectively leveraged their organization’s overall investments in vertical industry expertise to further enhance CCO capabilities and offerings. A key differentiator for many of these players is their ability to link the consumer interaction in the contact center with downstream industry-specific processes by delivering front-back office integrated solutions. These investments seem to have paid off well, as the revenues from these verticals have shown sharp growth for these service providers.

Our research shows that buyers are looking more towards building deeper working relationships with fewer CCO service providers. This means that buyers no longer expect service providers to just deliver on SLAs, but are looking for value beyond labor arbitrage. More contracts being signed now involve value-added processes, and include non-voice channels such as email, chat, and social media. To address these new value propositions, these high-growth players have invested in multiple technologies to build their capabilities in these domains. Most of them have leveraged their vast IT and BPO expertise to deliver solutions specific to contact center needs.

They have also made it a priority to focus on building strong relationships with their clients. They have performed quite strongly on Everest Group’s buyer satisfaction survey, and have frequently been cited for their flexibility, responsiveness, consistency, and execution. With buyers looking to consolidate their portfolio of work with fewer strategic partners, it becomes more essential to have a stronger client-service provider relationship, which the service providers can only achieve by walking that extra mile to keep clients happy with their services.

With the changing scenario in the CCO market, where the focus has shifted from improving the bottom line to adding more value to the operations and thus improving the top line for clients, scale can no longer be considered the primary metric for assessing a service provider. The focus has shifted to cost savings through process improvement and business outcomes, and this provides these relatively new generation high-growth players enough opportunity to prove their mettle in the market where they have been aligning their capabilities with changing client needs. Everest Group’s findings show that clients are taking notice and giving these providers a chance to prove themselves.


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