Tag: contact center outsourcing

Key Action Items Contact Center Providers Should Take to Optimize Their Operating Model in a Digital World | Sherpas in Blue Shirts

Today’s consumers are mobile, self-reliant, and demand faster and more convenient access to information. Thus, it’s not surprising that there was 50 percent growth in the number of contact center outsourcing (CCO) contracts signed in 2014-15 that include chat and social media support.

Tantamount to winning and retaining modern customers in today’s digital world is delivering great customer service. Just think about the astounding success of new age companies such as Airbnb, Amazon, Facebook, and Uber, each of which has differentiated their products and services with an unwavering, unparalleled focus on providing a best-in-class customer experience.

Traditional enterprises are feeling the heat to catch up and transform themselves. As a result, buyers who once outsourced their contact centers solely for cost reduction have started to rethink their customer engagement strategy. Buyers also expect service providers to be a strategic partner in transforming their contact center operations, such as expansion into non-voice digital channels and new delivery models.

So, how can service providers optimize their current operating model to provide a superior customer experience? Insights on emerging, new age KPIs from buyer feedback surveys and interviews conducted by Everest Group during 2014-15 help frame the answer.

 

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Unlike when traditional KPIs were used, buyer perception of service providers’ overall performance today is heavily impacted by four KPIs: relationship management, better insights/analytics, proactiveness, and innovation. As the relevance of these has either increased from the previous year or remained high over the last two years, it’s clear that buyers are increasingly evaluating service providers on new age KPIs. Against this backdrop, we recommend CCO service providers incorporate four action items into their operating model in order to remain competitive.

1. Strengthen relationships through greater governance and coordination across teams

Successful relationship management is the fundamental reason that larger deals have been signed during renewals over the past two years. Fostering strong relationships demands greater governance across buyer and service provider cross-functional teams. CCO providers that are deeply embedded in their client’s business and operational processes are often well positioned to proactively identify undetected challenges and propose relevant solutions. This goes a long way in building mutual trust and transparency between the two parties.

2. Unlock customer insights through advanced data analytics

The ability to provide the right service to every unique customer is the key to building customer loyalty in a world of constant change. While most providers have invested in developing reporting and descriptive analytics solutions, buyers expect them to bring in advanced analytical tools that analyze volumes of unstructured data and provide actionable insights on customer needs and behavior, so they can deliver a personalized customer experience. To remain ahead of client expectations, service providers will need to offer predictive and prescriptive analytics capabilities to understand consumers’ future behavior.

3. Co-create customer value by proactively pitching for implementable solutions

Buyers face an uphill battle to constantly evaluate and improve their business processes to respond to changing market forces. Many buyers with whom we have interacted have highlighted their desire for greater input in that effort from their CCO providers. In fact, clients cite greater proactiveness as one of the key areas of improvement for incumbent providers. As the customer-facing entity for enterprises, CCO providers can assist in identifying specific problems customers frequently encounter. And by leveraging their industry expertise, CCO providers can proactively suggest best practices to buyers and participate in business process improvement initiatives.

4. Build differentiated capabilities by investing in technological product and process innovation

Buyers need to constantly innovate their processes, products, and services in order to retain modern customers who now have a wider range of choices and low loyalty thresholds. Therefore, they expect service providers to bring in technological and process-driven innovation to enable a better customer experience. In order to stand out in the market, CCO providers must invest in building innovative, forward-looking capabilities such as cognitive learning technology and AI-powered assisted automation.

We expect the move toward digital contact centers will prove challenging for some providers and empowering for others. The market has already seen a flow of mergers, acquisitions, and commercial investments in the CCO market in the past year. In order to stay ahead of this wave, service providers must act swiftly to transform their contact centers in order to match the challenging needs of buyers and digital consumers.

For more information on the changing buyer requirements in CCO and their expectations from service providers, please see Everest Group’s Contact Center Outsourcing Annual Report 2016 .

Why Outsourced Call Center Roles are Coming Back Onshore | In the News

There has been a notable increase in contact center onshoring activity in recent years, according to new research from outsourcing consultancy and research firm Everest Group. In 2015, the percentage of contact center contracts with significant onshore delivery climbed to 53 percent, up from 49 percent in 2013 and just over a third (35 percent) in 2010. Read more.

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.

 

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