Tag: contact center outsourcing

Multi-Channel Solutions – Defining the New Age Contact Centers | Sherpas in Blue Shirts

The customer care industry is going through myriad changes, but none as far-reaching and impactful as the rise in the adoption of non-voice channels. Recognizing this shift in customer behavior, enterprises are working to ensure their customers have a seamless experience across the channels of their choice, in order to increase customer acquisition, retention, and loyalty. This change in buyer expectations is having its effect on the global Contact Center Outsourcing (CCO) market as well.

One of the key findings in Everest Group’s Contact Center Outsourcing Annual Report 2015 is an almost 10 percent erosion between 2011 and 2014 in the voice channel’s revenue share, even though it remained the dominant channel of customer interaction. While voice has grown at a sluggish pace (3 percent CAGR between 2011 and 2014), non-voice channels have witnessed robust growth, led by email, which experienced a handsome 22 percent CAGR revenue share growth between 2011 and 2014. Chat and social media account for smaller proportions of non-voice channel revenue, but grew at 43 percent and 53 percent, respectively, in the same period.

CCO revenue across channels over time

Increasing adoption of non-voice channels has also given rise to solutions specifically targeting multi-channel requirements. Everest Group research shows inclusion of channel management as a value-added service had almost tripled from 7 percent of the contracts signed in 2008-2010 to 19 percent in 2013-2014. In fact, multi-channel solutions have become so pervasive that growth opportunities for players supporting the voice channel predominantly are diminishing rapidly. Barring contracts focused on outbound sales services, 60 percent of new contracts focused on operational or value-added services have a non-voice component.  As discussed in our recently published viewpoint, it is becoming increasingly imperative for service providers to design solutions with a portfolio that combines value-added services and non-voice channels.

As service providers make investments to augment their capabilities and build expertise in managing non-voice channels, below are some implications they should keep in mind:

  • Outlining the right shoring strategy. Our research shows a clear move towards onshore delivery as CCO clients increasingly prefer agents closer to home, especially for the voice channel. The changing channel mix will dictate the direction in which the shoring strategies evolve in the future
  • Defining the right skill-sets. Non-voice channels provide productivity gains by allowing agents the opportunity to juggle multiple channels without impacting quality. Service providers must ensure agents are upskilled through the right set of training programs and hiring requirements, which are different from those for voice
  • Leveraging analytics. Non-voice channels are more digital-friendly by definition, and are suited for use of advanced analytics tools. Close alignment of analytics solutions to derive incremental insight and information from the data generated from non-voice channels will be critical
  • Using sophisticated pricing models. Non-voice channels align well with output- and outcome-based pricing models, and have witnessed higher adoption of these pricing models than the voice channel. As they build capabilities on the non-voice front, CCO service providers must also look at how to best align their processes and metrics around non-voice channels to support clients’ desired business and customer experience outcomes. This essentially involves redefining CCO’s value proposition beyond cost savings to include business performance
  • Supporting clients through the journey. CCO clients require guidance and clarity on where to begin the non-voice channel journey, and how to move forward with it. We have already seen consulting practices within BPO firms helping clients confidently undertake this transformative journey, and could be a very critical component in the successful adoption of non-voice channels.

In a heavily commoditized market, non-voice channels give service providers an opportunity to differentiate themselves and stand out from the crowd. While some providers have taken the lead and become front-runners in the multi-channel solutions race, others have more recently started augmenting their capabilities in this space through acquisitions and partnerships. Building capabilities is a key success factor, but as highlighted earlier there are other factors for service providers to consider to ensure they make the best use of these capabilities.

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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Incumbents Beware – There’s No Place for Complacency | Sherpas in Blue Shirts

Used to be that if you delivered against the SLAs in your CCO engagements service providers could count on a pretty stable book of business. The formula was to deliver consistently solid service and continue to drive a compelling business case for clients. In fact, adherence to SLAs was often one of the top criteria against which the buyers we spoke to would evaluate the success of their CCO engagement. But times are changing. Everest Group’s research shows that delivering on SLAs is now table stakes. And despite the fact that CCO providers typically do a solid job delivering on SLAs, over the past 2-3 years the rate of contract terminations has edged up from 50% in 2012 to 60% in 2014. What’s driving this ongoing shift?

There’s more to the story than meets the eye. While terminations are up, so too is the number of net new contracts and the scope and size of existing active contracts. In fact, total spending on CCO services continues to grow at 5% CAGR. While this may seem slow compared to other services markets, you have to keep in mind that the CCO market is huge at US$75 billion in annual revenues, so the absolute spending growth is not insignificant.

A key point here is that existing contracts are now contributing the larger share of net new spending in the CCO market, with average contract sizes growing from US$32 million in 2009-2011, to US$51 million in 2014. This growth in spending tends to come from a notable expansion in process scope. Not only have we seen growth in the total number of processes clients are asking their CCO providers to assume on their behalf, a bulk of the incremental processes fall into the category of value-added services. Growing from an aggregated inclusion rate of 42% to 61%, this could involve processes such as channel management, customer retention, analytics, or performance management.

Process includion with CCO contracts

At the same time, major CCO buyers tell Everest Group they are increasingly looking for opportunities to develop deeper working relationships with fewer CCO service providers – essentially consolidating their portfolio of work with fewer strategic partners. The expectation of these relationships is that CCO providers will meet a larger set of client requirements through a broader range of capabilities, including process scope, geographic coverage, and industry specialization. We have already seen CCO providers responding to this shift in buyer expectations as evidenced by the number of acquisitions taking place in the market, targeting both growth in scale/scope, but also in terms of vertical industry and technology capabilities.

For service providers to hold onto their client relationships they must continue innovating their approach to client relationships, the offerings in their portfolios, and their willingness to broaden the definition of customer care services.

For more CCO insights, download a complimentary preview of our CCO Annual Report.


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When It Comes to IT-BPS, the Philippines Knows Its Strengths | Sherpas in Blue Shirts

I was introduced to the Philippines about two years back when I started working in the global services sector. And frankly, I was a bit startled by how little I knew about this giant of the contact center services market – I always thought India was the world’s largest contact center market. But its colonial heritage, accent neutrality, cultural affinity with the west, and BPS-conducive environment puts the Philippines at an altogether different level.

I began following the Philippines IT-BPS markets more regularly as I worked on this location for several client engagements. I observed how this country is a perfect example of the “playing on your strengths” approach. It is incredible how the government, iBPAP, and other partner associations have worked together to achieve the growth potential we highlighted in the Roadmap we developed in association with then BPAP and Outsource2Philippines back in 2009. Indeed, the market has doubled in size in less than six years. Today, the Philippines employs over a million FTEs, and is the second largest offshore services delivery location, next only to India.

While voice-based services have always been Philippines’ strength, it has experienced remarkable success in other areas, such as IT services, which grew at ~25 percent CAGR since 2010, and now accounts for ~10 percent share of country’s entire offshore market. While service providers have been key drivers of the growth in IT, Global In-house Centers (GICs) have pushed for growth in FAO and banking services. Several global banking companies, such as American Express, ANZ, Citibank, Deutsche Bank, HSBC, ING Group, JP Morgan Chase, and Wells Fargo, have established sizable centers in the country. Even though Bank of America has exited the country (it shut down its shop in 2014 as part of a global GIC restructuring), and JP Morgan Chase is scaling down owing to global cost cutting, overall outlook remains positive. The country has also made good use of its strong nursing talent—the largest pool of U.S.-licensed nurses outside of the U.S.—and is now the largest healthcare services provider to the U.S. The healthcare BPS sector has grown at over 40 percent YoY since 2012.

Another success area for the Philippines has been its ability to attract global companies. Over 100 have set up their GICs in the country, and close to one-fourth of them are on the Fortune 500. These GICs are expanding their Philippines strategy beyond cost arbitrage, and establishing regional hubs/HQs/CoEs. The U.S. remains the leading buyer market, with ~70 percent total demand. However, demand from Asian markets has been increasing steadily, with several Japanese and Australian companies establishing their captive centers in the metro Manila region.

With increasing emphasis on adoption of digital globally, government agencies (such as iBPAP and PSIA) are making proactive efforts to ensure that the Philippines stays ahead of the curve. It is already investing in building capabilities – from teaching the right curriculum at the universities to supporting companies’ development of required infrastructure to setting up training labs at colleges and universities –  to deliver mobility, analytics and cloud-based services. We have seen some evidence of companies already delivering mobility (focused application development services for mobile) from the Philippines in the last year or so. Digital has been the buzzword in the majority of our interactions with our clients looking into the Philippines lately.

Having done well so far, I am intrigued to see how the Philippines will sustain its growth in the evolving IT-BPS ecosystem. It needs to adapt to rapidly changing consumer needs, e.g., the adoption of digital, development of multi-channel delivery systems, and a multi-skilled labor force. It also needs to ensure continuous growth in other service lines, such as banking BPS, FAO, HRO services, animation and gaming, and creative services, by leveraging its interpersonal, voice-based, and strong domain-specific skills to build scale.

It will be interesting to watch what lies ahead in the years to come. Can the Philippines continue shaping its own destiny in the global services market?

Why Are Organizations Leaning on Contact Center Outsourcing Providers to Tackle Their Social Media Analytics Challenges? | Sherpas in Blue Shirts

Our last blog on social media analytics outlined the challenges organizations can face in developing and launching their social media analytics capabilities. The challenges ranged from organizational issues to technology solutions. Given that many organizations channel their social media interactions through contact centers, it’s not surprising that an increasing number of companies have turned to contact center outsourcing (CCO) providers to help them get their social media house in order. Here’s why.

Among all non-voice contact center channels, spending on social media support, while the smallest at 3.4%, is the fastest growing, at 53% CAGR. This spending occurs both within existing CCO engagements with expanded scope thatinclude channels beyond social media, as well as those engagements developed specifically around social media interaction. At the same time, Everest Group has seen the inclusion of customer analytics as a defined element of CCO engagement double in the past five years, from 19% of deals including analytics to now 40% inclusion. These two developments are clearly linked.

Realizing the stakes in play of a successful social media effort versus one that fails, clients often seek specific benefits from their working relationship with CCO providers. The table below outlines the key challenges in play and how CCO providers can address these.

Key Client Social Media Challenges and CCO Solutions

Social media challenges and CCO solutions

CCO providers have been on the frontline of social media and analytics adoption – in fact they’re ahead of the curve on this one. Providers have proactively invested in best practices, staff training, and technology capabilities in order to meet clients’ current needs and help them envision the path forward. These engagements will often begin with a consultative phase to determine strategy and run through implementation and service delivery.

One key area of investment by CCO providers has been in enabling technology in support of social media, which can be both proprietary in nature (60%) and through partnership models (40%). Below we capture examples of proprietary technology tools developed by CCO providers specifically to take on their clients’ social media and analytics needs.

Investments in social media and analytics by ownership model

Share of instances

Investment in social media and analytics by ownership model

If you take a close look at these solutions, a few identifiable trends appear:

  • Social media interaction tools and analytics tools tend to be closely paired. The ability for analytics to shape and govern the unstructured nature of social media and drive value from these interactions is a key consideration here
  • CCO providers have taken a total solution approach in order to address the various social media needs of clients including channel monitoring, proactive issue resolution, and integration with other channels
  • Providers of CCO are ahead of the market. More specifically, with the exception of a limited number of mature adopters of social media, client organizations needing social media and analytics support perceive CCO providers as a means to access technology capabilities and expertise they lack internally

The level of investments made by the service providers clearly outpaces that of most organizations and provides a solid starting point for those that like to go-it-alone. Along the evolving frontier of social media and analytics, for some organizations, their CCO providers are valuable scouts leading their explorers to brighter horizons.


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What’s Holding Back Organizations from Deploying Social Media Analytics in Their Contact Centers? | Sherpas in Blue Shirts

Adoption of social media as a commercial interaction channel continues forward at a rapid pace, both among consumers and the companies they engage. Nowhere is this impact felt more profoundly than in the contact centers charged with supporting these customers. One of the advantages, and some would say disadvantages, of social media is the vast amount of data generated by every click and every keystroke. A potential treasure trove of information about consumers and their behavior, the social media channel offers the chance to apply analytics to volumes of information only dreamed of in the past. So why aren’t more organizations actively leveraging social media analytics in their contact centers? Why are only a small number of mature social media adopters figuring out how to leverage this channel proactively instead of reactively, to drive their own business agenda? Everest Group research shows there are five main obstacles getting in the way:

  • Stakeholder alignment
  • Immature social media adoption
  • Lack of adoption roadmap
  • Channel integration challenges
  • Shortage of social media and analytics skills

Stakeholder alignment: Unlike past interaction channels, interest in social media cuts across various internal department, including marketing, customer care, and IT. Each department has its own objectives with social media, measures success by different metrics, and often funds and budgets for social media investments independently. These dynamics create complexity and misalignment in how social media is managed.

Immature social media adoption: Where companies stand on the social media adoption continuum greatly impacts the nature of their investments. To date, the more mature social media adopters looking to leverage existing pools of data have implemented the most advanced analytics capabilities. To date the majority of companies continue to focus primarily on their fundamental social media capabilities of interaction, monitoring, and brand perception, with a lesser focus on the associated analytics.

Lack of adoption roadmap: Getting off the social media analytics block is easier said than done for many organizations. Identifying where to start and how to implement analytics effectively to drive business and process value often creates hesitation in some organizations, slowing adoption timelines.

Channel integration challenges: Consumer expectations about an integrated interaction experience continue to grow. Integrating various interaction channels (voice, e-mail, chat, web self-service, mobile) is already high on the corporate priority list for many. However, the public dialogue nature of social media combined with the high volume of data captured create a situation where social media implementation cannot be separated from the corresponding analytics components.

Shortage of social media and analytics skills: The successful implementation of social media and analytics require specialized skills in two distinct categories: the IT professionals that implement and maintain these technologies and the customer care services staff that engage customers via this channel. In both cases, organizations often experience a lack of internal skills and find a shortage of experienced people in the broader market. Again, another obstacle slowing the social media analytics adoption timeline.

No doubt organizations are working their way through these challenges and developing the internal resources to support their social media and analytics strategies. Compared to other interaction channels, social media not only requires analytics to effectively utilize the channel, but also offers the greatest potential for impacting the consumer experience, whether positive or not. We will hear about this topic for quite some time to come. In our next piece on social media analytics, we’ll explore how some organizations are turning to contact center outsourcing providers to shorten their learning curve and get them out of those starting blocks more quickly.

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