Tag: contact center outsourcing

Vicious Cycle: Attrition Cost Per Lost CSR Rises as Overall Attrition Increases | Market Insights™

Business Impacts of CC attrition 2

The total cost impact of attrition varies based on the actual level of overall attrition: costs increase by about 1.3% for every 10% increase in annual attrition rate. The higher per-Customer Service Representative (CSR) cost of attrition, which holds true for contact centers located in both onshore and offshore locations, is driven by the need to maintain a larger infrastructure to support higher attrition rates.

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Convergys to Acquire Stream – Can Leading CCO Providers Get the Mix Right Between Scale and Value? | Sherpas in Blue Shirts

Last week Convergys announced it plans to acquire Stream International. This combination of two large U.S.-based providers creates the world’s second largest Contact Center Outsourcing (CCO) provider, with a combined revenue topping the US$3 billion mark. Convergys stands to gain an expanded set of service delivery capabilities, client segments and regional presence.

As competition in the CCO market heats up, service providers are actively looking around for attractive opportunities for acquiring their way to growth and expanded offerings. Over the past two to three years several CCO M&A deals have been announced. These deals target a number of specific objectives, which Everest Group categorizes into three types – capabilities augmentation, scale enhancement and footprint expansion. Capabilities enhancement was the primary driver for nine of the more recent deals, making it the most prevalent investment area.

Key M&As in CCO space in 2011-2013 

Key M&As in CCO space in 2011-2013.jpg

Two key objectives drive Convergys’ acquisition of Stream, scale enhancement and client base expansion. On the other hand, the other CCO mergers in the past year and a half had different sets of objectives. Concentrix’s acquisition of IBM’s CCO (October 2013) business and Sykes’ acquisition of Alpine Access (July 2012) were driven by capability enhancements. In contrast, Webhelp Group’s acquisition of HEROtsc (February 2013) and Capita’s acquisition of Full Circle (June 2012) were driven by delivery footprint expansion.

While the deal ensures top line growth, we wonder how Convergys plans to tackle bottom-line growth. In our opinion, CCO leaders will need to balance scale-driven growth with more profitable organic growth among the existing client portfolio. The trick to achieving this growth involves effectively addressing ever-increasing client expectations around customer experience management and end-to-end multi-channel customer interaction. Everest Group research shows that over the past few years CCO clients have expanded the number and nature of the processes included in their engagements, with value-added services growing the fastest among all process areas.

For the gears to keep powering growth long after acquisitions have been digested, CCO service providers will have to focus on value-added services that expand existing client engagements and create differentiation in the market.

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Work-at-home Staff: the Feather in Cloud Contact Centers’ Cap | Gaining Altitude in the Cloud

Our last blog on contact centers focused on how next generation technology can drive new sources of savings in contact center operations. Now let’s turn our attention to how cloud-based contact centers create the opportunity to fundamentally rethink the traditional staffing model.

Hosting a contact center in the cloud removes certain technical limitations that dictate the location of your workforce, in particular the need for a centralized working site for employees and equipment. The consequence of this new freedom is the ability to decentralize your workforce, replacing traditional call center employees with work-at-home (WAH) agents. Among contact center services providers, such as Alpine Access, Transcom, and Xerox, we already see WAH agents as part of the delivery model. While a WAH model can significantly reduce the capital costs associated with renting and maintaining a facility and IT equipment, the more interesting – and to some organizations, highly enticing – implications are in its inherent flexibility.

Cloud-based contact centers eliminate the geographically imposed restrictions of physical call centers, allowing employees to simply login from wherever they may be. Thus, in a WAH staffing model, the pool of potential workers is limited only by the availability of skill sets. In fact, the pool for specialized skills becomes larger as workers with unique skills located out of the reach of centralized call centers can now integrate into virtual contact centers through the WAH model. Removing the geographical limitations of call centers also presents opportunities for workers who may have had challenges joining or remaining in the workforce due to age, physical disability, or the need to stay close to home. Due to both of these phenomena, the WAH model reintroduces domestic sourcing as a viable option.

Cloud-based contact centers also allow businesses greater staffing flexibility, as full time employees (FTEs) can be augmented with contract or temporary labor to meet fluctuating capacity requirements on a daily or seasonal basis. This approach also reduces cost obligations such as healthcare, retirement, and other benefits required by FTEs. While organizations may choose to use a high ratio of contractors or temps, Everest Group recommends they retain a minimum level of FTEs, WAH or otherwise, to ensure their ability to provide a base of capacity.

There is another more ambitious possibility for businesses willing to brave a next generation business model. A cloud contact center could be paired with a third-party staffing agency to provide the required number of agents on a daily, weekly, or monthly basis. These sorts of relationships are already forming in the marketplace. For example, staffing and talent firm Manpower Group has a specialized contact center recruitment practice.  Using next-gen forecasting tools to anticipate demand and utilization, a company could embrace a total ”as-a-service” approach to its call center/s, wherein both IT capacity and the staffed call center agents are dynamically scaled against demand, people, and platform-as-a-service (PaaS.) Theoretically, this approach would attain the greatest possible efficiency, matching costs of call center agents and IT bandwidth to demand.

The WAH model has long been associated with additional benefits, such as lower attrition rates, access to specialized and hard-to-find skills, and the ability to offer 24/7 service at lower costs. However, until now, the technical challenges of managing a large number of WAH agents have limited the scope of adoption. We expect this to change, with more organizations using WAH agents in new ways, enabled by the ease and cost-effectiveness afforded by next generation contact center technologies.

Photo credit: Markus Spiering

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