Value-added services, channel mix, industry-specific solutions, pricing models, technology and innovation
Value-added services, channel mix, industry-specific solutions, pricing models, technology and innovation
High-performing CCO providers differentiate by highlighting value-added service offerings
The Robotic Process Automation (RPA) Opportunity Varies by Industry and Function
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?
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
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
If you take a close look at these solutions, a few identifiable trends appear:
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.
Photo credit: Flickr
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: 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.
Eric Simonson’s recent blog, “John Mellencamp Named Honorary Everest Group Analyst of the Month,” highlighted the dominance of tier-3 locations in the United Sates for onshore service delivery. Now it’s time to take a look at the tier-5 and rural locations in the U.S., per the North America Domestic Outsourcing location landscape study we recently conducted for RevAmerica, an event focused solely on domestic ITO and BPO sourcing.
Given that places such as Oak Ridge, Tennessee, Albany, Georgia, and Jacksonville, Texas have populations below 100,000, with limited presence of colleges and poor connectivity to commercial airports, one would not expect them to contribute significantly to onshore service delivery. However, our analysis of tier-5 and rural locations revealed five interesting facts.
Tier-5 and rural locations are growing and have a sizeable share in the domestic sourcing market
Tier-5 and rural locations account for approximately 20 percent of the total service providers’ delivery centers, and 16 percent of the delivery FTEs in the United States. The Midwest region has the highest share of these delivery centers.
While onshoring in general has been on the rise, the leverage of tier-5 and rural locations has witnessed significant momentum. In the last decade, the number of new delivery center set ups in these locations has increased by ~150 percent, from an average of three centers per year in 2005-2006 to seven centers in 2013-2014.
At the same time, the share of tier-5 and rural locations in new U.S. delivery center set ups has gone up from ~19 percent in 2005-2006 to 25 percent in 2013-2014.
There are 100+ tier-5 and rural cities to choose from
More than a hundred tier-5 and rural locations are currently being leveraged by service providers for onshore service delivery. There are also a number of other potentially viable locales. Given the wide range of options these locations provide, they become an important consideration for players looking to establish a wider U.S. presence.
A large number of contact centers call these locations home
~61 percent of the existing centers in these locations deliver contact center services, as compared to 22 percent for IT services, and 17 percent for business process services. Leading multinational players such as Alorica, Convergys, Sitel, Sykes, Teleperformance, and Teletech leverage these locations for contact center service delivery.
These locations play a meaningful role in the location portfolio for domestic pure-plays
The leverage of tier-5 and rural locations is highest for domestic pure-plays – e.g., CrossUSA, Eagle Creek Software Services, Onshore Outsourcing, and Rural Sourcing Inc. – which have ~37 percent of their delivery centers in these locations. On an overall basis, traditional MNC’s still dominate the market landscape as they have significantly large number of delivery centers in the United States as compared to other players.
The talent pool is sizeable enough to support 1-2 moderate sized delivery centers per location
While talent availability in tier-5 and rural locations is generally lower than in tiers 1 to 4, they still offer a pool capable to support one or two moderate sized delivery centers. The typical delivery center size in these places is ~340 FTEs, as compared to a national average of ~445 FTEs. However, there is evidence of players achieving a scale of above 500 FTEs, especially for contact center services, where high school graduates are utilized.
As onshoring grows in the United States, leverage of tier-5 and rural locations will also grow. Service providers are establishing their presence in these locales due to their lower costs and lesser competitive intensity. Hence, there is a significant opportunity for economic development agencies in these locations to attract potential investors and create employment opportunities.
To download a full copy of our research on domestic delivery, please visit: https://research.everestgrp.com/Product/EGR-2015-2-R-1455/North-America-Domestic-Outsourcing-Services-Providers-Embrace-
For more Market Insights™ on this topic, please visit:
To download our presentation from the RevAmerica event, please visit: http://www.revamerica.com/program/
Photo credit: Wikipedia
Inclusion of value-added services is on the rise in Contact Center Outsourcing across both new and renewal contracts, though renewing buyers are more confident in adding services
Contact Center Outsourcing contract TCV is both shrinking and growing