Tag: contact center

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.

Think Oak Ridge, Tennessee Isn’t on Your List of Likely Domestic Service Delivery Sites? Think Again | Sherpas in Blue Shirts

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.

Distribution of domestic FTEs and US delivery centers by city-tiers

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.

Number of new center setups per year in tier-5 and rural locations in US

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

Distribution of delivery centers by function in tier-5 and rural cities

~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

Number of delivery centers by provider

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.

Average number of FTEs per delivery center

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:

https://www.everestgrp.com/tag/domestic-sourcing

To download our presentation from the RevAmerica event, please visit: http://www.revamerica.com/program/


Photo credit: Wikipedia

Capita’s German Gambit | Sherpas in Blue Shirts

Over the years we have seen Capita successfully expand from one market sector to another in the UK and Ireland. Since 1984 when it only served the UK local government sector, it has expanded into seven major verticals and over 15 segments of those. The latest expansion plans take it beyond the UK and Ireland borders into DACH, with Germany being a primary target market.

Acquisitions

Capita’s new geographic growth strategy has seen it make three acquisitions in the DACH region (Germany, Switzerland and Austria) in the past year:

  • tricontes – the £6.2m acquisition of this Munich-based company in June 2014 brought Capita specialist contact centre services across the retail, telecommunications, utilities and insurance sectors in Germany
  • SCHOLAND & BEILING – a customer care consulting company also based in Munich, Germany
  • avocis – announced in February 2015 and if successfully completed, at £157m, avocis would be one of the bigger Capita acquisitions. It would bring Capita 6,500 employees and a portfolio of customer contact management services contracts in DACH. Although headquartered in Switzerland, Germany is avocis’ biggest market, accounting for 53 percent of revenue. The rest comes from Switzerland.

Capita has a formulaic approach to acquisitions with a budget of £200m to £250m per annum. It considers many potential acquisitions each year, selecting a dozen or more that fit its formula to:

  1. Increase scale
  2. Add new expertise to enhance its propositions
  3. Take it into new markets.

In addition, the acquisitions have to make a Return on Capital Employed (ROCE) of 15 percent post tax return after 12-months integration into the group.

Capita recently also acquired 700 skilled, multi-lingual FTEs in Krakow and Lodz, thanks to its acquisition of SouthWestern in Ireland. It can tap into these centres to further boost its presence in DACH for outsourcing services, including insurance, finance and legal administration, and customer management.

The Drivers for DACH expansion

The key drivers for Capita’s German gambit include:

  • Small growth in the UK market – we estimate that contact centre outsourcing (CCO) to be growing at circa 5 percent. Capita posted decent growth in this business, but given the overall market conditions, Capita must be looking for an alternative growth trajectory outside its comfort zone
  • Continental Europe is growing – Everest Group research shows a rise in CCO adoption within Continental Europe. Germany has the largest economy in Europe with an under-penetrated and fragmented market, and only in certain verticals such as utilities, retail and telco. Germany, therefore, presents ample room for sustainable CCO growth for Capita
  • The DACH region represents a large CCO market with 110m German speakers. Yet there is only small levels of outsourcing. Capita sees good opportunity for a transformational CCO partner in the region
  • Ability to engage existing UK clients – this also provides Capita with opportunities to extend its existing contracts within UK with firms that have European parents and subsidiaries and vice versa
  • Access to the in-house contact centre market through SCHOLAND & BEILING’s existing portfolio of enterprise clients, enhancing the breadth of Capita’s footprint in the broader contact centre market.

The three acquisitions add scale to Capita’s existing customer management services in the service-line’s key sectors of retail, telecom and utilities. We expect to see some sharing of resources and skills across country units, driven by multi-country client requirements.

The combination of both customer care outsourcing and consulting services represented by these acquisitions also bodes well for CCO clients, who increasingly look to their service partners for guidance in strategic areas, such as the deployment of multi-channel services, enhanced uses of analytics and stronger vertical industry specificity.

Expansion into German local government is a possibility with avocis that has a number of contracts in the sector. This is Capita’s founding market and Andy Parker, the CEO, has already said that he sees much similarity between the UK and German local government sectors. However, expansion into this sector will be after that of avocis’ bigger private sector market. It is unlikely to target the German local government for the first 12 months after the acquisition.

Challenges

Capita’s biggest challenge is integration of these companies along with all the other acquisitions that it has made recently. In recent years Capita has spent:

  • £271m on 13 acquisitions in 2013
  • £310m on 17 acquisitions in 2014
  • £199m spent on 4 acquisitions to date in 2015

These have been in a diverse set of companies, ranging from software and data for utilities and transport sectors to residential and commercial mortgage administration. The company is also expanding its services portfolio into new verticals such as agriculture and science services.

Managing this expansive empire while building efficiencies into services and workforce management is not going to be easy.

Yet Capita continues to deliver growth year after year. In previous years, it managed to significantly boost its CCO business with the acquisitions of Ventura and Vertex in the UK. In DACH, it has to deal with challenges of a different culture and languages as well as the usual aspects of integrating businesses, so we will be watching this space with interest.

There is no doubt that Capita is a master at business expansion. Service providers that want to expand into new service lines and geographies would do well to follow Capita’s German gambit.

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