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onshoring

Technology Investments, Onshoring On the Rise in Contact Center Outsourcing | Press Release

By | Press Releases

CCO investments in technology and staffing are centered on the growing customer need for an integrated digital experience.

Technology is the leading investment theme in the contact center outsourcing (CCO) industry, followed by scale. Enabler technologies accounted for about three-fourths of the reported investments in 2014-2015, with analytics, automation, and multi-channel tools being the major areas of investments, according to new research from Everest Group, a consulting and research firm focused on strategic IT, business services, and sourcing.

“Contact centers across the world are moving into the digital era with a focus on enhanced customer experience in a multi-channel environment,” said Katrina Menzigian, vice president at Everest Group. “Service providers are responding by shifting their value proposition from the traditional, FTE-based focus on cost containment and implementation to an emphasis on providing insights and innovation to enhance the customer experience.”

Another aspect of the CCO market marking a notable increase in 2015 was onshoring activity, as buyers increased their focus on improving service quality and demonstrated a preference for agents located close to customers. In 2015, the percentage of CCO contracts with significant onshore delivery rose to 53 percent, as compared to 35 percent in 2010 and 49 percent in 2013. This trend also has led to the growth in adoption of a work-at-home agents model, which incurs lower operational costs than onshore full-time-equivalents (FTEs).

Otherwise, movements in the market were modest in scale. Experiencing a period of transition, the global CCO market grew at a rate of 4 percent in 2015 to reach US$75-78 billion. The global contact center spend stands at US$300-320 billion, of which third-party outsourcing accounts for approximately 25 percent.

These findings and more are discussed in “Contact Center Outsourcing Annual Report 2016: The Rise of Digital Contact Centers – Clear Evidence that Real Change is Underway.”

*** Download Complimentary, Publication-Quality Graphics Here ***

High-resolution graphics illustrating key takeaways from this research can be included in news coverage, with attribution to Everest Group.  Graphics include:

  • The benefits of automation in CCO
  • Digital initiatives changing CCO fundamentals
  • Why the CCO market continues to grow, but at a slower pace
  • CCO and the rise of onshore delivery

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

By | Blog, Onshoring

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