Global Sourcing Market Update: February 2008 Preview Deck Topic: Trends in the Offshore Contact Center Services Market

Transcription

1 Global Sourcing Market Update: February 2008 Preview Deck Topic: Trends in the Offshore Contact Center Services Market

2 Background and scope of research Background for the research Traditionally, several companies outsourced their contact center functions for customer service, sales and marketing applications, resulting in a relatively mature contact center outsourcing market today However, in the past few years, shifting buyer needs and the advent of offshoring are calling into question the efficacy of traditional contact center outsourcing models Consequently, there is a need for industry stakeholders to understand these recent market shifts and align their operating models accordingly, in order to derive maximum value from their outsourcing/offshoring programs Scope of the research This market update attempts to provide insight on the recent trends impacting the contact center offshoring market and the key implications for stakeholders going forward. Specifically, this report contains the following: Overview of the contact center offshoring market in terms of market size, growth, and maturity Market evolution, key transformational trends, and their impact on offshore delivery models Implications for buyers and suppliers 2

3 Summary of key messages (page 1 of 2) Market overview Perspectives on market evolution The global Contact Center Outsourcing (CCO) market has grown rapidly to a US$55 billion opportunity today. However, there are indications of an impending growth plateau with the market entering a mature phase In contrast, the offshore Contact Center (CC) market is in a rapid-growth phase. Key delivery regions such as India, Philippines, and Central and Eastern Europe are experiencing growth rates in the range of 25-60% CAGR compared to 10-12% CAGR growth rates for the global CCO market over the last three years Buyers pursuing offshore strategies have faced multiple challenges around achieving stakeholder buy-in and managing transition, operations, and performance. Nevertheless, several large companies have developed resolution mechanisms to overcome these challenges and continue to pursue strong offshore strategies Evolution in the CC market can be viewed along a consolidation paradigm. Consolidation of scale and contact channels were the key imperatives from offshoring in the past However, going forward, consolidation of processes within the customer management function and across business units within the buyer enterprise will be the primary focus of outsourcing solutions This is giving rise to higher-value segments of the market: Customer Management Outsourcing (CMO) increase in functional scope, and enhanced capability to deliver end-to-end scope Enterprise Customer Management Outsourcing (ECMO) integrated solution across people, process, and technology, enabling a unique end-customer view Investment in technology solutions (VoIP, self-service, workforce/performance management) and global delivery mechanisms (blended delivery model across in-house, outsource, offshore global delivery network) will be the primary enablers of this transformation 3

4 Summary of key messages (page 2 of 2) Supply-side trends The global CCO landscape is highly fragmented with the top 20 suppliers representing less than one-third of the overall CCO market Four key supplier segments are currently at play: Global integrators e.g., EDS, Accenture, IBM Global CC specialists e.g., Convergys, Teleperformance, Teletech Offshore pure plays e.g., WNS, EXL, Mphasis Domestic niche specialists e.g., Alpine Access, Intellicare Leading suppliers are making focused investments in their technology and delivery model to align their future strategy towards integrated customer management solutions (CMO, ECMO) Significant mergers and acquisitions took place in the last year with suppliers looking to inorganically build capabilities and create differentiation in a fragmented marketplace. A number of offshore and nearshore CC location options emerged, each with different leverage points India and Philippines have emerged as the leading offshore destinations for English language support Central and South American represent strong options for Spanish language support Each location presents a different trade-off point between cost, operating risks, maturity of the supply landscape, and extent of fit with specific customer geographies 4

5 Table of contents Topic Page no. Section I: Summary of key messages 4 Section II: Market overview 7 Market definition 8 Size, growth, and maturity 10 Key market challenges 16 Report contains Section III: Perspectives on market evolution over 50 pages of 20 Transformation of value proposition detailed analysis 21 Key enablers of transformation and information 26 Section IV: Supply-side trends 27 Key supplier developments 28 Location considerations 33 Section V: Implications for key stakeholders 49 Implications for buyers 50 Implications for suppliers 51 Appendix 52 Appendix A: Key supplier profiles 53 Appendix B: Glossary of terms 58 Appendix C: Additional research recommendations 61 5

6 Evolution in the CCO market can be viewed along a consolidation paradigm Market value creation Consolidation of scale Consolidation of contact Consolidation of customer management processes within business functions Consolidation of customer management processes for enterprisewide leverage 1980 s-mid1990 s mid1990 s-early 2000 s Emerging Potential future scenario Maturity Primary driver Cost reduction Characteristics Outsourcing of individual processes Typically simple sales or service support Primarily singlechannel voicebased contact Source: Everest Research Institute (2008) Efficiency gains Increase in sophistication; delivery across multiple channels, e.g., voice, , Web chat Cross-leverage across certain processes such as sales and transaction processing Effectiveness of customer management Multi-scope outsourcing of customer management processes Alignment of customer management within individual functions or business units Incorporation of global delivery framework Effectiveness and customercentricity Enterprise-wide alignment of customer management processes Focus on integrated view of the customer across multiple business units, functions, and channels Leverage of alternate delivery mechanisms along with global delivery, e.g., home-sourcing 6

7 The traditional CCO market is reaching a mature phase with signs of an impending growth plateau Today 2009 Market value creation Mid 1990s Late 1990s Contact center Pioneer Adoption Value proposition identified, but untapped Early adopters / limited adoption Standards/suppliers Multiple models Unclear standards create high risk for buyers to select between models Presence of VC-type suppliers Source: Everest Research Institute (2008) Emerging rapid growth Maturity Acceleration of adoption rates Increased scope and scale penetration Fewer models, each of which is better established lower risk in choosing the appropriate model Suppliers are more established; however, execution varies widely Market M&A increases as new players enter with proprietary skills Reaching maturity Slow-down in adoption rates Growth and scale still available Accepted model(s) and standards Clearly established players 7

8 However, the CC market is still in a rapid growth phase Low Low-medium Medium Medium-high Market value creation IT Infrastructure Procurement HRO Contact center FAO IT ADM Adoption Supply Standards Supplier Locations Overall maturity High Contact Center Pioneers Emerging rapid growth Reaching maturity Maturity Source: Everest Research Institute Global Sourcing Annual Report

9 The report has 50+ pages of analysis and insight, focused on overall evolution and offshoring in CC While cost savings was the historic driver of CCO, buyer priorities are shifting Contact Center suppliers can be segmented into four key categories Leading CCO suppliers are also aggressively expanding their global footprint Global integrators Top three strategies planned to drive revenue growth over a three-year timeframe 2005; Percentage of respondents Lowering costs and maximizing competencies 47 Top three strategies planned to drive revenue growth over a three-year timeframe 2006; Percentage of respondents Acquiring new customers 58 Offshore pure-plays Global CC specialist Company Revenue US$ million Employees Languages Locations Countries Teleperformance 1,410 67, Convergys 2,800 70, Increasing customer satisfaction 46 Building closer relationships with existing customers 51 SITEL + 1,800 65, ClientLogic Teletech 1,100 41, Performance and process improvements/ operational efficiency 36 New products and services 48 Domestic niche-specialists NCO Customer Management 1,052 20,000? A number of locations have emerged as viable contenders for offshored CC services Total annual operating cost per FTE for Spanish language contact center 2006; US$ 000s per FTE Cost-risk comparison for selected cities for English language contact center work Manila (Accenture, Convergys, Teletech, Sykes, epldt, Peoplesupport) Bacolod (Teleperformance, Teletech) Malaysia Kuala Lumpur (Scicom) Singapore (Arvato, EDS) Philippines Cebu (Convergys, TeleTech, Sykes, etelecare ) Low Cost Chandigarh Kolkata Santo Domingo Cebu Pune Buenos Aires Kingston Santiago Nascent San Jose Mexico City Emerging Kelowna Manila New Delhi Bangalore Mumbai Mature Guatemala Cordoba Puebla Buenos Aires Santo Domingo Guadalajara Mexico City Santiago Monterrey San Jose Panama City High High Risk Toronto Low 9

10 Get the answers today that lead to tomorrow s success Everest Research Institute has the resources, experience, and capabilities to provide companies with the strategic intelligence, analysis, and insight that are crucial to making the right decisions in today s outsourcing marketplace. With the vision of our leadership team, the personal commitment, and indeed, the passion of our professionals to deliver real value to our clients, our organization is unsurpassed in its ability to guide your company s future success. Everest Research Institute Two Galleria Tower Noel Road, Suite 2100 Dallas, TX U.S.A info@everestresearchinstitute.com Everest Group 150 E., 52 nd Street, 16 th Floor New York, NY U.S.A Everest India Ground Floor, Tower A Unitech Business Park South City - I, Gurgaon National Capital Region India Everest Australasia Level 6, 90 Mount Street North Sydney, NSW 2060 Australia Everest Canada The Exchange Tower 130 King Street West, Suite 1800 Toronto, ON Canada M5X 1E Everest UK 83 Baker Street London, W1U 6LA United Kingdom Everest Netherlands & Continental Europe Atrium Building 3 rd Floor Strawinskylaan ZX Amsterdam Everest Australia 409a Wattletree Road East Malvern Melbourne, VIC 3145 Australia