Heavy Competition Continues to Drive the BPO Market
The economic slowdown that's been sending gas and oil prices into a tizzy hasn't been able to deter the business process outsourcing (BPO) market's expanding profile on the global scene. Increased competition continues to rule the day for outsourcers, and industry pundits do not predict any stall in the immediate future.
Stephen Loynd, IDC's program manager for contact center services and author of "Worldwide Contact Center Services 2008 Vendor Profiles: Customer Care in Volatile Times," says that the competition is worldwide, no longer just in one or two hotspots. "This industry is an extremely competitive industry," he explains, noting he profiled 36 outsourcing players spread worldwide. "All of these contact center service outsourcers are competing on a global level."
Not only are there more service providers trying to make a firm footprint on the BPO space, but there are more countries being leveraged, too. Peter Ryan, head of contact center outsourcing analysis at Datamonitor and author of "Business Trends: Knowing Your Contact Center Outsourcing Customer," explains one of the questions posited to respondents dealt with where countries companies would consider or not consider outsourcing -- and he listed up to 30 countries, which in itself he says is noteworthy. "We listed more locations here in terms of what they'd consider in this question than we did in the last couple of reports," Ryan recollects. "We extended it greatly."
Countries Ryan says were popular outsourcing spots include Panama, Poland, South Africa, Chile, Mexico, Hungary, and India. With the exception of several countries, like South Africa and Chile, one reason these countries are popular Ryan says is due to their easy proximity from major Western locations. While these locations aren't cheap, according to Ryan, the reputation for good quality is there. "[These countries] wouldn't necessarily be the cheapest locations, but they have a reputation for a good quality versus cost ratio."
As Ryan notes and Loynd stresses, India still has a seat at the BPO dinner table -- although it may not be at the head of the table anymore. Speaking about stories in the media highlighting dissatisfaction with Indian outsourcers, Loynd points out, "We have to separate the politicalization sometimes, of some of the stories [highlighting problems with outsourcing in India]."
Loynd explains that while stories have been out about "unsuccessful engagements" in India, two points must be raised. One, poor deployments can happen in any country, and two, there are "loads of successful engagements and well-run contact centers out of India," he adds. According to information in his IDC report, some Indian BPOs are raising prices for its services due to the rupee moving up more than 10 percent against the U.S. dollar. He says these companies will have to be wary of competitors taking advantage, but there is no evidence yet as to what effect price raises may have. Nonetheless, Loynd declares, "India is right near the top as far as the world of outsourcing goes."
Lack of awareness may also creep into homeshoring, a rapidly growing complement to offshoring and nearshoring contact centers. "There has been lots of growth in the home-agent market, notably in the United States but starting to permeate in other parts of the world," Ryan says. Loynd and Ryan both say North America in particular has the most mature market for this emerging business model. However, Ryan explains a majority of North American companies still aren't considering work-at-home-agents. According to data complied by Ryan, approximately two out of five respondents in North America said they considered outsourced home agents, while approximately three out of five said they had not.
With myriad options for who, where, and how much to outsource -- the best strategy is to diversify. Loynd highlights the top five vendors out of the 36 he profiled for his latest IDC report (in alphabetical order -- the top five vendors themselves were not ranked against each other):
- Teleperformance Group;
- TeleTech; and
Billion-dollar revenues aside, Loynd explains the reason why these five vendors are a cut ahead of the rest he profiled is that "these companies are very keenly aware of global presence and its importance." He also adds these five vendors have considerable revenue streams coming from different regions, as well as a diversified delivery portfolio -- which "makes all of these players top in the industry," Loynd explains. Ryan agrees that a diversified delivery portfolio is of paramount importance. "One of the most important things recognized amongst outsourcing players and clients now is that they understand the need to be able to balance a good agent-based delivery model with automation," he says. "You can have one, you can have the other -- but you can't have one without the other."
Loynd expects the BPO market to continue to stay hot, despite a cooling economy. "The globalization [of the BPO space] and the downturn in the economy are kind of feeding off of each other," Loynd points out. He also adds that we can expect to see more mergers, acquisitions, and strategic partnerships between BPO players worldwide. "Long story short, players in the industry need to think of ways to team up and work together, considering the environment," he concludes.
The 2008 CRM Service Awards: Outsourcing
Customer service outsourcing comes down to comfort; West retains the crown.
Virtualization Takes Hold, Says Gartner Magic Quadrant on Desktop Outsourcing
Out of a 12-company scrum assigned to the top quadrant, EDS leads the pack.
Re-shoring Contact Centers
A rise in customer dissatisfaction with offshore contact centers has many companies looking to relocate closer to home.
Heavy Competition Drives Bilingual Offshore Market
New research reveals increased competition among Latin American nations looking to provide customer service for America's rapidly expanding Hispanic markets.
Worldwide Outsourcing Market to Grow 8.1% in '08
A new Gartner study reveals strong growth in the overall outsourcing market -- but even stronger growth in the business-process outsourcing most critical to CRM.
eTelecare Global Solutions Merges with Stream Global Services
One industry analyst believes the move is the biggest business process outsourcing market shakeup in the last six to 12 months.