Workforce Optimization's Winners and Losers

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The workforce optimization (WFO) market is transitioning from products dedicated to optimizing agent performance to solutions optimizing staff performance and providing engagement and enterprise analytics, and this change is having a major impact on the sector's revenue and growth. The traditional contact center WFO market is still attracting substantial investment, but the growth rate for some of the applications, particularly the mature ones, is slowing down. At the same time, adoption of newer analytically oriented applications is expected to pick up.

The back-office and branch WFO market is under-penetrated; in some cases, new applications are being built from the ground up to meet back-office and branch needs. Also, many applications that were developed for contact centers either have been or are being retrofitted by WFO vendors to meet the needs of this sector. DMG estimates that there are 2.5 times as many back-office employees as front-office ones in the United States alone, based on the U.S. Bureau of Labor Statistics’ Occupational Employment Statistics Survey, from May 2014. (The total number of back-office employees in other developed countries could be even larger.) The challenge for WFO vendors is to learn how to sell to this market.

In the long term, the contact center WFO market has great potential, but the next few years may be challenging due to the continued slowdown in sales of traditional contact center WFO applications. As a result, DMG has reevaluated the market projections for the next five years; here is what we project for the various segments:

Recording. Innovations in recording are making it compelling for companies to replace outdated solutions. Since the cost of recording solutions continues to decrease, and voice recording is highly penetrated, this is not expected to be a growth market. Video recording, on the other hand, remains a growth area, but near-term adoption is expected to be low. DMG expects the recording market to grow at a rate of 1 percent each year for the next five years.

Quality assurance (QA)/quality management (QM). This market is expected to take a hit as companies migrate to analytics-enabled QA (AQA). DMG expects many companies to continue to purchase traditional QA/QM solutions. Unfortunately, vendors are not breaking out AQA revenue from other speech and text analytics revenue, so there's no way to determine how much of revenue to attribute to AQA. DMG expects to see the traditional QA/QM market contract by 2 percent in each of the next five years.

Workforce management (WFM). This remains the most important productivity tool in the contact centers where it's used, and it's starting to find use as a tool for employee engagement. The newer WFM solutions have a variety of self-service capabilities that allow agents to manage their own schedules, including time off and schedule swaps, features especially important with Millennial employees. WFM is highly penetrated in contact centers with more than 250 agents, and now back offices are slowly starting to use WFM; this represents a large sales opportunity. DMG expects the WFM market to grow at a rate of at least 8 percent each year for the next five years.

Contact center performance management (CCPM). CCPM is both a strategic and a highly tactical tool that gives managers visibility into all aspects of their operating area. Since the revenue base for CCPM remains low, it will be easier, relatively speaking, to pick up momentum. Also, back offices are showing growing interest in these tools. DMG expects this sector to grow by 12 percent in 2015 and 2016, and by 14 percent in 2017, 2018, and 2019.

Speech analytics (SA). These solutions structure and find insights in phone conversations and have attracted the attention of companies large and small. The challenge is that too few organizations are realizing the expected payback. The industry continues to need best practices and expertise to drive this IT segment forward. DMG expects the market to grow by 15 percent in 2015 and 2016, 14 percent in 2017, and 13 percent in 2018 and 2019. But if vendors can do a better job of making the results actionable, sales will increase at a much faster rate.

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