The 2015 CRM Service Leaders: Contact Center Outsourcing
The Market
Information Services Group (ISG) recently reported that 77 percent of contact center operations are still being performed in-house, but outsourcing of those services has been gaining momentum. That growth was topped in 2013, when the global contact center outsourcing market grew 7 percent to reach nearly $75 billion, according to research from the Everest Group.
Everest Group also found that companies are frequently requesting more from their outsourcers. In fact, the inclusion of value-added services in contracts has increased by more than 30 percent in six years, from 48 percent in 2008 to its current level of 81 percent, the research firm found.
As the ink on those contracts dries, the nature of many of the contracts themselves has also changed. For one, many businesses are now eschewing large, bundled service agreements in favor of smaller, shorter engagements with more specialized service providers, ISG reports.
And while, as of last year, there were roughly 4,000 contact center outsourcers in North America, industry consolidation seems almost inevitable. This year will see a lot of "targeted acquisitions to boost presence in specific vertical markets and geographies and to add capabilities," predicts Peter Ryan, principal analyst covering the IT services sector at Ovum.
The Leaders
Convergys in 2014 completed its acquisition of Stream, which "seems to be paying off in a bigger North American presence," according to Ian Jacobs, senior analyst at Forrester Research. The company now "will have to cement that momentum and drive further into European markets," Jacobs says.
That shouldn't be a problem for Convergys, which employs 125,000 agents in 31 countries and is in the midst of a major growth spurt. Analysts gave Convergys a 4.1 in company direction and a 4.0 in customer satisfaction. "One of the impressive things about Convergys is their internal research organization, for its work on satisfaction and loyalty drivers," says John Ragsdale, vice president of technology research at the Technology Services Industry Association.
Sykes Enterprises, a One to Watch winner last year, this year advanced to the leaderboard largely based on its customer success. It scored a 4.2 in customer satisfaction. Sykes, which employs 48,000 employees at 75 facilities in 20 countries, was rated very high "for their focus on quality interactions and strategic relationships," Ragsdale says.
Sykes' scores of 3.8 in depth of services and company direction, however, were among the lowest of all the firms on the leaderboard. It is expanding new and existing client programs across the communications and technology verticals, more than offsetting mixed demand in other verticals.
While many of the larger outsourcers will likely be the aggressors in impending acquisitions, West was on the receiving end. In early January, Alorica acquired most of the company's agent services business, employing more than 25,000 agents in the United States, Mexico, Jamaica, and the Philippines, for $275 million. "West is one of the pioneers and most successful players in the [business process outsourcing] industry," said Andy Lee, CEO of Alorica, in a statement.
"Good numbers and a great reputation place West in the top tier [of contact center outsourcers]," Jacobs says.
The company garnered scores in the low 4s in depth of services, customer satisfaction, and cost. With the acquisition, however, questions surround its company direction, but Ryan isn't too concerned. With the West addition, Alorica is projecting 2015 revenue of roughly $1.2 billion. "In sheer magnitude, this positions Alorica nearly level with other leading U.S. vendors," he says, "and will serve Alorica well when bidding for business among enterprises seeking vendors with solid revenues behind their name."
The Winner
With 182,000 employees in 62 countries, Teleperformance is by far the largest contact center outsourcer in the world. But it's not the company's size that earned it the top spot for the third year in a row. The company "is really at the top of their game right now," Ryan says. "They can anticipate trends, not just respond to them."
Teleperformance led the field in all but one criteria, pulling in scores of 4.3 for its ability to execute, company direction, and customer satisfaction. "Some innovative use of technology, including in the mobile arena, just cements Teleperformance as a leader in the space," Jacobs says.
One to Watch
TeleTech, which received scores of 4.0 for its ability to execute, company direction, and customer satisfaction, is already a popular choice. In 2015 and beyond, look for it to sign "more high-value engagements" that leverage its advanced analytics capabilities and other services, according to Jacobs, who also notes that expansion into new geographic areas, such as Bulgaria, "will help fuel growth" for TeleTech. "I really like what TeleTech has been doing," Ryan adds.