Tailored to Please

Hosted contact center technology is the choice of service providers worldwide.

The technology is a unified, scalable, and managed portfolio of contact center

applications integrated with a high capacity and reliable voice and data

network. It provides benefits of multimedia contact services like voice, email,

chat, and co-browsing, as well as enhanced reporting and recording capabilities.

It can be integrated with third party applications with ease, and offers

exciting pay-as-you-go tariff plans. Also, it is an ideal framework which builds

scalable and flexible network-based contact centers that provide best-in-class

capabilities with minimal advance investment.

The hosted technology in India is an emerging model that is gaining traction.

The Indian hosted contact center market in 2006 was valued at $10.8 mn and is

expected to witness tremendous growth in the next four years to reach $85 mn by

2009.

Market Assessment



The Indian contact center market is a high growth market leading the

offshore contact center space in Asia Pacific. The growth in the industry is

driven by both the outsourcing of contact center services and setting up of new

contact centers by foreign and local multi-nationals.

Also, the fast growing Indian economy, large number of English speaking,

educated, and skilled professionals, low labor costs, and favorable government

policies have made India a perfect location for outsourcing activities. Thus,

the Indian IT services and IT-enabled services (BPO) industry have seen

tremendous growth in the last few years.

In 2006, the IT/BPO industry in India was estimated to have grown by 33.5%

y-o-y. The contact center market in India was one of the early successes of the

business process outsourcing industry that led to other complex business

processes such as financial, HR, animation and graphics, technical support. Now

research and development, market research, and equity research are being

outsourced to India. The cost advantage offered by India for the quality of

service provided has been a key reason for the growth of the BPO and the contact

center markets.

Apart from the cost advantages, the key reasons for the increasing growth in

the contact center industry in India is the quality of work, ability to scale-up

operations, and brand awareness and marketing campaigns by the Indian

government, BPO firms, and industry associations, especially Nasscom. India has

successfully portrayed itself as the hub for business process outsourcing and

IT-enabled services, not only for low complexity jobs but also for high-end

research and complex processes. This advantage has given India a yawning lead in

the industry, which is likely to help sustain the growth of the market. Tata

Communications expects India to continue to lead the offshore contact center

market in Asia Pacific until 2011.

State of the Industry



There were about 800 contact centers in India with over 110,000 agent seats

employing over 150,000 agents in 2006. Also, the number of contact centers in

India grew by 43% y-o-y in 2006. Further, the number of contact centers is

expected to grow at a rate of 30% from 2004—2011, and the agent seats by 2011

are expected to stand at 448,200 employing over 602,000 people.

Tata Communications sees an increase of 45.5% in 2010 over 2006 in the number

of new contact center seats, to reach an estimated figure of 150,000 seats.

Apart from new contact centers being set up, expansion of existing centers is

also expected to take the number of agent seats in India to 115,000 by the end

of 2009. And a majority of these seats belong to contact centers with capacities

less than fifty seats.

Such centers form a significant fraction of the total number of contact

centers in the country. But the proportion of such centers will diminish over

time as sustainability and scalability are expected to become key determinants

for the success of hosted contact centers.

Contact centers with capacities between 51-200 seats were observed to be the

next major portion of all contact centers in the country. In order to sustain

themselves, such centers would have to increase their capacity and move to the

higher capacity segment.

In 2009, Tata Communications expects 43% of Indian contact center seats to be

outsourced and the remaining 57% to be in-house. And by 2011, owing to the

higher growth in outsourced contact centers, the outsourced contact center seats

are expected to exceed the captive contact center seats.

Also, as more local and foreign companies have started to provide outsourced

contact center services in India, and customers have started realizing the

benefits of the scheme, even more government and public sector organizations are

expected to outsource their customer relationship management services than setup

their own captive centers to save on setup cost and time-to-market.

The top verticals in the Indian hosted contact center market are the BFSI,

and travel and hospitality sectors. There has also been some demand from

utilities, government, technology and IT, outsourced contact centers, retail,

energy, logistics, and healthcare.

The government sector does not traditionally outsource a lot of their work

but of late it has realized the importance of customer satisfaction and

relationship, and hence the need to cost effectively engage their customers

through contact center services. And this is where the hosted contact center

model is a good fit for the public sector environment. The government also finds

opex a better way to manage costs than investing capital into infrastructure.

Its demand is also expected to pick from all the three segments of the

market, as awareness about the solution increases in the region. Government,

BFSI, and outsourcing sectors will contribute to the growth in the mid-sized and

large hosted contact center deployments. The primary players in the hosted

contact center market are service providers that host contact center

applications and offer them on a rental basis. The success of this market

depends on the focus and commitment of service providers to their hosted

services offering.

The main reason for telecom service providers to enter the market has been

the relatively slower growth in the traditional telecom businesses, and hence

they are looking toward providing peripheral VAS that will increase their

revenue, increase customer loyalty by offering a broad portfolio of services,

and achieve higher growth. Managed and hosted services are one of the areas that

the TSPs are looking to invest in.

By offering hosted contact center services, telecom service providers are

able to get the customers hooked on to a key application set like contact

centers for a period of time, and thus increase the stickiness and loyalty of

the customer. Also, with hosted service, the TSP offers bundled telco-minutes

and other network services like international inbound service, load balancing,

etc.

Benefits of Subscribing



The basic reason that hosted contact center is a good business for service

providers is that subscribing to a hosted service is a good business decision

for potential customers. The motivation for enterprises to choose a service

provider's on-demand contact center offering instead of deploying premise-based

call center equipment is considerable. The qualitative benefits are described

below.

Capital Expenditure Avoidance: Instead of large upfront purchases of capital

equipment, enterprises are able to work on a monthly expense basis, paying

either by agent or by usage for the services they need.

Focus on Core Business, not Managing Technology: Contact center

infrastructure has multiplied in complexity, and managing this infrastructure

in-house requires significant IT and telecom expertise and manpower. Today's

trend is to focus on core competencies. Businesses should do what they do best

and leave the rest to other specialists. Companies don't try to supply their own

electricity or telephone service. Why should they supply their own contact

center infrastructure?

Adoption of Multi-Channel Contact Centers: There has been a major change in

the way customers want to contact the companies they do business with. Telephone

communications are being augmented by Web-based chat, email, and even voice and

VoIP. This means that call centers in enterprises all over the world are

rethinking the way they handle customer contacts. Many are focused on how to

enhance legacy equipment and when they should replace it. In such an atmosphere

of change, considering a new strategy such as hosted contact centers to achieve

multi-channel makes a lot of sense.

Capacity Management: One of the strongest benefits of hosted contact centers

is in the area of capacity management, especially as it applies to new contact

methods. Enterprises simply don't know what the new mix of contact methods will

be. To some extent, no one knows what it will be. Phone calls versus Web chat

versus email versus VoIP versus video versus voice mail-who can figure out the

right amount of capital equipment for enterprises to buy in each of these areas?

This is where hosted contact centers enter the scenario. With these services,

customers pay for the capacity they need and have the ability to change the mix

at any time without penalty and with minimum lead time delays.

The Best-fit Solution



Considering operational support requirements, total cost of ownership, and

speed of implementation, the hosted contact center solution produces tangible

benefits above and beyond those of a premises solution. But considering a long

time scenario it ceases to be profitable compared to a premise-based model. With

hosted contact center services, we can create a bundle of leading-edge network

and application services that not only can help save customers a significant

capital expenditure-it also gets their contact center up and working for them

quickly and reliably.

Yazad Boga



The author is head, Hosted Contact Center Services, Tata Comm


vadmail@cybermedia.co.in