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North American Contact Centers in 2006: The State of the Industry

(1st edition)

Principal Analyst: Steve Morrell

AUGUST 2006

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Contents 5 Chapter One: Methodology and Background 6 Definitions and figures 9 Distribution and use of this report 10 Chapter Two: The Structure of the North American Contact

Center Industry: Market Size 11 US contact centers and agent positions by size 12 US contact centers by vertical market 15 US agent positions by vertical market 17 US contact center size by vertical market

18 Canadian contact centers and agent positions by size 19 Canadian contact centers by vertical market 21 Canadian agent positions by vertical market 23 Canadian contact center size by vertical market 24 Chapter Three: The Structure of the US Contact Center

Industry: Geographical Location 24 A note on Canadian contact center distribution 25 The US contact center industry structure by region

26 The US contact center industry structure by division 29 The US contact center industry structure by state 35 Chapter Four: Market Forecasts to 2010

28 US contact centers, 2004-2010 30 US agent positions, 2004-2010 32 US vertical market forecasts, 2009 35 US employment forecasts, 2009 42 Canadian contact centers, 2004-2010 43 Canadian agent positions, 2004-2010 44 Canadian vertical market forecasts, 2009 46 Canadian employment forecasts, 2009

47 Chapter Five: Inbound and Outbound Activity 48 US: inbound/outbound activity by size of contact center 50 US: inbound/outbound activity by vertical market 52 US: inbound call volumes 54 Canada: inbound/outbound activity by size of contact center 55 Canada: inbound/outbound activity by vertical market 57 Canada: inbound call volumes 58 The future of outbound calling

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60 Chapter Six: The Use of IVR and Outbound Dialers in North American Contact Centers

61 IVR (interactive voice response) in North American contact

centers 66 The future of self-service 68 Use of outbound dialers in North American contact centers 61 Chapter Seven: Contact center management gender 73 Commentary: The State of the Industry in 2006 79 APPENDIX: ABOUT CONTACTBABEL

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List of tables

Table

number

Page

number

Description

1 7 Statistical assumptions 2 8 Vertical market definitions and examples 3 12 US agent positions and contact centers by size of contact center 4 14 US contact centers by vertical market 5 16 US agent positions by vertical market 6 17 Mean average US contact center size by vertical market 7 19 Canadian agent positions and contact centers by size of contact

center 8 20 Canadian contact centers by vertical market 9 22 Canadian agent positions by vertical market 10 23 Mean average Canadian contact center size by vertical market 11 25 The US contact center industry by region 12 28 The US contact center industry by division 13 33 The US contact center industry by state 14 36 US contact centers, 2004-2010 15 38 US agent positions, 2004-2010 16 39 US contact centers by vertical market, 2009 17 40 US agent positions by vertical market, 2009 18 41 US contact center employment changes by vertical market, 2006-

2009 19 42 Canadian contact centers, 2004-2010 20 43 Canadian agent positions, 2004-2010 21 44 Canadian contact centers by vertical market, 2009 22 45 Canadian agent positions by vertical market, 2009 23 46 Canadian contact center employment changes by vertical market,

2006-2009 24 48 US: outbound activity by size of contact center 25 49 US: outbound agent positions (equivalent) by size of contact center 26 51 US: equivalent outbound agent positions by vertical market 27 52 US: inbound call minutes by vertical market 28 52 US: inbound call minutes by size of contact center 29 54 Canada: outbound activity by size of contact center 30 55 Canada: outbound agent positions (equivalent) by size of contact

center 31 56 Canada: equivalent outbound agent positions by vertical market 32 57 Canada: inbound call minutes by vertical market 33 57 Canada: inbound call minutes by size of contact center 34 62 Use of IVR by vertical market 35 63 Use of IVR by size of contact center 36 69 Use of outbound dialer by vertical market 37 70 Use of outbound dialer by size of contact center 38 71 US contact center management gender 39 72 Canadian contact center management gender

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Chapter One: Methodology and Background “North American Contact Centers in 2006: The State of the Industry” is the 1st in a series of annual reports looking at the structure of the industry from an analytical and statistical viewpoint. This piece of market analysis is based upon a foundation of fact: the numerical analysis of a database of over 3,000 US and Canadian contact centers, called the North American Contact Center Directory. The North American Contact Center Directory is one of the largest and most comprehensive databases available of North American contact centers and their management. Furthermore, it is updated and expanded at least twice per year.

Further information on the North American Contact Center Directory and how to purchase it can be found at

www.contactbabel.com/usccd.html

This report, “North American Contact Centers in 2006: The State of the Industry” analyses each record of this database, segmenting by size of contact center, vertical market and geographical location in order to provide the reader with unparalleled accuracy in understanding the industry. However, ContactBabel realizes that while the North American Contact Center Directory is a good starting point for analysis, it does not cover every single contact center operation in the US and Canada. Therefore, we have estimated to the best of our knowledge the proportion of each size of contact center which is included within the database, and multiplied upwards to achieve what we believe to be the most accurate measurement of the North American contact center industry available, as well as using vendor shipments and statements to get to a top-line figure with which we are confident. Considering that most other market sizing reports rely upon “consensus forecasting” or vendor-stated shipments, rather than ‘bottom-up’ counting of the base blocks, it is to be hoped that the reader will acknowledge the superior accuracy of this report. Please be aware that this methodology works best as a relative measure, rather than as an absolute count of operations or agent positions. This is because multiplying everything upwards from a base of solid fact will keep the relative proportions the same, but will miss anomalies which the original figures did not show. For example, if there is a large contact

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center in a specific small region which has not been included in the North American Contact Center Directory, multiplying the figures upwards from this region will not take this into account. Therefore, we would ask that readers please use these any absolute figures only as approximations, especially where segments are very small. Although “North American Contact Centers in 2006: The State of the Industry” is not perfect, we are the only analyst firm looking at the North American contact center industry from a sample of over 3,000 contact centers and around 750,000 people. Definitions and figures Throughout the report, the phrase “contact center” will be used to refer to multimedia contact centers (deal with email and Internet contacts as well as telephony), call centers (traditional, telephony operations) and customer service centers, sales centers etc. Although not all of these operations will be dealing with non-telephony customer contact, using “contact center” as the generic term will help to concentrate thoughts on the future of the industry. In cases where figures have not been rounded up or down, this does not imply that figures should be taken to be accurate to the nearest agent position or contact center. Like every other analyst firm, ContactBabel uses a measure of subjectivity and opinion in order to arrive at a conclusion, and we believe that the reader should be aware of the various processes which figures have been subjected to in order to reach a final number. Therefore, numbers - especially at geographical level - have not been massaged in order to seem more authoritative: please bear in mind that most of these figures are products of initial “true” raw data, multiplied upwards and segmented into smaller pieces in order to bring out the patterns or themes which ContactBabel believes are important to show. Each year, we attempt to map the contact center industry as accurately as we can at the time. In some cases, new information comes to light that was previously unavailable: we choose to report data as accurately as possible at the current time, rather than to be forced into supporting old data which may now be proven to be less accurate. A major segmentation within this report is size band. No contact center with fewer than 10 agent positions (seats) was considered within this report. Although the North American Contact Center Directory has around 200 mini contact centers with fewer than 10 seats, it was felt that we could not accurately estimate the number of operations of this size which we do not have within the database, so the veracity of the report would be diminished if this size band were included. Other analysts rarely take this size band into account, so any comparisons between

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analysts’ estimates would be more difficult for our readers were we to do so. The following table shows the size bands and the average size that each contact center within the size band was assumed to have. Table 1: Statistical assumptions

Agent positions (range)

Assumed average size within range

(agent positions)

10-24 14 25-50 29 51-100 59 101-150 126 151-200 160 201-250 212 251-500 306 501-1000 602 1000+ 1,206 Apart from contact center size band, the other main segmentation is vertical market, sometimes known as business sector. A brief definition of each follows.

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Table 2: Vertical market definitions Vertical market

Sub-sectors

Engineering and Construction

Building suppliers, builders

Entertainment and Leisure

Hotels, ticket booking

Finance Banking, insurance, credit cards, loans, debt collection, credit checking agencies

Food and Drink Brewers, food suppliers IT

Technology sales and service (external, no internal company helpdesks included); ISPs

Manufacturing

Manufacturers (often product support and queries)

Medical Pharmaceuticals, healthcare Motoring Manufacturers, rental, assistance Outsourcing and Telemarketing

Telemarketing companies and large full-service outsourcers

Retail and Distribution Home shopping, catalogue, parcel carriers, logistics, support for physical shopping outlets

Printing and Publishing

Newspaper and magazine advertisements, subscriptions etc.

Public Services Government, federal, state, local, agencies, emergency services

Services Non-physical service offerings to public and business; other Telecoms Mobile and fixed line operators, sales and support Transport and Travel Public transport information and booking, travel agents Utilities Gas, electricity, water Analysis for this report was started in June 2006 and completed in August 2006. To comply with the usual protocol of market analysis, years are reported as year-end (i.e. the 2006 figures are reporting the state of the industry as it will be in December 2006). All revenues are in US$.

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Distribution and use of this report This report is written for the community of people interested in the present and future structure and shape of the North American contact center industry. Amongst others, these may include:

• Contact center solution providers: hardware, software & services • Outsourcers • Contact center managers and directors • Customer service directors and those involved in contact center

strategy • Consultants • Journalists • Analysts • Real estate companies • Training providers • New entrants to the contact center industry • Government bodies • Academic institutes • Contact center industry organisations • Regional & national development/inward investment agencies

Although this report is free of charge, no sharing, swapping, gifting, photocopying or other dissemination of this report must occur without prior written permission from ContactBabel. All figures, text and graphs are © ContactBabel.

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Chapter Two: The Structure of the North American Contact Center Industry: Market Size

There are presently 56,900 contact centers in the US and 3,950 in Canada

The US industry is made up of 3.07m agent positions and the Canadian

industry of 290,500 agent positions

Large contact centers (with over 250 agent positions) employ 34% of US staff, despite only accounting for less than 4% of physical contact center sites

The retail and distribution sector has most contact centers (19%) and

with finance, manufacturing, outsourcing & telemarketing, telecoms and utilities also important sectors

The mean average contact center size is 54 agent positions in the US,

and 74 agent positions in Canada

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US Contact Centers and Agent Positions by Size As the following graph shows, there are a very large number of contact center operations in the sub-100 agent position size bands, with a significant number of agent positions. Both the numbers of agent positions and contact centers decline as the size band is increased, until the realm of the large contact center (over 250 agent positions) is reached. Here, a relatively small number of large operations employ many hundreds of thousands of people in total, creating a disproportionately large pool of employment in the largest few hundred contact centers: this is how most people think of the contact center industry, and is also the place where any impact of offshoring is having its largest effect.

US agent positions and contact centers by size range, 2006

0

5,000

10,000

15,000

20,000

25,000

30,000

10-24 25-50 50-100 100-150150-200

200-250250-500

500-1,000

1,000+

Agent position size band

Con

tact

cen

ters

-

100,000

200,000

300,000

400,000

500,000

600,000

Age

nt p

ositi

ons

Contact centersAgent positions

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Table 3: US agent positions and contact centers by size of contact center Size band (agent positions)

Number of

contact centers

% contact

centers

Number of

agent positions

% of agent positions

10-24 25,250 44.4% 358,000 11.7% 25-50 16,750 29.4% 493,000 16.1% 50-100 8,650 15.2% 513,000 16.7% 100-150 1,900 3.3% 239,000 7.8% 150-200 1,400 2.5% 224,000 7.3% 200-250 950 1.7% 201,000 6.5% 250-500 1,200 2.1% 367,000 12.0% 500-1,000 480 0.8% 289,000 9.4% 1,000+ 320 0.6% 386,000 12.6% Total

56,900

100.0%

3,070,000

100.0%

US contact centers by vertical market Each business sector (vertical market) has its own distinct character and place within the contact center industry. The retail and distribution sector has the largest number of contact center operations. This vertical market includes catalogue/direct mail retailers (which tend to be the largest in this sector), package couriers, retail support for large physical stores, and niche retailers. This area has been growing rapidly, supported by the massive increase in online shopping, which requires telephone support. Financial services organisations run the second-most contact centers of any business sector. This vertical market consists mainly of banks, credit card companies, insurance companies, building societies, collection agencies and credit reference agencies. The first three sub-sectors are amongst the largest users of contact centers, and many of the largest operations are within this vertical market. Several suppliers of contact center solutions have estimated that the finance sector provides between 40% and 50% of their total revenues. However, this sector has shown the most inclination to move offshore, to take advantage of labour cost differentials. Manufacturing companies account for 11% of North American contact centers, although they are generally smaller operations, dealing with customer support and sales to other companies rather than the public. The US still has a strong manufacturing base, which means that the contact center support required is proportionally larger than that found in other mature contact center industries, such as the UK.

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The transport and travel vertical market includes travel agents (both High Street and web-based), public transport companies, airlines, and car hire firms. 11% of the UK’s contact centers are run by these types of company. The telecoms vertical market accounts for 8.3% of operations, but has a much bigger impact on the industry as a whole, as many telecoms contact centers are a considerable size (having a mean average of 79 agent positions). This vertical market includes both fixed line and mobile operators. The services sector is a broad category taking in those contact centers which do not fit in easily elsewhere. It includes home security, directory services, legal services and home improvements companies. The IT sector is made up of both technology sales and external helpdesk operations, as well as ISPs (internet service providers). This report does not include the large numbers of internal helpdesks which support employees. The outsourcing and telemarketing vertical market consists of telemarketing companies and full-service outsourcers, both inbound and outbound. Public services contact centers cover a very wide area, from local, state and federal service supply, through to taking 911 and non-emergency calls. The sector is experiencing significant investment in its contact center operations as it tries to catch up with the private sector and allow citizens to benefit from longer hours and shorter wait times. Printing and publishing contact centers include newspaper and magazine subscription and outbound advertisement operations, along with book publishers. The utilities sector comprises those businesses selling water, fuel and electricity, although such companies increasingly try to market new services (such as internet access and telephony) to their customer base.

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US contact centers by vertical market

Finance17.1%

Food and Drink2.2%

IT5.7%

Manufacturing11.0%

Retail and Distribution19.3%

Services11.0%

Telecoms8.3%

Transport and Travel4.8%

Printing and Publishing1.3% Public Services

6.6%

Motoring0.5%Outsourcing and

Telemarketing5.1%

Medical1.3%

Entertainment and Leisure2.6%

Utilities2.6%


0.4%

Table 4: US contact centers by vertical market Vertical market

Contact centers

Percentage

Retail and Distribution 11,000 19.3% Finance 9,750 17.1% Manufacturing 6,250 11.0% Services 6,250 11.0% Telecoms 4,750 8.3% Public Services 3,750 6.6% IT 3,250 5.7% Outsourcing and Telemarketing 2,900 5.1% Transport and Travel 2,750 4.8% Entertainment and Leisure 1,500 2.6% Utilities 1,500 2.6% Food and Drink 1,250 2.2% Medical 750 1.3% Printing and Publishing 750 1.3% Motoring 300 0.5% Engineering and Construction 200 0.4%

TOTAL

56,900

100.0%

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US agent positions by vertical market The financial services sector has the most agent positions, at almost 500,000, with the retail & distribution sector close behind. Telecoms, and outsourcing & telemarketing sectors both have over 300,000 agent positions, and between them, these four leading sectors account for over 55% of agent positions.

US agent positions by vertical market

0 100,000 200,000 300,000 400,000 500,000 600,000

Finance

Retail and Distribution

Telecoms

Outsourcing and Telemarketing

Manufacturing

IT

Services

Public Services

UtilitiesTransport and Travel


MedicalFood and Drink


Motoring


Agent positions

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Table 5: US agent positions by vertical market Vertical market

Agent positions

Percentage

Finance 494,270 16.1% Retail and Distribution 475,850 15.5% Telecoms 377,610 12.3% Outsourcing and Telemarketing 313,140 10.2% Manufacturing 245,600 8.0% IT 239,460 7.8% Services 224,110 7.3% Public Services 174,990 5.7% Utilities 159,640 5.2% Transport and Travel 156,570 5.1% Entertainment and Leisure 64,470 2.1% Medical 58,330 1.9% Food and Drink 33,770 1.1% Printing and Publishing 27,630 0.9% Motoring 21,490 0.7% Engineering and Construction 3,070 0.1%

Total

3,070,000

100.0%

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US contact center size by vertical market The mean average sizes of contact centers by vertical market are listed below, although care should be taken when analysing these figures. The mean average may not be the most representative measure of average contact center size: dividing total agent positions by total number of contact centers gives a mean average industry size of 54 agent positions, yet 73% of contact centers have fewer than 50 agent positions. Using a mean average approach, the relatively few very large operations skew the results upwards. Table 6: Mean average US contact center size by vertical market Vertical market

Mean average size (agent positions)

Outsourcing and Telemarketing 108 Utilities 106 Telecoms 79 Medical 78 IT 74 Motoring 72 Transport and Travel 57 Finance 51 Public Services 47 Retail and Distribution 43 Entertainment and Leisure 43 Manufacturing 39 Printing and Publishing 37 Services 36 Food and Drink 27 Engineering and Construction 15

Mean average (all vertical markets)

54

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Canadian Contact Centers and Agent Positions by Size As with the US, there are a large number of contact center operations in the sub-100 agent position size bands, with a significant number of agent positions. Generally, the numbers of agent positions and contact centers decline as the size band is increased, until the realm of the large contact center (over 250 agent positions) is reached. Here, a relatively small number of large operations employ many people, creating a disproportionately large pool of employment in the largest contact centers: this is how most people think of the contact center industry.

Canadian agent positions and contact centers by size range, 2006

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

10-24 25-50 50-100 100-150 150-200 200-250 250-500 500-1,000 1,000+

Agent position size band

Con

tact

cen

ters

-0

10,000

20,000

30,000

40,000

50,000

60,000

Age

nt p

ositi

ons

Contact centersAgent positions

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Table 7: Canadian agent positions and contact centers by size of contact center Size band (agent positions)

Number of

contact centers

% contact

centers

Number of

agent positions

% of agent positions

10-24 1,855 47.0% 40,500 14.5% 25-50 1,100 27.8% 45,000 15.5% 50-100 550 13.9% 48,000 16.3% 100-150 125 3.2% 17,500 6.2% 150-200 90 2.3% 16,500 5.7% 200-250 70 1.8% 16,500 5.7% 250-500 100 2.5% 40,500 14.0% 500-1,000 40 1.0% 31,500 10.5% 1,000+ 20 0.5% 34,500 11.6% Total

3,950

100.0%

290,500

100.0%

Canadian contact centers by vertical market There are a lot of similarities between the Canadian and US economies (see the section above), which impacts upon each contact center industry in a similar way. However, the outsourcing and telemarketing industry in Canada has a higher proportion of contact center operations than the in US (8.9% vs 5.1%). In large part, this is due to the work carried out by lower cost Canadian outsourcers on behalf of US businesses, as a lower-risk form of offshoring.

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Table 8: Canadian contact centers by vertical market Vertical market

Contact centers

Percentage

Retail and Distribution 650 16.5% Finance 625 15.8% Manufacturing 375 9.5% Outsourcing and Telemarketing 350 8.9% Services 350 8.9% Public Services 325 8.2% Telecoms 300 7.6% IT 250 6.3% Transport and Travel 200 5.1% Utilities 150 3.8% Entertainment and Leisure 125 3.2% Food and Drink 100 2.5% Medical 50 1.3% Printing and Publishing 50 1.3% Engineering and Construction 25 0.6% Motoring 25 0.6%

TOTAL

3,950

100.0%

Canadian contact centers by vertical market

Finance15.8%

Food and Drink2.5%

IT6.3%

Manufacturing9.5%

Retail and Distribution16.5%

Services8.9%

Telecoms7.6%

Transport and Travel5.1%

Entertainment and Leisure3.2%


0.6%

Utilities3.8%

Medical1.3%

Motoring0.6%


8.9%Public Services

8.2%

Printing and Publishing1.3%

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Canadian agent positions by vertical market As in the US, the financial services sector has the most agent positions, at over 45,000, although the outsourcing & telemarketing sector is in second place in Canada, with retail & distribution close behind.

Canadian agent positions by vertical market

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000

Finance



Telecoms

IT

Public Services

Manufacturing

Utilities

Transport and Travel

Services


Medical

Food and Drink


Motoring


Agent positions

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Table 9: Canadian agent positions by vertical market Vertical market

Agent positions

Percentage

Finance 45,250 15.6% Outsourcing and Telemarketing 41,250 14.2% Retail and Distribution 40,000 13.8% Telecoms 32,500 11.2% IT 23,750 8.2% Public Services 21,250 7.3% Manufacturing 17,750 6.1% Utilities 17,500 6.0% Transport and Travel 15,750 5.4% Services 15,000 5.2% Entertainment and Leisure 7,000 2.4% Medical 6,000 2.1% Food and Drink 3,750 1.3% Printing and Publishing 2,000 0.7% Motoring 1,250 0.4% Engineering and Construction 500 0.2%

Total

290,500

100.0%

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Canadian contact center size by vertical market The mean average sizes of contact centers by vertical market are listed below, although care should be taken when analysing these figures. The mean average may not be the most representative measure of average contact center size: dividing total agent positions by total number of contact centers gives a mean average industry size of 74 agent positions, yet 75% of contact centers have fewer than 50 agent positions. Using a mean average approach, the relatively few very large operations skew the results upwards. Table 10: Mean average Canadian contact center size by vertical market Vertical market

Mean average size (agent positions)

Medical 120 Outsourcing and Telemarketing 118 Utilities 117 Telecoms 108 IT 95 Transport and Travel 79 Finance 72 Public Services 65 Retail and Distribution 62 Entertainment and Leisure 56 Motoring 50 Manufacturing 47 Services 43 Printing and Publishing 40 Food and Drink 38 Engineering and Construction 20

Mean average (all vertical markets)

74

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Chapter Three: The Structure of the US Contact Center Industry: Geographical Location

3.7% of the US’s employed population work within the contact center industry

The South of the US has most agent positions, yet the contact center

industry is least vital to that region in terms of the proportion of the employed population working in the industry

The Middle Atlantic and East North Central (aka Great Lakes) divisions

have the most contact center staff, with over 900,000 working in each division

In terms of the importance of the contact center industry to the

division, there is a significant North-South divide, with Northern divisions relying more heavily on the contact center industry for employment

Although we advise caution when viewing state-wide contact center

estimations, it seems that Texas, New York and California have the most agent positions and contact centers

A note on Canadian contact center distribution This chapter does not consider the geographical distribution of contact centers in Canada. This is because the North American Contact Center Directory, upon which this chapter is based, does not contain the volume of Canadian contact centers which we need in order to be confident of distribution by state/province level. Neither is Canada divided up into meaningful and significant regions or divisions, in the way of the US, which would allow better estimations (as in the rest of this chapter). For those requiring some idea of the geography of the Canadian contact center industry, we tentatively hypothesize from our directory of operations that Ontario contains by far the most contact centers and agent positions, with around 75% and 85% respectively. Quebec and Alberta seem to have around 15,000 agent positions each, with British Columbia being the only other significant area of contact center activity at around half of these agent positions. We must again urge readers to note the extreme uncertainty of these figures, which are included only for completeness’s sake.

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The US contact center industry structure by region “Region” is the top-level of US geographical segmentation. Very widely-used, it divides the US into four distinct large regions. Table 11: The US contact center industry by region

Region Agent

positions Jobs Contact centers

Working population

% employed in contact

centers

Average size

(APs) West 583,159 991,370 12,246 32,392,000 3.1% 48 North-East 810,399 1,377,678 13,344 26,359,000 5.2% 61 Midwest 791,838 1,346,125 14,230 32,724,000 4.1% 56 South 884,604 1,503,827 17,080 50,235,000 3.0% 52

TOTAL

3,070,000

5,219,000

56,900

141,710,000

3.7%

54

Although the South has most agent positions and contact centers, the importance of the contact center industry to this region is less than elsewhere, employing only 3.0% of the employed population. Contact centers are especially important in the North-East – especially around New York and parts of New England.

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The US contact center industry structure by division This section of the report analyses the US contact center industry by nine divisions. A division is a group of geographically similar states, used widely within the US and is a generally recognised official grouping. It has greater granularity than the regional level provides, but this means the possibility of inaccuracy further increases.

WA

OR

CANV

ID

AZ

UT

MT

NM

WIWY

ND

CO

SD

NE

KS

TX

OK

IO

MN

AR

MO

LA

MI

IN OH

KYTN

MS

AK

IL

AL

WV VANC

SC

FL

GA

NY

PA

ME

Contact centers by US division

Contact centers

<2.5k

2.5-5.0k

5.0-7.5k

>7.5k

- 27 -

WA

OR

CANV

ID

AZ

UT

MT

NM

WIWY

ND

CO

SD

NE

KS

TX

OK

IO

MN

AR

MO

LA

MI

IN OH

KYTN

MS

AK

IL

AL

WV VANC

SC

FL

GA

NY

PA

ME

Agent positions by US division

<200k

200-300k

300-400k

400-500k

>500k

Agent positions

- 28 -

Table 12: The US contact center industry by division

Division Agent

positions Jobs Contact centers

Working population

% employed in contact

centers

Average size

(APs) Pacific 352,292 598,896 8,864 22,536,000 2.7% 40 Mountain 230,868 392,476 3,381 9,856,000 4.0% 68 Middle Atlantic 549,324 933,851 8,746 19,160,000 4.9% 63 New England 261,074 443,826 4,598 7,199,000 6.2% 57 West North Central 256,423 435,919 4,599 10,387,000 4.2% 56 East North Central 535,415 910,206 9,631 22,337,000 4.1% 56 South Atlantic 450,405 765,689 8,609 26,790,000 2.9% 52 East South Central 108,596 184,613 2,241 7,932,000 2.3% 48 West South Central 325,603 553,525 6,231 15,513,000 3.6% 52

TOTAL

3,070,000

5,219,000

56,900

141,710,000

3.7%

54

WA

OR

CANV

ID

AZ

UT

MT

NM

WIWY

ND

CO

SD

NE

KS

TX

OK

IO

MN

AR

MO

LA

MI

IN OH

KYTN

MS

AK

IL

AL

WV VANC

SC

FL

GA

NY

PA

ME

Contact center employment by US division

<3%

3-4%

4-5%

>5%

% of working population employed in contact centers

- 29 -

An interesting pattern thrown up here is the North-South divide along the importance of contact centers to the division. The southern divisions – despite a large number of agent positions and contact centers in the Southern Atlantic division – do not rely on the contact center industry to the same extent as the New England and Middle Atlantic divisions, for example. Unsurprisingly, the raw contact center and agent position distribution seems to follow the general areas of high population – the North-East, Texas, Eastern Seaboard, California and Great Lakes.

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The US contact center industry structure by state Please note – the following figures are estimations of contact center and agent position numbers at state level. Due to the nature of statistical analysis, operating at such a granular level may decrease the level of accuracy. For example, the presence or absence of a very large contact center may be largely statistically insignificant at the national or regional level, but may play an important part in determining state-wide data. For this reason, we recommend that readers exercise extreme caution when using figures from the following section. We are hesitant about analysing specific state-wide data, due to the nature of the small sample sizes at this level of granularity, so there is no commentary of this section.

WA

OR

CANV

ID

AZ

UT

MT

NM

WIWY

ND

CO

SD

NE

KS

TX

OK

IO

MN

AR

MO

LA

MI

IN OH

KYTN

MS

AK

IL

AL

WV VANC

SC

FL

GA

NY

PA

ME

Contact centers by US state

<250

250-500

500-1,000

1,000-2,000

>2,000

Contact centers

- 31 -

WA

OR

CANV

ID

AZ

UT

MT

NM

WIWY

ND

CO

SD

NE

KS

TX

OK

IO

MN

AR

MO

LA

MI

IN OH

KYTN

MS

AK

IL

AL

WV VANC

SC

FL

GA

NY

PA

ME

Agent positions by US state

<10k

10-25k

25-50k

50-100k

100-200k

>200k

Agent positions

- 32 -

WA

OR

CANV

ID

AZ

UT

MT

NM

WIWY

ND

CO

SD

NE

KS

TX

OK

IO

MN

AR

MO

LA

MI

IN OH

KYTN

MS

AK

IL

AL

WV VANC

SC

FL

GA

NY

PA

ME

Contact center employment by US state

<2%

2-4%

4-6%

>6%

% of working population employed in contact centers

- 33 -

Table 13: The US contact center industry by state

State

Agent

positions

Jobs

Contact centers

Working population

% employed

in contact centers

Average size

(APs)

Alabama 30,628 52,068 825 2,069,000 2.5% 37 Alaska 3,079 5,234 80 316,000 1.7% 38 Arizona 75,333 128,066 1,219 2,710,000 4.7% 62 Arkansas 29,717 50,519 570 1,295,000 3.9% 52 California 241,041 409,769 6,722 16,747,000 2.4% 36 Colorado 52,463 89,187 845 2,419,000 3.7% 62 Connecticut 72,811 123,779 1,120 1,728,000 7.2% 65 DC 18,327 31,157 177 277,000 11.2% 104 Delaware 12,645 21,497 138 420,000 5.1% 92 Florida 136,463 231,987 2,476 8,329,000 2.8% 55 Georgia 78,656 133,714 1,395 4,346,000 3.1% 56 Hawaii 2,089 3,551 138 617,000 0.6% 15 Idaho 5,018 8,531 177 711,000 1.2% 28 Illinois 185,074 314,626 3,243 6,101,000 5.2% 57 Indiana 37,279 63,374 924 3,035,000 2.1% 40 Iowa 38,768 65,905 727 1,584,000 4.2% 53 Kansas 13,830 23,510 590 1,401,000 1.7% 23 Kentucky 35,270 59,959 590 1,878,000 3.2% 60 Louisiana 10,972 18,652 334 1,923,000 1.0% 33 Maine 27,953 47,520 431 677,000 7.0% 65 Maryland 20,312 34,531 767 2,814,000 1.2% 26 Massachusetts 97,205 165,249 1,848 3,203,000 5.2% 53 Michigan 38,487 65,429 1,258 4,754,000 1.4% 31 Minnesota 62,585 106,395 1,376 2,829,000 3.8% 45 Mississippi 11,877 20,191 216 1,237,000 1.6% 55 Missouri 86,219 146,572 1,199 2,862,000 5.1% 72 Montana 2,353 4,000 157 474,000 0.8% 15 Nebraska 46,018 78,231 432 949,000 8.2% 106 Nevada 18,599 31,619 275 1,167,000 2.7% 68 New Hampshire 23,513 39,973 373 706,000 5.7% 63 New Jersey 117,255 199,334 1,926 4,236,000 4.7% 61 New Mexico 16,243 27,613 177 887,000 3.1% 92 New York 256,495 436,041 4,619 8,944,000 4.9% 56 North Carolina 53,333 90,667 1,297 4,106,000 2.2% 41 North Dakota 3,962 6,735 177 347,000 1.9% 22 Ohio 128,708 218,803 2,418 5,550,000 3.9% 53 Oklahoma 17,767 30,204 511 1,665,000 1.8% 35 Oregon 48,660 82,721 806 1,746,000 4.7% 60 Pennsylvania 175,574 298,477 2,201 5,980,000 5.0% 80 Rhode Island 28,243 48,014 275 541,000 8.9% 103

- 34 -

State

Agent

positions

Jobs

Contact centers

Working population

% employed

in contact centers

Average size

(APs)

South Carolina 29,692 50,476 590 1,939,000 2.6% 50 South Dakota 5,042 8,571 98 415,000 2.1% 51 Tennessee 30,820 52,395 609 2,748,000 1.9% 51 Texas 267,147 454,150 4,815 10,630,000 4.3% 55 Utah 49,612 84,340 413 1,214,000 6.9% 120 Vermont 11,349 19,293 550 344,000 5.6% 21 Virginia 87,651 149,007 1,376 3,798,000 3.9% 64 Washington 57,423 97,619 1,120 3,110,000 3.1% 51 West Virginia 13,325 22,653 393 761,000 3.0% 34 Wisconsin 145,867 247,973 1,789 2,897,000 8.6% 82 Wyoming 11,247 19,120 118 274,000 7.0% 95

TOTAL

3,070,000

5,219,000

56,900

141,710,000

3.7%

54

- 35 -

Chapter Four: Market Forecasts to 2010

Between 2006 and 2010, the US contact center industry will shrink by 2.8% in terms of contact centers, and by 2.0% in agent positions. The Canadian industry will grow by 5.0% and 8.6% respectively

The North American contact center industry will experience a net loss

of over 55,000 jobs between 2006 and 2010

Within the US, the finance, outsourcing and telecoms vertical markets will shed over 110,000 jobs between 2006 and 2009

In Canada, the outsourcing, public sector and retail/distribution sectors

will add almost 26,000 jobs between 2006 and 2009

Investment in technology in US contact centers will increase by 11% over the 2006-2010 period, moving from $3.36bn to $3.73bn

Canadian contact center investment will grow more sharply, from $314

in 2006 to $385 in 2010, a growth rate of over 22% in that timescale

- 36 -

US contact centers, 2004-2010 Table 14: US contact centers, 2004-2010 Year

Contact centers

% growth

Average size (agent positions)

2004 58,300 -1.0% 53.4 2005 57,600 -1.2% 53.6 2006 56,900 -1.2% 54.0 2007 56,300 -1.1% 54.2 2008 55,900 -0.7% 54.4 2009 55,600 -0.5% 54.5 2010 55,300 -0.5% 54.4 The years between 1990 and 2000 saw the greatest increase in the number of contact centers opening. Today, most companies who can benefit from a contact center have already done so, and are - in the main - either adding new agents to existing premises or are looking more or less seriously at offshore as a place to expand and/or move contact center operations. Although there are now many fewer announcements of new US operations opening, numerous studies of existing contact centers show that many are still adding considerable numbers of staff. However, the US is the most mature contact center industry in the world, and there is also a great deal

US contact centers, 2004-2010

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

55,000

60,000

2004 2005 2006 2007 2008 2009 2010

Con

tact

cen

ters

-1.4%

-1.2%

-1.0%

-0.8%

-0.6%

-0.4%

-0.2%

0.0%

Gro

wth

rate

(%)

Contact centersGrowth rate (%)

- 37 -

of consolidation, nearshoring (mainly to Canada, although also to Mexico), and offshoring (the Philippines and India are the main destinations). This seems to have created a small net decline within the US contact center industry, which we expect to continue. Some operations will close over the next four years – more likely through consolidation than movement offshore. Many operations are likely to be of a significant size, and will impact on agent numbers. In the main, existing operations will continue to grow very gradually or remain stable, although the increased use of self-service will cause some closures, especially of multi-site operations.

- 38 -

US agent positions, 2004-2010 Table 15: US agent positions, 2004-2010 Year

Agent positions

% growth

2004 3,115,000 -0.3% 2005 3,090,000 -0.8% 2006 3,070,000 -0.7% 2007 3,050,000 -0.7% 2008 3,040,000 -0.3% 2009 3,030,000 -0.3% 2010 3,010,000 -0.7% Consolidation and offshoring will impact agent numbers negatively, although we believe that the growing movement to self-service – whether web- or phone-based – will have a longer term effect. In particular, large parts of the US population are now extremely web-literate and happy to manage bills and technical help online as their first choice.

US agent positions, 2004-2010

0

500

1,000

1,500

2,000

2,500

3,000

2004 2005 2006 2007 2008 2009 2010

Age

nt p

ositi

ons

(000

s)

-2.50%

-2.00%

-1.50%

-1.00%

-0.50%

0.00%

Gro

wth

rate

(%)

Agent positionsGrowth rate (%)

- 39 -

US vertical market forecasts, 2009 Table 16: US contact centers by vertical market, 2009 Vertical market

Contact

centers, 2009

% of overall contact

centers, 2009

% change 06-09

Retail and Distribution 11,200 20.1% +1.8% Finance 9,100 16.4% -6.7% Services 6,300 11.3% +0.8% Manufacturing 6,150 11.1% -1.6% Telecoms 4,350 7.8% -8.4% Public Services 3,950 7.1% +5.3% IT 3,100 5.6% -4.6% Outsourcing and Telemarketing 2,650 4.8% -8.6% Transport and Travel 2,650 4.8% -3.6% Entertainment and Leisure 1,520 2.7% +1.3% Utilities 1,400 2.5% -6.7% Food and Drink 1,220 2.2% -2.4% Medical 770 1.4% +2.7% Printing and Publishing 750 1.3% +0.0% Motoring 300 0.5% +0.0% Engineering and Construction 190 0.3% -5.0%

Total

55,600

100.0%

-2.3%

By 2008, the gap will have grown between the retail and distribution vertical market and the finance sector. Financial services businesses have been the main ones to move offshore, and coupled with the continuing consolidation of the industry and its contact centers, we expect to see a stagnation in the number of finance contact centers. The increasing use of account self-management options (voice and web self-service) in the finance industry adds to this effect. Telecoms and utility contact centers are also likely to be under the same competitive pressures, with somewhat more dramatic results, especially due to the round of consolidation caused by “triple-play” companies (TV, Internet and voice traffic) emerging from the telecoms sector. The main area of growth in contact center numbers will be in the public sector, where eGovernment initiatives continue to grow, and the formalization of departmental customer handling leads to the growth in contact centers. The retail & distribution sector will continue to grow, driven in part by the need to support online interactions. The outsourcing & telemarketing sector looks to be in for a decline, as more work moves offshore and nearshore.

- 40 -

Table 17: US agent positions by vertical market, 2009 Vertical market

Agent

positions, 2009

% of overall agent

positions, 2009

% change 06-09

Retail and Distribution 480,000 15.8% +0.9% Finance 472,500 15.6% -4.4% Telecoms 355,000 11.7% -6.0% Outsourcing and Telemarketing 292,500 9.7% -6.6% Manufacturing 244,000 8.1% -0.7% IT 232,500 7.7% -2.9% Services 230,000 7.6% +2.6% Public Services 191,000 6.3% +9.1% Transport and Travel 162,000 5.3% +3.5% Utilities 155,000 5.1% -2.9% Entertainment and Leisure 67,500 2.2% +4.7% Medical 62,000 2.0% +6.3% Food and Drink 33,500 1.1% -0.8% Printing and Publishing 28,000 0.9% +1.3% Motoring 21,500 0.7% +0.0% Engineering and Construction 3,000 0.1% -2.3%

Total

3,030,000

100.0%

-1.3%

Major growth will come from the public services sector, which is a long way behind the contact center curve that the private sector has been on for many years. The Entertainment & Leisure, Medical and the Transport & Travel sectors will experience some agent position growth as well. Due to offshoring and triple-play-driven consolidation, and a move towards web- or SMS-based contact – the US’s telecoms and utilities contact center sectors will be somewhat smaller in 2009 than today. All told, the US contact center industry will be 1.3%, or 40,000 agent positions smaller in 2009 than in 2006.

- 41 -

US employment forecasts, 2009 The public sector will add considerably to its contact center employment figures, but there is little to cheer in the rest of the industry, with a net loss of 68,000 jobs predicted over the next three years. The finance, telecoms and outsourcing & telemarketing sectors are responsible for most of this, with these three sectors alone accounting for losses of over 110,000 jobs. Table 18: US contact center employment changes by vertical market, 2006-2009

Vertical market

Difference in contact center employment,

2006-2009

Public Services +27,217 Services +10,013 Transport and Travel +9,231 Retail and Distribution +7,055 Medical +6,239 Entertainment and Leisure +5,151 Printing and Publishing +629 Motoring +17 Engineering and Construction -119 Food and Drink -459 Manufacturing -2,720 Utilities -7,888 IT -11,832 Outsourcing and Telemarketing -35,088 Finance -37,009 Telecoms -38,437

Total

-68,000

- 42 -

Canadian contact centers, 2004-2010 Table 19: Canadian contact centers, 2004-2010 Year

Contact centers

% growth

Average size (agent positions)

2004 3,750 1.4% 73.2 2005 3,850 2.7% 73.0 2006 3,950 2.6% 73.5 2007 4,050 2.5% 73.7 2008 4,100 1.2% 74.4 2009 4,150 1.2% 74.9 2010 4,150 0.0% 76.0 The Canadian contact center industry is at a similar point to the UK’s – still growing, but the rate and amount of growth declining each year. The Canadian industry is still opening some contact centers as it picks up work from the US. Although some operations will close over the next three years – more likely through consolidation than movement offshore – these will be relatively few in number, although the operations are likely to be of a significant size. In the main, existing operations will continue to grow gradually, and there will continue to be a steady opening of new or returning contact centers or continuing formalization of existing operations, especially at the lower end of the industry.

Canadian contact centers, 2004-2010

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2004 2005 2006 2007 2008 2009 2010

Con

tact

cen

ters

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

Gro

wth

rate

(%)

Contact centersGrowth rate (%)

- 43 -

Canadian agent positions, 2004-2010 Table 20: Canadian agent positions, 2004-2010 Year

Agent positions

% growth

2004 274,600 n/a 2005 281,200 2.4% 2006 290,500 3.3% 2007 298,500 2.8% 2008 305,000 2.2% 2009 311,000 2.0% 2010 315,500 1.4% Growth in the Canadian contact center industry is still definite, although it is at a gentler pace than has been seen before. 25,000 agent positions (over 40,000 actual jobs) will be added between 2006 and 2010.

Canadian agent positions, 2004-2010

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

2004 2005 2006 2007 2008 2009 2010

Age

nt p

ositi

ons

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

Gro

wth

rate

(%)

Agent positionsGrowth rate (%)

- 44 -

Canadian vertical market forecasts, 2009 Table 21: Canadian contact centers by vertical market, 2009 Vertical market

Contact

centers, 2009

% of overall contact

centers, 2009

% change 06-09

Retail and Distribution 705 17.0% +8.5% Finance 610 14.7% -2.4% Manufacturing 400 9.6% +6.7% Outsourcing and Telemarketing 395 9.5% +12.9% Services 375 9.0% +7.1% Public Services 360 8.7% +10.8% Telecoms 285 6.9% -5.0% IT 270 6.5% +8.0% Transport and Travel 210 5.1% +5.0% Utilities 145 3.5% -3.3% Entertainment and Leisure 135 3.3% +8.0% Food and Drink 105 2.5% +5.0% Medical 53 1.3% +6.0% Printing and Publishing 52 1.3% +4.0% Engineering and Construction 25 0.6% +0.0% Motoring 25 0.6% +0.0%

Total

4,150

100.0%

+5.1%

The retail & distribution sector will add some new contact centers over the next 3 years, as the increasing use of web-based retailers and the ineffectiveness of email support opens up avenues for contact center work. The outsourcing & telemarketing sector (driven partially by US work) will increase, as will the formalization of the public sector’s contact operations. Consolidation in the telecoms and utilities industries will create a small decline in the number of contact centers in these sectors.

- 45 -

Table 22: Canadian agent positions by vertical market, 2009 Vertical market

Agent

positions, 2009

% of overall agent

positions, 2009

% change 06-09

Outsourcing and Telemarketing 48,750 15.7% +18.2% Finance 44,500 14.3% -1.7% Retail and Distribution 44,500 14.3% +11.3% Telecoms 31,500 10.1% -3.1% IT 25,000 8.0% +5.3% Public Services 24,500 7.9% +15.3% Manufacturing 19,250 6.2% +8.5% Utilities 17,250 5.5% -1.4% Transport and Travel 17,000 5.5% +7.9% Services 16,350 5.3% +9.0% Entertainment and Leisure 7,750 2.5% +10.7% Medical 6,500 2.1% +8.3% Food and Drink 4,100 1.3% +9.3% Printing and Publishing 2,175 0.7% +8.8% Motoring 1,350 0.4% +8.0% Engineering and Construction 525 0.2% +5.0%

Total

311,000

100.0%

+7.1%

Major growth will come from the retail & distribution sector, outsourcing & telemarketing and also public services, which is a long way behind the contact center curve that the private sector has been on for many years. Most sectors will see gentle growth, although finance, utilities and telecoms may see some small decline.

- 46 -

Canadian employment forecasts, 2009 The outsourcing & telemarketing sector will add over 12,000 jobs to the Canadian contact center industry over the next three years, with the retail & distribution and public service sectors also adding significant employment figures. All told, an increase in employment of over 35,000 contact center staff is expected, with most coming from growth within existing contact centers. Table 23: Canadian contact center employment changes by vertical market, 2006-2009

Vertical market

Difference in contact center employment,

2006-2009

Outsourcing and Telemarketing +12,750 Retail and Distribution +7,650 Public Services +5,525 Manufacturing +2,550 Services +2,295 IT +2,125 Transport and Travel +2,125 Entertainment and Leisure +1,275 Medical +850 Food and Drink +595 Printing and Publishing +298 Motoring +170 Engineering and Construction +43 Utilities -425 Finance -1,275 Telecoms -1,700

Total

+34,850

- 47 -

Chapter Five: Inbound and Outbound Activity

US outbound activity is currently at just over 30%, with Canada’s being slightly lower at 28.8%

There are over 1 million outbound agent positions within North

America

Outbound activity is highest in the outsourcing & telemarketing sector, with the finance and retail & distribution sectors also playing a large part in outbound calling

There will be around 266 billion minutes of inbound calling into North

American contact centers in 2006

- 48 -

US: inbound/outbound activity by size of contact center Table 24: US: outbound activity by size of contact center

There is little linear correlation between contact center size and amount of outbound calling. However, mid-sized contact centers seem to do somewhat more outbound calling than either small or very large operations, which may use outsourcers and telemarketing firms more. (The term “outbound agent equivalent” describes the number of exclusively-outbound, full-time agents required. In practice, not all

Agent positions

% of outbound activity

10-24 27.2% 25-50 31.5% 51-100 29.6% 101-150 32.1% 151-200 34.8% 201-250 37.6% 251-500 30.7% 501-1,000 31.9% 1,001+ 28.2% MEAN AVERAGE

30.3%

US inbound and outbound activity by size of contact center

0% 20% 40% 60% 80% 100%

10-24

25-50

51-100

101-150

151-200

201-250

251-500

501-1,000

1,001+

AVERAGE

Age

nt p

ositi

ons

InboundOutbound

- 49 -

outbound work is done by outbound-only agents, hence the need for “outbound agent equivalents”). Table 25: US: outbound agent positions (equivalent) by size of contact center Size band (agent positions)

Outbound agent positions (equivalent)

10-24 97,512 25-50 155,250 51-100 151,686 101-150 76,754 151-200 77,961 201-250 75,593 251-500 112,694 501-1,000 92,148 1,001+ 109,006 Total

931,485

Small (sub-100 seat) contact centers have very significant numbers of outbound agent positions, but more as a factor of the overall size of the segment, rather than any focus of small contact centers upon outbound calling.

- 50 -

US: inbound/outbound activity by vertical market

US inbound and outbound activity by vertical market

0% 20% 40% 60% 80% 100%



IT

Food and Drink

Manufacturing

Services

Finance


Telecoms

Utilities



Public Services


Medical

Motoring

TOTAL

Vert

ical

mar

ket

InboundOutbound

- 51 -

Table 26: US: equivalent outbound agent positions by vertical market Vertical market

Outbound activity

Outbound FTEs

Outsourcing and Telemarketing 49.6% 154,427 Finance 29.8% 146,594 Retail and Distribution 26.7% 126,054 Telecoms 25.4% 95,341 IT 36.1% 85,902 Manufacturing 30.4% 74,193 Printing and Publishing 38.6% 67,164 Services 30.0% 66,917 Utilities 24.0% 38,044 Transport and Travel 23.2% 36,043 Entertainment and Leisure 22.0% 14,069 Food and Drink 33.3% 11,177 Medical 13.3% 7,727 Public Services 21.1% 5,794 Motoring 7.3% 1,559 Engineering and Construction 15.8% 481

Mean average

30.3%

931,485

The outsourcing and telemarketing sector has the biggest focus on outbound calling, with half of activity being aimed outwards, rather than being connected with inbound customer service. When considering the amount of offshoring that this sector has weathered in recent years, it is testament to the size of this industry segment that it still has more outbound FTEs (full-time equivalents) than any other sector. The finance vertical market has the largest number of outbound agents, involved in debt collection, persuading customers to change financial products (e.g. credit cards) and increasingly, cross-selling and up-selling to existing customers. Businesses are aware that one of the key moves towards increased profitability is to get customers purchasing multiple products, e.g. a personal loan, a current account, a credit card and insurance from the same provider. A significant proportion of outbound calling is now being done offshore (especially for lower value products), so we expect to see the number of outbound FTEs in this sector in the US decreasing significantly over the next two to three years.

- 52 -

US: inbound call volumes Table 27: US: inbound call minutes by vertical market Vertical market

Minutes inbound per year (billions)

% of all inbound

activity

Retail and Distribution 38.8 16.3% Finance 39.6 16.0% Telecoms 35.6 14.6% Outsourcing and Telemarketing 19.4 8.0% Manufacturing 13.7 7.8% Services 15.0 7.1% IT 13.6 6.2% Public Services 19.0 5.6% Utilities 13.2 5.6% Transport and Travel 17.4 5.4% Medical 5.6 2.3% Entertainment and Leisure 5.6 2.3% Food and Drink 2.5 1.0% Motoring 1.9 0.9% Printing and Publishing 2.2 0.8% Engineering and Construction 0.3 0.1% Total

243.2

100.0%

Table 28: US: inbound call minutes by size of contact center Size band (agent positions)

Minutes inbound per year (millions)

% of all inbound activity

11-24 27.3 11.2% 25-50 36.6 15.0% 51-100 40.6 16.7% 101-150 19.0 7.8% 151-200 17.9 7.4% 201-250 15.8 6.5% 251-500 30.3 12.5% 501-1,000 23.1 9.5% 1,001+ 32.5 13.4% Total

243.2

100.0%

The preceding tables are estimates of the amount of inbound call minutes per year into US contact centers. They are based upon proportions of inbound and outbound activity and agent position numbers from this report, with averages of call time and duration applied to them.

- 53 -

ContactBabel believes there are around 243 billion inbound call minutes per year into US contact centers. Outbound call statistics have not been included, as it is more difficult to estimate the number of outbound minutes. Opinion is divided on whether to count unconnected calls and calls to answerphones, and the length of outbound calls also varies enormously, making average outbound call lengths misleading. The retail & distribution and finance vertical markets have around 16% of all inbound traffic each, with the telecoms sector also playing a significant role. By size band, the smallest contact centers are most important, with around 43% of inbound traffic terminating in contact centers with fewer than 100 agent positions. However, the very large contact centers (over 250 seats) are the most visible and make an attractive target for suppliers, handling over 35% of all inbound calls.

- 54 -

Canada: inbound/outbound activity by size of contact center Table 29: Canada: outbound activity by size of contact center

As with the US, there is a slight increase in the proportion of work which is outbound in the mid-sized contact center range. (The term “outbound agent equivalent” describes the number of exclusively-outbound, full-time agents required. In practice, not all outbound work is done by outbound-only agents, hence the need for “outbound agent equivalents”).

Agent positions

% of outbound activity

10-24 27.2% 25-50 29.7% 51-100 29.8% 101-150 28.8% 151-200 30.0% 201-250 33.3% 251-500 27.6% 501-1,000 26.6% 1,001+ 31.1% MEAN AVERAGE

28.8%

Canadian inbound and outbound activity by size of contact center

0% 20% 40% 60% 80% 100%

10-24

25-50

51-100

101-150

151-200

201-250

251-500

501-1,000

1,001+

TOTAL

Age

nt p

ositi

ons

InboundOutbound

- 55 -

Table 30: Canada: outbound agent positions (equivalent) by size of contact center Size band (agent positions)

Outbound agent positions (equivalent)

10-24 11,016 25-50 13,365 51-100 14,304 101-150 5,040 151-200 4,950 201-250 5,495 251-500 11,178 501-1,000 8,379 1,001+ 10,730 Total

83,696

The sub-100 seat sector accounts for almost half of all outbound calling in Canada. Canada: inbound/outbound activity by vertical market

Canadian inbound and outbound activity by vertical market

0% 20% 40% 60% 80% 100%



Food and Drink

IT

Manufacturing

Finance

Services

Utilities


Telecoms



Medical

Motoring

Public Services


TOTAL

Vert

ical

mar

ket

InboundOutbound

- 56 -

Table 31: Canada: equivalent outbound agent positions by vertical market Vertical market

Outbound activity

Outbound FTEs

Outsourcing and Telemarketing 49.9% 19,179 Finance 28.4% 11,974 Retail and Distribution 25.1% 9,355 IT 34.0% 7,524 Printing and Publishing 37.7% 7,465 Telecoms 24.0% 7,268 Manufacturing 29.7% 4,912 Utilities 25.9% 4,223 Services 27.1% 3,788 Transport and Travel 22.9% 3,361 Entertainment and Leisure 23.8% 1,552 Food and Drink 36.8% 1,286 Medical 21.8% 1,219 Public Services 16.4% 306 Motoring 18.4% 214 Engineering and Construction 15.0% 70 Mean average

28.8%

83,696

The outsourcing & telemarketing sector in Canada is even more important to the overall outbound activity than in the US, (from which it is receiving this type of work). The finance and retail & distribution sectors also play a part in outbound activity, with a strong presence too from the printing and publishing sector (outbound advert sales in the main).

- 57 -

Canada: inbound call volumes Table 32: Canada: inbound call minutes by vertical market Vertical market


% of all inbound

activity

Finance 3,625 15.7% Retail and Distribution 3,398 14.8% Telecoms 3,120 13.5% Outsourcing and Telemarketing 2,539 11.0% Public Services 1,765 7.7% IT 1,533 6.7% Utilities 1,449 6.3% Manufacturing 1,383 6.0% Transport and Travel 1,336 5.8% Services 1,212 5.3% Entertainment and Leisure 591 2.6% Medical 520 2.3% Food and Drink 263 1.1% Printing and Publishing 138 0.6% Motoring 113 0.5% Engineering and Construction 47 0.2% Total

23,032

100.0%

Table 33: Canada: inbound call minutes by size of contact center Size band (agent positions)


% of all inbound activity

11-24 3,017 13.1% 25-50 3,348 14.5% 51-100 3,703 16.1% 101-150 1,429 6.2% 151-200 1,386 6.0% 201-250 1,359 5.9% 251-500 3,414 14.8% 501-1,000 2,651 11.5% 1,001+ 2,726 11.8% Total

23,032

100.0%

The preceding tables are estimates of the amount of inbound call minutes per year into Canadian contact centers. There will be around 23bn minutes of inbound activity into Canadian contact centers in 2006.

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The future of outbound calling Outbound activity falls into two categories: cold and warm. While there has been a rise in unsolicited cold calls over the past 5 years, the Do-Not-Call register, poor perception of this activity by customers and agent alike, and the enthusiastic introduction of state legislation on dialler rates means that cold calling looks likely to drop significantly and very quickly. With new means of contacting prospects, such as SMS or email having become available, the telephone cold call should be losing importance in the marketing mix of most companies, although many are now using offshore to telemarket cost-effectively. The past rise in outbound calling can be attributed to warm calls to existing customers, in order to cross-sell or up-sell, or increasingly, to check customer satisfaction and experience. Based upon customer loyalty theory, a key driver for CRM activities, warm calling has increased greatly, as metrics such as products per customer and wallet-share have started to be captured in the leading businesses. The measurement of a contact center’s success is starting to move away from pure performance-based metrics (time to answer; average call duration), into more balanced effectiveness/efficiency measures. However, in ContactBabel’s opinion, warm calling is often seen as an easy way to generate revenues without having to do too much extra thinking. Too many companies are trawling all the way through their customer lists, and trying to sell new products and services to customers, regardless of whether the customers will need them: there is not enough analysis of customer preferences and desires first. Add to this some companies’ enthusiasm for using offshore agents who may not be fully trained or suited to selling to the North American public, and it is easy to see how a negative view of outbound has emerged. There is no real difference between cold calling someone a company has not yet sold to, and calling an existing customer without understanding who that customer is and what they are likely to be interested in: both are unlikely to reap rewards. The latter option is actually likely to alienate existing customers. Businesses should be very wary of running indiscriminate cross-selling and upselling campaigns to existing customers – it could backfire on them. Added to this, silent calls - generated by the overuse of predictive dialling technology – are alienating customers and prospects. Many react to what they see as a worrying and hostile experience by registering on the Do-Not-Call register, effectively taking themselves out of the market altogether. ContactBabel would expect to see the following trends emerging within the next five years:

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• Outbound calling to decrease and stabilize at around 25% on average

• Warm calling will become more targeted after failures of over-

proactive campaigns to existing customers. However, there will still be many companies for whom warm calling means untargeted activity aimed at large chunks of the customer and prospect databases

• Direct mail marketing to increase in popularity with businesses • Cold calling decreases slowly and above-the-line and direct mail

marketing becomes more popular • Broadband and “always-on” devices make multimedia

communication a less-painful experience than many customers have suffered caused by poor web and database design, narrowband connections and poor eService service levels. This will slow the rate of increase in inbound voice communication somewhat by shifting some service requests onto self-service, maintaining the proportion of inbound-outbound proportion of around 75/25

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Chapter Six: The use of IVR and outbound dialers in North American contact centers

IVR (interactive voice response) is currently found in 43% of contact centers

Printing & publishing, medical and transport & travel contact centres

are the most likely to use IVR

Although only 12% of contact centers report using outbound dialers, 62% of those in the outsourcing & telemarketing sectors do so

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IVR (interactive voice response) in North American contact centers

North American IVR usage by vertical market

0% 20% 40% 60% 80% 100%


Motoring

Public Services

Finance

Food and Drink

IT

Telecoms



Services


Manufacturing

Utilities


Medical


AVERAGE

Vert

ical

mar

ket

Use IVRDo not use IVR

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Table 34: Use of IVR by vertical market Do you use IVR in your contact center?

Yes

No

Engineering and Construction 0% 100% Motoring 6% 94% Public Services 33% 67% Finance 35% 65% Food and Drink 39% 61% IT 40% 60% Telecoms 41% 59% Retail and Distribution 42% 58% Entertainment and Leisure 42% 58% Services 43% 57% Outsourcing and Telemarketing 44% 56% Manufacturing 46% 54% Utilities 48% 52% Transport and Travel 53% 47% Medical 63% 38% Printing and Publishing 73% 27%

AVERAGE

43%

57%

Perhaps surprisingly, the most avid users of IVR are not to be found in the major vertical markets of finance, retail and telecoms, but rather in the minor niches of printing & publishing and medical. Many of North America’s finance contact centers are actually small operations – local banks, for example – and do not require routing or automation assistance. The transport & travel and utilities sectors are strong users of IVR, for timetable and ticket booking in the case of the former, and for automated meter readings and billing enquiries for the latter. However, in most countries, IVR usage is directly positively correlated to the size of the contact center operation, and this is also the case in North America.

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Table 35: Use of IVR by size of contact center Do you use IVR in your contact center?

Yes

No

11-24 agent positions 32% 68% 25-50 agent positions 46% 54% 51-100 agent positions 38% 62% 101-150 agent positions 42% 58% 151-200 agent positions 61% 39% 201-250 agent positions 50% 50% 251-500 agent positions 57% 43% 501-1,000 agent positions 66% 34% 1,001+ agent positions 57% 43% Average

43%

57%

As we would expect to find, there is generally a positive correlation between the size of the contact center and the use of IVR.

North American IVR usage by contact center size

0% 20% 40% 60% 80% 100%

10-24

25-50

51-100

101-150

151-200

201-250

251-500

501-1,000

1,001+

AVERAGE

Age

nt p

ositi

ons

Use IVRDo not use IVR

- 64 -

As IVR is a solution which provides major cost savings in volume-based environments, we would expect to find more of the larger contact centers using it. While this is certainly the case, it does not seem that IVR suppliers have reached saturation point in any sector of the market. In larger contact centers with at least 150 agent positions, IVR usage is not much more than 60% in most size bands. This does suggest that commercial decisions not to use IVR have been made, i.e. if size were the only, or main factor in using IVR, we would expect to see all 1,000+ contact centers using IVR, and a gradual tailing-off of penetration rates as operations got smaller. Indeed, IVR suppliers still have virgin territory in the smaller contact center sector (fewer than 100 seats), where penetration tails off quite noticeably. This may be due to less supplier effort in this area, possibly caused by the difficulty of creating a profitable business model for suppliers to small contact centers. Also, as IVR works best in a volume-based environment, there may be not be the savings to be made, so interest is less in these types of solution. The positive correlation between large contact centers and the use of IVR will be of surprise to no-one. What should be of more interest to suppliers is the usage ceiling which seems to have been reached long before a 100% penetration rate has been hit. The following graph shows the penetration rate by size of contact center, compared to what ContactBabel would expect it to be if contact center size were, without doubt, the main driver of IVR uptake (which it should be, being of most use to high-volume environments).

Call centre size

Low

High

Low High

IVR

pen

etra

tion

rate

Expected penetration rate

Actual penetration rate

IVR usage: expected vs actual

c. 60% max.

Source: ContactBabel

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The diagram shows there are two main ways for IVR suppliers to increase their revenues: sell into the small contact center sector, and change the commercial decision not to use IVR which around half of larger contact centers seem to have made. The small contact center (sub-100 seat) sector, while accounting for the majority of North America’s contact center operations, has proven to be an extremely tough nut for suppliers to crack. The absence in many cases of a suitable sales model, the expense of selling directly and the previously unproven status of hosted applications means that small contact centers are beneath the radar screens of many of the larger IVR vendors. Add to this that only a proportion of this sector will be interested in IVR (as it provides best returns by automating large volumes of calls), and the divide between IVR applications and small contact centers is plain to see. Having said that, ContactBabel believes there are opportunities for IVR vendors in this area, although they may take some hunting down. Public services contact centers have a very low rate of IVR penetration, which is likely to rise due to the general increase in contact center investment which is being made now. Local government especially, which tends to have many departments, may benefit from an IVR routing solution rather than the usual system of having a receptionist answer the phone. However, government operations are not always focused upon efficiency, and solution providers which emphasize the reduction in staff which IVR can offer may not be welcomed. Looking again at the medium-to-large contact center sector – the traditional IVR arena – vendors will have to repackage and remarket their IVR solutions if they are to break through the penetration barrier which seems to be in place. IVR has been sold as a cost-saving measure, which is undoubtedly true, but it is also the pet hate of consumers. This may be why so many businesses have refused to implement IVR, which would otherwise save them considerable amounts of money. Vendors need to look at why businesses are wary of using IVR. Poorly-implemented IVR is the main problem, where the system is expected to do everything for the business. Vendors could look at supplying best practice guidelines based upon experience to avoid these problems. Many businesses wish to be seen as strongly focused upon customers’ needs. The concept of IVR used as a customer assistance tool (and marketed as such) is much more likely to succeed when harnessed with the traditional message of cost savings. Small contact centers can now consider IVR as a network-based pay-per-use model, which should open up new markets for suppliers.

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Touchtone IVR’s days are numbered, and has been for some years been evolving into a more flexible and open solution. Speech recognition enablement will make it a more powerful tool, and sharing web self-service functionality via voice through a voice portal should also improve the image and utility of voice self-service. The future of self-service Increasing self-service is consistently stated by leading contact centers as one of their major strategic aims for the medium-to-long term (2 years onwards). But what of the immediate future – where does the interest and activity really lie today? Despite touchtone IVR being long in the tooth, companies still predict that the number of interactions handled by this channel will increase. One of the clearest messages to come out of a major study of UK contact centers (the UK Contact Centre Operational Review – it is intended that a similar survey will be carried out in North America in late 2006) is that most businesses are woefully under-informed about the functionality and commercial benefits of speech recognition, perceiving it to be a complex and technical area that is patchy and unreliable. The reality is very different from this: the technology has improved dramatically in the last five years, and speech recognition is now an enterprise-class application, scalable, robust and capable of delivering much to both customers and businesses than touchtone IVR. Businesses’ predictions of when they will start to use technology solutions always need to be treated with a pinch of salt. For example, current uptake of speech recognition is running at around 5% in the UK, yet 7% of respondents say they will be implementing automated speech recognition (ASR) within the next 6 months, and a further 7% say they will be doing so at some point within the next year. Taken at face value, this would seem to indicate that the installed base of ASR will almost quadruple within the next 12 months. Unfortunately for speech recognition vendors, this enthusiastic response is unlikely to materialize along these lines, as projects always take longer than expected, other interested parties get involved and start questioning costs, and priorities change within businesses. However, growth will increase and speech recognition is now coming into the mainstream. However, these figures definitely show that speech recognition is high on the agenda of many companies, and that businesses with a large number of inbound calls should make themselves aware of what the industry currently offers, and more importantly, where ASR is going in the future. Recent unpublished ContactBabel research has shown that self-service is the no.1 technology priority for large contact center businesses in the UK (with at least 250 seats). We would say that speech recognition is one of the killer applications of the next five years, and will have more of an

- 67 -

impact than offshoring on the global contact center industry. The industries most interested in benefiting from early adoption of speech recognition – for routing, identification and self-service – are banks, telecoms and utilities companies, with some large retailers also showing interest. In many cases, there is already a compelling financial reason for businesses to use self-service today. In the future, financial and commercial trends mean that these drivers will become even more undeniable.

Labor costs will continue to increase, and businesses will decide to use agents only for high value-add work of which automation is currently incapable

Staff attrition rates are running at over 20% per year in most

mature contact center industries, and seem to be increasing. The full cost of recruitment, training and lost revenues through inexperience have only recently been fully understood. Keeping experienced staff drastically reduces costs, and using self-service to deal with the thankless and repetitive work will improve staff retention rates

Speech recognition can act as the front-end security system for the

contact center, taking customers through their security identification questions more quickly than an agent could do so, and freeing up that agent’s time. Adding biometrics (through voice print identification) could shorten the process even further, which would be positive for all stakeholders

Touchtone IVR systems will be coming to the end of their life within

the next few years. Businesses will use this opportunity to upgrade the levels of functionality that they use. This will reduce the cost of speech recognition and integrated web/voice self-service systems, making them affordable to much of the market.

- 68 -

Use of outbound dialers in North American contact centers

North American dialer usage by vertical market

0% 20% 40% 60% 80% 100%


Motoring

Food and Drink

Finance


Manufacturing


Telecoms

Public Services

Services


IT

Utilities

Medical



AVERAGE

Vert

ical

mar

ket

% of contact centers reporting dialer usage

Use dialerDo not use dialer

- 69 -

Table 36: Use of outbound dialers by vertical market Do you use an outbound dialer?

Yes

No

Engineering and Construction 0% 100% Motoring 0% 100% Food and Drink 2% 98% Finance 4% 96% Retail and Distribution 5% 95% Manufacturing 6% 94% Transport and Travel 7% 93% Telecoms 10% 90% Public Services 12% 88% Services 15% 85% Entertainment and Leisure 17% 83% IT 17% 83% Utilities 18% 82% Medical 25% 75% Printing and Publishing 28% 72% Outsourcing and Telemarketing 62% 38%

Average

12%

88%

The outsourcing & telemarketing sector is by far the most likely to use outbound dialers, due to the nature of much of the work they do, and the pressing need to maximise resources and profits within the contact center. Industries with large amounts of outbound – such as printing & publishing – also use dialers significantly. As with IVR though, we would expect dialer usage to be more a factor of contact center size than vertical market.

- 70 -

Table 37: Use of outbound dialers by contact center size Do you deal with customer emails within your contact center?

Yes

No

10-24 agent positions 6% 94% 25-50 agent positions 11% 89% 51-100 agent positions 13% 87% 101-150 agent positions 21% 79% 151-200 agent positions 25% 75% 201-250 agent positions 22% 78% 251-500 agent positions 17% 83% 501-1,000 agent positions 21% 79% 1,001+ agent positions 15% 85%

Average

12%

88%

There is certainly a positive correlation between contact center size and the usage of dialers, as we would expect – economies of scale suggest that increasing call throughput would impact costs in large contact centers more than in smaller operations. However, only 18% of large contact centers (250+ seats) indicated that they were using a dialer, which is still a low penetration rate.

North American dialer usage by contact center size

0% 20% 40% 60% 80% 100%

10-24

25-50

51-100

101-150

151-200

201-250

251-500

501-1,000

1,001+

AVERAGE

Age

nt p

ositi

ons

% of contact centers reporting dialer usage

Use dialerDo not use dialer

- 71 -

Chapter Seven: Contact center management gender Table 38: US contact center management gender Job title / gender

Male

Female

Contact center manager / director 58% 42% IT manager 80% 20% HR manager 32% 68% For the role of contact center manager, there is almost a 6:4 ratio in favor of the incumbent being male. IT management is still a predominantly male area, while HR and training functions are more likely to be run by women.

US contact center management gender

0%10%20%30%40%50%60%70%80%90%

100%

Contact centremanager / director

IT manager HR manager

FemaleMale

- 72 -

Table 39: Canadian contact center management gender Job title / gender

Male

Female

Contact center manager / director 59% 41% IT manager 79% 21% HR manager 24% 76% Canadian contact centers are split along almost the same gender lines as in the US, with the only exception being that women are even more likely to be running the HR function.

Canadian contact center management gender

0%10%20%30%40%50%

60%70%80%90%

100%

Contact centremanager / director

IT manager HR manager

FemaleMale

- 73 -

Commentary: The State of the Industry in 2006 Offshoring Despite the talk of a collapse of the contact center industry, there has only been a small decline in the number of contact centers and agent positions. To some extent, offshoring dropped down the industry agenda in 2005, as many of those businesses who would seriously consider it (often large finance, telco and retail operations) have already made decisions one way or the other. We would not say that the offshoring of customer contact has been the unqualified success that many expected – substantial cost savings have failed to materialize in many cases, and the customer perception of offshoring has been broadly negative. However, neither do we expect to see a major movement back to the US – there have been one or two announcements (and rather more quiet informal admissions of a reduction in offshore ambitions) – but generally, those executives whose decision it was to move offshore will not want to be seen to have been wrong. Additionally, as time moves on, working practices offshore will become more closely aligned with those in North American contact centers, as Western managers get their messages across, and the offshore industry matures further. We do not expect any particular dramatic movements either offshore, or back onshore, neither do we expect to see any short-term inroads into the Philippines or Indian contact center industries being made by South Africa, Eastern Europe, the West Indies, etc.: the issues around offshore are just as valid there as elsewhere. The impact of self-service Self-service is of much greater importance to the contact center industry over the longer term than is offshoring. The reason for self-service’s guaranteed success is two-fold, in that it generally aligns both with what customers want (rapid and accurate interactions) and with what businesses want (a low cost of doing business). This is a simple way of looking at the issue, but in most cases, it holds true. In some cases, a customer will need to talk with a person as the issue they have may be complex, but the main reason for having that type of conversation as far as the customer is concerned is to get the task done in the shortest amount of time. If using self-service is quicker than talking to an agent, then that is what most customers will do. The average technological sophistication level of a customer is steadily increasing, and the latest generation of customers (18-35 year-olds) have always been used to calling a business, rather than writing or physically visiting a business’s branch.

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From a business’s viewpoint, decreasing the cost per interaction through self-service is a positive result, although there will be some discussion of the optimum level of self-service, as many want to learn more about their customers and (more importantly) try to cross-sell and up-sell to them, which is easier in a live agent conversation. ContactBabel believes that one of the key opportunities for vendors in the next few years is to develop the ability to cross-sell and up-sell to customers through the self-service channel. There is some element of personalization through web self-service now, although not as much as has been predicted, but almost nothing through the voice channel, which is a major opportunity. Changes in customer expectations Although customers still complain about bad service through contact centers, the measurable standard of service has improved almost every year, with improvements in queuing time and call resolution rates occurring most years. Most complaints supposedly about contact centers are actually about the business itself, or the underlying systems or business processes which will not allow the agent to do what the customer requires. Because the contact center is now the main portal into the business, it is this channel that takes the blame when perhaps the agents are not the cause of the problem. Customer expectations of the contact center have in fact increased significantly year-on-year, yet almost unnoticeably. Whereas ten years ago, a queue time of two minutes might just have been part of the customer experience, many customers now consider that to be unacceptable. This constant demand for improvements will continue to drive increasingly sophisticated ways to fulfill customers’ requirements for swift and accurate service, in order to get closer to the customers’ ultimate goal of zero-queue time and 100% first-call resolution. Multimedia Multimedia – usually meaning email – is generally only a small part of most businesses’ customer contact realities, although many large businesses had very high hopes for it. Despite predictions (by contact centers themselves) that email volumes would account for over 25% of interactions by now, the UK figure is closer to 5% - a figure from which there has not been much deviation for some years. (A study of North American contact centers later in the year will provide the equivalent US and Canadian figures, but preliminary investigations indicate a figure of less than 10%).

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Businesses cannot dictate the methods by which their customers wish to contact them – almost all of the “Internet-only” banks eventually decided to offer a phone channel as well, due to the pressure that customers put on them. Customers have become more demanding in the performance that they expect from the companies they choose to do business with, and the ability to change providers who fail them is becoming ever more easy. Email response times, generally, have been appalling, and customers have been put off from using this channel very quickly. We would question the whole concept behind email as a customer-to-business interaction tool. Customers do not contact businesses for a chat – most interactions are something that needs to be done and/or confirmed, and there is no advantage to the customer to be waiting longer than it would take to pick up a phone. Typing also takes longer than talking, with no opportunity to enter into a conversation – why take a week to have a six-sentence email conversation when you could speak it in a minute? This is why email hasn’t taken off – there is little need for it from the customers’ perspective. Email is slow to use, takes forever to get a response (if at all), PCs may have to be booted-up and it offers no realistic opportunity of having a real-time conversation. We would expect text chat to have a greater share of overall interactions, as at least it can offer some real-time conclusions, but companies are slow to offer it, and many customers are tentative about trying it. As such, we believe email will never achieve the target rates of 25-50% that many large companies have stated as their aim for this channel. Changes in working practices The next five years will see the continuing development of working practices and customer expectations which have put so much pressure on the contact center industry, and go some way to explaining occasional poor performance:

24/7 culture will become ever more prevalent the need for more skilled and highly-trained contact center staff will

increase, as the job becomes more demanding this will create the need for contact centers to offer more flexible

hours and locations, away from the traditional central contact center model

there will be a greater need for IT-aware business staff to keep knowledge bases, agent decision support systems and website/databases up-to-date

IP architectures will become mainstream, making virtual contact centers and part-time staff a more important part of the contact center mix

Independent homeworking will continue to be niche, as management issues and concerns will not go away. However, we believe there is a case for seeing team leaders being based at satellite locations with small teams.

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The contact center in 2025 Although technology moves quickly, the reason that contact centers were set up still remains – customers want to do business quickly, and organisations want to do business profitably. The contact center still gives both parties a reasonable result. When looking into the far future, we have assumed that:

Businesses will continue to place profitability above all things, and in particular, will be ruthless in their pursuit of lower costs. Although there has been lots of talk of getting the contact center to increase revenues, in most cases, funding has been granted more easily to projects and initiatives which can prove short-term cost reduction, and we see no reason for this to change

Customers do not particularly want to do business with other

people – most lead increasingly busy lives, and see interacting with businesses just as a task to get through. As such, customers will choose the means and time to communicate with businesses which offers them the greatest chance of a swift and successful resolution. Currently, this is through talking to other people, although this may change.

Based on this, we believe that the following have a good chance of occurring: The customer experience

Self-service, especially via speech, will be prevalent, and will have taken over from live voice contact as the no.1 customer-to-business communication method

A greater number of initial purchases of goods will be done without

actually contacting a company. Potential purchasers will use a real or virtual broker to determine the best deal based on their requirements, and purchases will be carried out after reviewing options. The use of a PDA with limited intelligence which interrogates company systems on behalf of a customer seems likely. Actual live calls to a company will be more likely to come from existing customers

Customer expectations will be so high that there will be no contact

center queue. Most large businesses will operate a virtual contact center, using outsourcers or in-house staff not based at the contact center site itself. Customers may still allow the use of call-back technology – it is unclear to what extent customer impatience will further develop

- 77 -

Outbound cold calls will have been legislated out of existence,

however outbound value-added service will be a strong brand differentiator (e.g. letting customers know about approaching credit limits, late flights, etc.), although this will not necessarily through a live voice option

Inbound security checks will carried out automatically though

voiceprints, reducing call lengths The agent experience

There will be fewer agents than today, although there will be many more at the top-end. The average agent will be highly-skilled, technically-competent, and authorized to make decisions immediately. It is possible that they will be based in multiple separate locations in very small teams

Businesses will need to be careful not to overload agents with data,

but will need to present it in a user friendly format. Technology will be used which identifies words in a conversation, picking up key words and pushing possible solutions to an agent’s screen

Much more emphasis will be placed on clearing the agent desktop

of unnecessary clutter, while providing the agent with more relevant information dynamically. A speech interface could take over from the use of a keyboard, with structured data being filled in automatically as the conversation occurs naturally

Training times and salaries for agents will be much higher than

today, even in relative terms. Agents will be skilled in sales and marketing, as well as service, and systems will empower them to make decisions

Voice will continue to be the no.1 customer-agent communication

form, as it is so flexible and quick compared to any text-based interaction type.

- 78 -

The business experience

Interaction recording solutions and the analytical tools behind it will increase in sophistication so that timely information is provided on a daily and digestible basis to operational and senior people for tactical decisions and feedback on marketing

How will contact center performance be measured? We do not

believe that businesses’ aims will change substantially, so first-call resolution and the measurement of revenue against total cost of customer service – customer profitability – will grow in importance even more. We believe that the current fad for improving customer satisfaction is driven by CRM theories (rather than altruism), which link satisfaction with loyalty, and loyalty with profits. As such, this focus will probably wane as new commercial theories emerge, although of course, the profit focus will remain as strong as ever

A point will be reached when businesses are avoiding so many calls

that they realize that they are no longer communicating with their customers, and are losing sales opportunities (even if the customers themselves are quite happy). This means that automation will reach a point when enough is enough, and businesses actually try to engineer chances to talk to their customers, rather than vice versa as is the case today.

- 79 -

APPENDIX: ABOUT CONTACTBABEL ContactBabel is the contact center industry expert. If you have a question about how the industry works, or where it’s heading, the chances are we have the answer. We provide databases of contact centers so that solution providers can target the right people effectively. We can help create marketing messages and analyze how to approach sectors and industries. We also provide benchmarking reports so that contact centers can compare themselves with their competitors. The coverage provided by our massive and ongoing primary research projects is matched by our experience analysing the contact center industry. We understand how technology, people and process best fit together, and how they will work collectively in the future. Since 2000, we’ve helped the biggest and most successful solution providers develop their contact center strategies and talk to the right prospects. We have shown the Department of Trade and Industry how the UK contact center industry will develop and change. We help contact centers compare themselves to their closest competitors so they can understand what they are doing well and what needs to improve. If you have a question about your company’s place in the contact center industry, perhaps we can help you. Email: [email protected] Website: www.contactbabel.com Telephone: 0870 770 3337 (+44 1740 629835 outside the UK)

microsoft word - north american contact centers in 2006 - the

Documents

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