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2007 will be one of the most challenging years in contact center outsourcing's history

8th March 2007
By IB Staff Writer

Coming hot on the heels of UK bank Lloyds TSB's announcement that it is to move its contact center operations from Mumbai to the UK, a new report has revealed that contact center outsourcing providers are set to face tremendous challenges with the emergence of late-adopting vertical markets. Indeed, vendors are struggling to adapt industry-specific solutions to both new and established clients.

According to the Datamonitor report, "2007 Trends to Watch: Contact Center Outsourcing and Services," the evolution of horizontal functions will also challenge contact center outsourcers, as more investors move toward one-stop-shops for multiple services. In addition technology shifts will be an area of concern for outsourcing vendors, as end-users rapidly adopt new and sophisticated contact channels.

2007 will be one of the most challenging in contact center outsourcing's history. Not only will more industries be looking to adopt third-party customer care services than ever before, but their horizontal functions will be shifting to more profitable requirements.

Additionally, the need to satisfy demand from multiple contact channels as opposed to strictly voice-based services will be crucial for success over the long term. Those outsourcing vendors that properly target industries with realistic and tailored programs and are able to accommodate cross-channel solutions are certain to succeed.

Datamonitor's research indicates three major contact center outsourcing services trends that will emerge in 2007.

Vertical shifts challenge outsourcing providers

Contact center outsourcing vendors are struggling to adapt industry-specific solutions to both new and established clients. This is due to the changing nature of specific sectors, in addition to a rise in client sophistication, which is fuelling new contact channel solutions.

What also needs to be considered is that many companies are finding that offshoring contact center services is not a generic solution. It is now being understood that offshoring is one of many business models that may or may not suit individual firms.

Despite that one company may decide to return its call center work to domestic shores, there are many that are pleased with their offshore deployments and are expanding them. Given the fluid nature of the current business environment, it is likely that investors would try a number of customer care models in order to find the one that suits them best.

Horizontal function needs are changing in conjunction with investor priorities

Outsourcing vendors are faced with a contact center sector in which clients and end-users alike are prioritizing higher-value services, in addition to statutory legislation that limits outbound calling. Therefore, outsourcers will need to adapt their offerings to incorporate higher-value services such as business to employee care and technical support, which are likely to lead to higher revenues and profits over the long term.

Outsourcing vendors must adapt to new contact center technology realities

The explosion of new contact channels, in addition to the steady growth of voice telephony globally, will require outsourcers to make targeted investments in order to interact effectively with an already sophisticated consumer set.

Outsourcing vendors will need to examine expanding multi-channel tools such as web chat, SMS and email should they wish to remain at the vanguard of customer care. However, such investments will depend heavily on the vertical and geographic market that is being serviced.

Lloyds TSB's decision to return a number of its call center agent positions from India to the UK reflects a much-reported trend across western economies. However, it would be short-sighted to predict the end of the offshore contact center industry.

With more locations than ever before providing customer care services, investment to offshore markets will continue for some time as firms attempt to capitalize on lower costs and high quality client care. In the case of Lloyd's TSB, clearly this was a business decision, one that was undertaken with due diligence and that reflected what its management felt would best serve its clients.

If outsourcing vendors are to maintain and increase vertical market share, tailored solutions for individual markets will be required, which will also have to take into account multi-channel capabilities.

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