Magic Quadrant for Customer Management Contact Center BPO
This is the Gartner Magic Quadrant Report reposted in January 2015
The top four BPO players of Teleperformance, Convergys, Atento and Sitel dominate with Sykes and Sutherland following closely behind them. This past year there have been a number of key mergers in the BPO arena with Stream Global Services being acquired by Convergys, IBM CM BPO being bought by Synnex into their Concentrix arm.Craig Ashmole
New entrants into the BPO outsourcing space
New entrants into the BPO outsourcing space include the following this past year.
- HGS – Due to its recent acquisition activities, HGS has grown to be a key CM contact center BPO company in 2014.
- Transcosmos – It is a key CM contact center BPO company in Japan, with expanding operations in Japan.
- Concentrix – It completed its acquisition of IBM’s CM contact center BPO business, through its parent – Synnex – in early 2014.
Gartner’s Magic Quadrant for CM contact center business process outsourcing services evaluates a dynamic and transforming provider landscape. Sourcing managers need to know that providers are fast-evolving due to changing markets, technology and customer needs.
This document was revised on 5 January 2015. The document you are viewing is the corrected version. For more information, see the Corrections page on – gartner.com – or read the report at the bottom.
Gartner’s definition of business process outsourcing (BPO) is the delegation of one or more highly transactional IT-intensive business activities to an external party. BPO always includes the delegation of the business process administration to a third party and may also include the delegation of application maintenance and ownership.
Customer management (CM) contact center BPO, which are the processes linking an organization with its existing and potential customers, can be categorized in four subsegments:
- Customer selection
- Customer acquisition
- Customer retention
- Customer extension
The above four subsegments should also consistently be executed across the following four primary channels:
- Telephony, inclusive of voice and interactive voice response (IVR) self-service
- Email response management
- SMS, Web chat, mobile app services and social for CRM
- Knowledge management for Web-based self-service
The Market Overview
The worldwide CM BPO revenue base for most service providers continues to be centered on agent-based voice services; the growth of these voice-based services, however, is starting to slow. Gartner estimates approximately 75% of the total market in 2014 was made up of voice-based services, while the other 25% was made up of nonvoice services. Gartner’s research points to a higher rate of adoption of nonvoice services – defined as multichannel, automated, analytics and social for CRM services – albeit at a faster rate compared with 2011 and 2012. The focus on CRM customer engagement center or customer experience hubs are also increasing as clients look to consolidate various engagement channels and provide a single view of the customer journey and experience.
The adoption rate and growth momentum experienced in nonvoice multichannel and automated services (also known as intelligent process automation or robotics) – such as Web chat, email, SMS, mobile apps, Web self-service, virtual assistant and social CRM services, coupled with dynamic analytics and cloud services, such as BPaaS – are set to tilt the balance in favor of nonvoice services by 2017 at the earliest.
In fact, Gartner expects that seven of the top 10 providers will generate more than half their revenue from these rapidly growing nonvoice channels by 2017. Based on the recently published “Competitive Landscape: Customer Management BPO, 2014 – Making a Difference With Size and Scale in Multichannel, Analytics and Automation,” two of the top 10 providers had 28% of their revenue contributions from non-voice, automated, analytics and social for CRM services.
Managing Client Expectations, and Balancing Metrics and Sustainable Growth
Most C-level executives in both provider and buyer organizations will privately agree that their (buyer) procurement processes for CM contact centre BPO are still relatively immature. Because of this immaturity, these executives and their industries will focus more on tangible, short-term results, such as pricing and metrics, with clearly defined numerical outcomes (that is, “volume play,” to use the rudimentary industry term). The industry is in a “death by metrics” situation today as a result, even though the initial intent is typically based on what value the engagement or service can or will deliver to the consumer of such services – typically measured by customer experience or value play.
It is, therefore, imperative for service providers to remain focused on the “real client” – the executive sponsor and the sponsors’ peers (influencers) – rather than the “accidental client” – the procurement people looking to gain favour and look good by showing 2% to 5% cost savings per year. Providers must invest in consultative selling if they are serious about having C-level discussions in which they will be able to demonstrate their capabilities and make a difference to the clients’ business and managing clients’ expectations – areas where CM contact centre BPO will matter.
Better alignment of CM contact centre BPO metrics to key business goals continues to be the mantra for buyers. That said, buyers who, during the past four to five years have systematically reduced head count and operating budgets at the expense of customer experience and retention, either have received new marching orders or have been told to grow their customer engagements – in effect, to complement internal sales and marketing functions.
The key question is – “How can this be done?” – Especially if an enterprise needs to deliver on this doctrinal shift with a smaller amount of resources. Buyers, therefore, continue to explore opportunities to outsource their customer management processes in order to optimize their investments by achieving the desired process rigor and technology infusion, while maintaining a flexible and scalable operational cost model.
Service providers continue to deal with myriad issues, such as sustainable growth, rising attrition, increasing labour costs resulting from inflation, a stronger/weaker currency, profitability, investments in technology and assets, and quality improvements. Added to these issues are increasing business complexities, both internally and in the buyer business environment. Buyers, especially during the past four years, may have mastered the art of shifting risk to service providers, a behaviour triggered primarily by the global economic crisis of 2009 in the U.S. and the economic crisis of 2010 and 2011 in Europe. Providers must continue to be vigilant and pay more attention to sustainable growth.
Discussions across client boardrooms have shifted from just cost containment and labour arbitrage to the delivery of enhanced customer experience, automation, value-added services (such as multichannel and analytics services), scalability, quality of service, and more innovative ways of addressing the increasing levels of complexity in their business. Some enterprises have gone further to include topics such as increasing customer spend and profitability, portfolio optimization, effective marketing and sales campaigns, retention, and brand strategy. Providers are now treated more like “partners” or an extension of the buyer organization.
Three key trends have consistently appeared during the fact-finding and assessment process and are as follows:
- Growth of digital services– Multichannel (including crowdsourcing), BPaaS, social CRM, mobile and analytics services are expected to further take the labour equation out of the sales, marketing and customer care processes. These services are further driving up the consumption of CM contact centre BPO services. Increasing numbers of mobile devices, adoption of crowdsourcing (as a viable business model), and richer content and interaction on such devices drive demand for CM contact centre BPO in the matured markets and more so in emerging markets.
- Rise of smart machines– Automation technologies and services will further drive the adoption of PETS, including the new trend of using phantom RPA and intelligent process automation within CM contact centre BPO services. With the costs of these technologies decreasing exponentially (based on transaction volumes/marginal cost of transaction) and increasing numbers of these automated devices (typically software-based with cross-channel integration capabilities) currently deployed or planned to be deployed during the next 18 months, Gartner sees smart machines as a key game-changer in the industry.
- Increasing demand for marketing services– Marketing services, such as market segmentation, campaign design and management, and mobile and Web marketing, are growing.
There are many good vendors not found in this Magic Quadrant – either due to the size of their business (revenue) or due to their operations being centred in just one region – that we regularly recommend for consideration, including (but not limited to):-
- Arise Virtual Solutions
- Grupo Konecta
- Moshi Moshi Hotline
- Tata Business Support Services, wholly owned subsidiary of Tata Sons, the holding company of the Tata Group