Global Headquarters: 5 Speen Street Framingham, MA USA P F

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1 Global Headquarters: 5 Speen Street Framingham, MA USA P F E X C E R P T I D C M a r k e t S c a p e : W o r l d w i d e C u s t o m e r C a r e B P O S e r v i c e s V e n d o r A n a l y s i s L e v e r a g i n g t h e F o u r P i l l a r s t o M o d e r n i z e C u s t o m e r E x p e r i e n c e Melissa O'Brien I N T H I S E X C E R P T The content for this paper is excerpted from the IDC Competitive Analysis Report, IDC MarketScape: Worldwide Customer Care BPO Services 2013 Vendor Analysis Leveraging the Four Pillars to Modernize Customer Experience, by Melissa O'Brien, (Doc # ). All or parts of the following sections are included in this Excerpt: IDC Opinion, In This Study, Situation Overview, Future Outlook, Essential Guidance, and Synopsis. Figure 2 is also included. I D C O P I N I O N The customer care business process outsourcing (BPO) services market has reached a high level of maturity, yet the dynamics of customer interactions are causing a fundamental shift in the demand for and delivery of these services. The dynamic changes in the way that customers connect with companies combined with companies' newly focused look at customer experience (CX) are pushing customer care BPO service providers to move deeper into their clients' operations and have a greater impact on how they operate. Customer care BPO service providers are using IDC's four pillars of the "3rd Platform" cloud, social, mobile, and big data to help transform and modernize the way their clients approach their customer engagement. This IDC MarketScape examines these trends and how they are impacting the ability of leading vendors to grow and increase market share, including input from 31 buyer phone interviews. This study identifies several key areas of market opportunity that lead to criteria by which customer care BPO service providers are assessed for their current capabilities and future strategies. The keys to success for customer care BPO service providers are: Customer experience expertise. As more companies recognize experience as the key differentiator in their businesses, it will become more and more important for customer care BPO service providers to have the expertise and capabilities to deliver on that experience. This transition requires changes in many elements of providers and their clients' business operations, including talent, process, and technology. IDC believes that by using the power of mobile, social, big data, and cloud and having deep customer experience expertise customer care providers can lead their clients toward modernizing the customer experience. Delivery model competence. In this mature market, providers must constantly evaluate the delivery model options and strategy that will ensure the best quality, cost, and efficiency for their clients. Currently, the most important models for customer care BPO service providers to be investing in are home-agent delivery, Filing Information: April 2013, IDC #240710e : Excerpt

2 hosted and on-demand technology models and, increasingly, business process as a service (BPaaS). Omnichannel aptitude. A key component of customer experience, the phrase "omnichannel" goes a step beyond the traditional contact center term "multichannel." To be apt in omnichannel solutions, the provider must be astute not just in providing services by using the various channels (voice, chat, social, etc.) discretely but also in aiding customers to connect these channels and provide a holistic view of customer engagement. I N T H I S S T U D Y This IDC study represents a vendor assessment of the customer care business process outsourcing services market through the IDC MarketScape model. This assessment discusses both quantitative and qualitative characteristics that explain a vendor's success in this market. This IDC MarketScape covers a variety of vendors participating in the customer care BPO services market. With a focus on the market in the United States, the evaluation is based on a comprehensive and rigorous framework that assesses vendors relative to the criteria and one another and highlights the factors expected to be the most influential for success in the market in both the short term and the long term. This study is essentially composed of two parts: The first part describes and defines the market, provides an overview of the market dynamics including buyer demands, and explains the criteria for success in the customer care BPO services market. This criteria is based on demand-side surveys, customer reference discussions, and analyst observations. The second part provides a visual presentation of multiple vendors in a single bubble chart format. This display exhibits the observed and quantified scores of the reviewed vendors and is followed by individual profiles on each vendor participant explaining the highlights and opportunities for each. The document concludes with IDC's essential guidance, which includes advice for both buyers and providers of customer care BPO services. This IDC MarketScape is a fresh view of the customer care BPO services market and does not directly replace any previous IDC research. M e t h o d o l o g y IDC MarketScape criteria selection, weightings, and vendor scores represent wellresearched IDC judgment about the market and specific vendors. IDC analysts tailor the range of standard characteristics by which vendors are measured through structured discussions, surveys, and interviews with market leaders, participants, and end users. Market weightings are based on user interviews, buyer surveys, and the input of a review board of IDC experts in each market. IDC analysts base individual #240710e 2013 IDC

3 vendor scores, and ultimately vendor positions on the IDC MarketScape, on detailed surveys and interviews with the vendors, publicly available information, and client experiences in an effort to provide an accurate and consistent assessment of each vendor's characteristics, behavior, and capability. Extensive buyer input was used to generate this research, including phone interviews of the participating vendors' clients, totaling 31 buyer interviews. S I T U A T I O N O V E R V I E W The market for customer care BPO services, about $58 billion worldwide, has turned around since the lows of and is forecast to grow at a 5.5% CAGR worldwide through Many vendors have struggled to grow revenue, while others have grown nicely out of the downturn. As automation and self-service continue to gain share of the total interactions, and mobile and social customer behavior increases, vendors heavily invested in the traditional agent-based business but without complementary technological investments will find it harder and harder to compete, as cost-based competition based on labor arbitrage continues to intensify. As competitive differentiation becomes more difficult and customers are more connected than ever, companies are realizing that the experience that their customers have, rather than the company's product or service, becomes the real differentiator. To look at modernizing customer experience is fundamentally different from the traditional customer relationship management (CRM) view that most companies have utilized in interacting with their customers. Most importantly, whereas traditional CRM views customer interactions as individual transactions, customer experience is an end-to-end strategy that addresses and analyzes the totality of customer interactions over time and across channels. Customer experience modernization also seeks to simplify, personalize, and contextualize the interactions that customers have with a company. The transition to customer experience invokes the need for omnichannel capabilities, analytics, and many other areas of expertise, and it is an ongoing process that should be centric to any company's core values. Customer care BPO service providers are aligning services to aid their clients in modernizing the customer experience. I n t r o d u c t i o n This IDC MarketScape evaluates vendors in the customer care business process outsourcing market. IDC defines customer care BPO services, also called contact center services, as the outsourcing of services related to customer care activities and business processes associated with the customer contact center. Customer care BPO services can involve the transfer of single or multiple processes and can include a transfer of people. From the IDC Services Taxonomy The customer care services market can be segmented along the following key subprocesses: 2013 IDC #240710e 3

4 Customer interaction. Customer interaction is the service that involves transferring the process of interactions to a third party. Interactions are broken down into four major function types: Customer service. Customer service includes outsourced customer interaction facilities and processes that handle billing inquiries, account maintenance, service dispatch, scheduling, and general information. Dominated by inbound contact (yet inclusive of outbound interaction as well), customer care typically takes place via the telephone but may also occur via , chat, fax, self-help, text, social media, or mail. This service includes the provision of support- and care-related activities to and for the customer. IDC distinguishes postsales support from customer service based on the fact that postsales support is generally facilitated by the OEMs themselves, while customer care outsourcing is facilitated by an outsourcer on behalf of the OEM. Marketing. IDC refers to marketing as the segment of customer care BPO services that focuses on marketing-related tasks such as customer data collection, customer retention and loyalty campaigns, promotional campaigns, and brand management. Marketing processes can also include customer targeting and segmentation. Sales. The sales function includes interactions focused on new customer acquisition and growth or expansion of the current customer base. Sales can include telesales, new account setup, cross-selling, upselling, and lead generation. Technical support/help desk. IDC refers to technical support as the process of providing assistance for software, systems, and other consumer products or devices to users. The technical support outsourcer receives calls from users on behalf of the independent software vendor (ISV) or OEM and is responsible for resolving those problems. Interaction typically includes providing telephone support, maintaining a self-support Web site, dispatching a service technician, and escalating calls back to the ISV or OEM. Fulfillment/logistics. Fulfillment is a suite of services that combines front-end customer interaction center services with real-time order management, automated payment processing, advanced lettershop, and back-end logistics and reverse logistics to support product fulfillment. Integrated distribution services for customer care also include inventory, transportation, and warehouse management. This is only pertaining to fulfillment/logistics processes that support customer management. CRM technology hosting. CRM technology hosting is a service model in which a provider operates the technology platform of a contact center and provides this service to its customers on the provider's premises. Hosted contact center services vendors manage the technology environment on behalf of their customers on either a dedicated or a shared basis. Technologies provided can include but are not limited to the following: ACD, IVR, CTI, and desktop CRM. This segment of the forecast addresses management and hosting of the technology only and does not include management of process or agents. 4 #240710e 2013 IDC

5 Customer analytics. Customer analytics is a suite of services to collect, manage, augment, analyze, and apply customer data in support of marketing, sales, and service efforts. Specific service activities included in this definition are analytics/data mining services, data preparation and enhancement, list rental, campaign management/execution, customer-centric data warehouse development, customer data integration services, and customer data analysis services. Analytics services can be included as a part of the customer care service and are often embedded in the aforementioned processes, thus they are also embedded in the forecast numbers. F U T U R E O U T L O O K I D C M a r k e t S c a p e W o r l d w i d e C u s t o m e r C a r e B P O S e r v i c e s M a r k e t V e n d o r A s s e s s m e n t The IDC vendor assessment for the customer care BPO services market represents IDC's opinion on which vendors are well positioned today through current capabilities and which are best positioned to gain market share over the next few years. Positioning in the upper right-hand corner of the grid indicates that vendors are well positioned to gain market share. For the purposes of discussion, IDC divided potential key strategy measures for success into two primary categories capabilities and strategies. As a mature market, strategy criteria was weighted slightly heavier than capabilities for the customer care BPO services market. Positioning on the y-axis reflects the vendor's current capabilities and menu of services and how well aligned it is to customer needs. The capabilities category focuses on the capabilities of the company and service today, here and now. Under this category, IDC analysts look at how well a vendor is building/delivering capabilities that enable it to execute its chosen strategy in the market. Positioning on the x-axis, or strategy axis, indicates how well the vendors' future strategy aligns with what customers will require in three to five years. The strategy category focuses on high-level strategic decisions and underlying assumptions about offerings, customer segments, and business and go-to-market plans for the future, in this case defined as the next three to five years. Under this category, analysts look at whether or not a provider's strategies in various areas are aligned with customer requirements (and spending) over a defined future time period. Figure 2 shows each vendor's position in the vendor assessment chart. The vendor's reported or estimated revenue is indicated by the size of the bubble IDC #240710e 5

6 F I G U R E 2 I D C M a r k e t S c a p e W o r l d w i d e C u s t o m e r C a r e B P O S e r v i c e s V e n d o r A s s e s s m e n t Source: IDC, 2013 V e n d o r S u m m a r y A n a l y s i s Each vendor in this IDC MarketScape was evaluated against each of the criteria and subcriteria outlined in the Weighting Evaluation Criteria section. The descriptions in the sections that follow provide a summary of the findings that represent the vendor's score. 6 #240710e 2013 IDC

7 IBM IBM's CRM business processing outsourcing services and solution business is a comprehensive service offering that boasts 65,000 agents around the globe delivering services in more than 40 languages. IBM Global Process Services (GPS) is in the process of evolving the business to align complementarily with other IBM offerings to increase value to its clients and improve profit margins. IBM has been placed as a Leader in the customer care BPO services IDC MarketScape. Strength s and High light s Vision and strategy. One of the highlights of IBM's customer care services is the vision and strategy that has been honed by IBM CRM to take a holistic view of customer relationships across channels and over time. This vision goes beyond multichannel to an omnichannel view aimed at getting to the single view of the customer assisting clients with achieving this goal often requires services beyond process outsourcing, such as consulting and integration capabilities. IBM's recent announcements to align the GPS business with Smarter Commerce and go to market with combined offerings of consulting, BPO, software, and analytics are a cornerstone of this vision. As IBM strives to help its clients achieve this holistic customer view, it also moves up the value chain and more deeply impacts the enterprise. Complementary services. IBM's position as an industry leader in many technology aspects is complementary to the BPO services business. As discussed previously, IBM is able to offer business process operations like customer care along with operations, business applications, and technology infrastructure in an integrated way. One area in particular that is a differentiator for IBM is mobile customer care, with the dedicated mobility group that develops custom enterprise mobile applications for smartphones and tablets. Other areas of differentiation are consulting and software. In consulting, IBM employs 5,600 consultants for the CRM practice, and the developing integration of IBM software products such as Cognos, SPSS, Sterling, Lombardi, Tealeaf, Unica, and WebSphere into the customer experience offerings are real advances. Clients cited IBM's proactive nature in offering new complementary services and bringing ideas for improvement to relationship managers as a point of strength. This was a major differentiator to almost all other IDC MarketScape participants, where clients cited a lack of proactive engagement as an area of improvement. EPIC. IBM's process optimization and automation approach to improve quality and efficiency is called EPIC (Enterprise Process Innovation Continuum). EPIC has embedded analytics that identify areas of the process flow that can be optimized, driving agent and system productivity. EPIC will often identify areas of an agent's process that are manual and time intensive that can be automated. The goal of EPIC is to drive efficiency and productivity and to ready clients for more sophisticated services IDC #240710e 7

8 Watson. The IBM Watson team is currently developing a customer engagement solution for Watson, which will be tested and used by the CRM customer care services and solutions team. IDC believes that the development of artificial intelligence, and/or meaning-based learning and communication tools, will change the future of customer care. Having access to this kind of state-of-the-art technology is a major differentiator for IBM's customer care services. Challenge s and Opp ortu nitie s Customer readiness. While the future strategy of aligning customer care to Smarter Commerce and selling integrated solutions in a transformative framework is a wise vision, IBM's sales may be ahead of some customers in terms of maturity and readiness. Some customers will be more likely to seek a discrete business process, which could set challenges in the sales cycle in the short term if IBM will not engage in customer care discretely. However, this could easily be mitigated if transformational offerings outsell pure-play agent seats work. The opportunity in the long term will be to grow the integrated business and significantly improve profit margins. IBM client feedback indicated that it is best to develop the relationship within the business process engagement first before attempting to sell more transformational services. Thus IBM's current client base should be a primary target for this new style of services, and aiding existing clients with readiness (through EPIC and analytics) should be paramount. Agent strategy. While the scope of customer care is changing as a result of selfservice and digital channels, plus the more holistic vision of the customer experience, IDC believes there will still be a significant role played by the agent in the future. This role will evolve and change as live calls will require more sophisticated and complex service. While IBM's strength is very clearly in the continually growing technology and automation aspect of customer care, the risk of losing focus on the human touch is a possible challenge. IBM has a strong strategy to mitigate this by adding education and upskilling agents in line with market demand. IBM has indicated a future strategy to develop process expertise in marketing, sales, and service, and it is already deploying agent SME programs for social customer care and industry-specific solutions to address the elevated agent component. E S S E N T I A L G U I D A N C E IDC believes that the four pillars will have a fundamental impact on customer care processes and in advancing how customer care BPO services are delivered in the coming years. A summary of this impact is as follows: Mobile. Much of the mobile customer care trend is driven directly from end customers. Customers are increasingly using mobile devices to communicate with companies, whether through mobile applications, mobile Web, or voice. As such, companies must ensure that their mobile customer care processes are optimized to ensure a seamless experience for customers using mobile devices. This can mean many things, but one of the key challenges and opportunities pertaining to the contact center is the ability to connect and provide context of the 8 #240710e 2013 IDC

9 mobile interaction across the channels of customer interaction. For example, a customer using a mobile application who needs voice assistance should be able to dial out of the application and have the interaction information from the application follow through to the IVR or agent so that the customer doesn't need to repeat information. Visual IVR is one up-and-coming way that companies are attempting to optimize this mobile app-to-voice process. Mobility also presents many opportunities for location-based services, such as push notifications (if authorized by the customer) with coupons when a customer is close to a store location where the customer is a loyalty program member. Demand-side survey data indicates that the majority of buyers of customer care BPO services are expecting help from their providers to enable mobile processes for customer care. This means that customer care BPO service providers need to partner for or build capabilities that help their clients take advantage of the opportunities for mobile customer care. Cloud. The gradual trend of contact center and CRM technology applications has been shifting toward delivery in the cloud. Thus we see the emergence of cloud-based contact center platforms and CRM applications like Salesforce.com. The customer care BPO service providers also play an important role in this ecosystem by building out complementary services and solutions for the popular cloud-based platforms and also, in many cases, as a reseller of these cloudbased contact center applications. The ease and flexibility with which cloudbased solutions are delivered provide many benefits for BPO service processes, and we will see an emergence of business processes that are based on cloud services, or BPaaS, offering new opportunities for BPO services firms. On the other hand, cloud also offers a potential challenge to BPO services companies, in particular for those competing solely on traditional labor arbitrage focused processes, where many cloud-based options can optimize and in some cases replace the traditional service. Social. Social networks are becoming a greater part of customer care BPO service delivery. While most companies have embraced the marketing aspects of promoting products and services on social media, most have yet to thoroughly grasp the opportunity of supporting customer inquiries and issues via these media. As evidenced in some of the vendor profiles in the Vendor Summary Analysis section, most leading customer care providers are offering some form of social customer care service to aid clients with providing support via this channel of growing importance for customer care. The challenges that enterprises face with social customer care are many, including how to measure effectiveness and/or ROI and dealing with the public element of social communication, which involves quite a bit of risk. Customer care BPO service providers are becoming experts on social communication and leading their customers through this shift, whether just dipping a toe in the water or jumping right in. Most providers have a listen-understand-engage paradigm, which includes social media monitoring, analytics, and live agent services to interact with customers on social networks as appropriate. The need for agents to interact on public social networks is creating a push to hire social-savvy agents and create training about the dynamics of customer care, not just within the social channel but its impact on other channels as well. IDC believes that while adoption is still relatively low, provider sophistication and client adoption in the area of these services are 2013 IDC #240710e 9

10 poised to quickly increase. Social also impacts customer care from an operations perspective, where employees can leverage internal social networks to share best practices and gamify performance metrics. This is especially evident with home-based agent delivery, where the camaraderie and competition in typical office-based contact centers can be replaced by social networks. The result can often lead to greater employee satisfaction, helping toward a better customer experience. Big data/analytics. There are a panoply of analytics offerings available in the customer care BPO services market. While general performance analytics are a dime a dozen, such as those that assess call volumes and trends, there are many forms of emerging analytics that are going to become more important and true differentiators over time. Analytics that are predictive, that perform analysis in real time, that analyze customer data across channels (in particular the big data that is so prevalent on social networks), that perform sentiment analysis, and that blend voice and text analytics are going to help build the contact center of the future. The ability to deliver these different forms of analytics in a complementary way that helps modernize the customer experience will be a big differentiator for customer care BPO service providers. A d v i c e f o r B u y e r s Seek out experienced customer care providers with a global footprint and a proven track record of capabilities. Each of the participants in the IDC MarketScape for customer care BPO services is an established player in the customer care BPO services market with considerable expertise. Look for providers that have proven expertise within the buying company's vertical. Look for providers with customer experience expertise. Buyers of customer care should look to providers that have honed specific expertise around modernizing the customer experience, in particular as it relates to omnichannel customer care and voice of the customer analytics. Use this expertise to create a competitive advantage in your company. A d v i c e f o r C u s t o m e r C a r e B P O S e r v i c e P r o v i d e r s Providers should be aware of the trends outlined in this analysis and ensure that they are making the appropriate investments to complement their portfolios. In addition, IDC recommends the following specifics: Build customer experience labs. The leaders of the customer care BPO services industry are already investing in these labs where clients can have a peek into the contact center of the future and get an understanding of what end customers experience with their brand. These labs often include a "global command center" where their clients can learn about the omnichannel view and the opportunities therein. Most importantly, the experimentation and analysis done at these labs will serve to consistently improve customer care processes, making providers true experts and thought leaders in the customer care BPO services industry. 10 #240710e 2013 IDC

11 Lead customers on the journey to customer experience modernization. This is another major opportunity for thought leadership. If clients are not looking at customer experience with a strategic view, it is mutually beneficial to lead them down this path and help them to see the opportunities that they can realize with the providers' value-added services in terms of customer loyalty, revenue generation, and customer satisfaction by modernizing the customer experience. Provide advisory services/consulting. To sell new delivery models and channel solutions, providers will need to develop internal expertise that can be shared with clients embarking on a new venture. Whether implemented as a presales mechanism or built out as a full offering, consulting and/or advisory services will help sell new and innovative offerings and build trust of expertise with clients. Continue focus on operational efficiency. Despite all of the new and exciting opportunities for the customer care BPO services industry, clients still count on customer care BPO service providers to provide excellent and consistent traditional services. Striking a balance between technology, process, and talent aspects of the business is also crucial. While technological capabilities such as automation and self-service, and at some point artificial intelligence, are growing in importance, at its heart the customer care BPO services industry will always be a people business and successful providers will not lose sight of that. S y n o p s i s This IDC study uses the IDC MarketScape model to provide an assessment of a number of providers participating in the customer care BPO services market. The IDC MarketScape is an evaluation based on a comprehensive framework and a set of parameters that assesses providers relative to one another and to those factors expected to be most conducive to success in a given market during both the short term and the long term. "Customer care BPO services vendors are now in the position to assist their clients' customer experience modernization efforts as enterprises see the need to stay competitive by taking a lifetime view of the customer and recognizing that the experience is the sum of their relationship over time," said Melissa O'Brien, research analyst, Worldwide Customer Care BPO Services. "BPO service providers that build competency around customer experience and use the four pillars cloud, social, mobile, and big data (analytics) to do so will have the capabilities that customers will need and the ability to gain market share over time." 2013 IDC #240710e 11

12 C o p y r i g h t N o t i c e This IDC research document was published as part of an IDC continuous intelligence service, providing written research, analyst interactions, telebriefings, and conferences. Visit to learn more about IDC subscription and consulting services. To view a list of IDC offices worldwide, visit Please contact the IDC Hotline at , ext (or ) or sales@idc.com for information on applying the price of this document toward the purchase of an IDC service or for information on additional copies or Web rights. Copyright 2013 IDC. Reproduction is forbidden unless authorized. All rights reserved. 12 #240710e 2013 IDC