Key Trends in Outsourced Contact Centers. 12 Congreso Andino, April 2015 Peter Ryan, Principal Analyst

Key Trends in Outsourced Contact Centers 12 Congreso Andino, April 2015 Peter Ryan, Principal Analyst

Outline of Presentation Introduction Key trends in outsourced contact centers Market growth Pricing trends Value-added service provision Home-based agent delivery Offshoring trends Wrap-up Questions

Introduction Outsourced contact centers are forecast to grow over the coming five years However, regional trends will impact this expansion Outsourcers are under pressure to move beyond just front-line services Value add and technology-focused offerings are key to success Home-based contact center offerings are seeing some success But, growth into new regions and non-traditional verticals will be key Offshore delivery remains controversial as ever Limited interest among enterprises in going overseas Latin America has emerged as a favored offshore delivery region

Contact Center Outsourcing is Growing in the Americas 1.150 1.100 1.050 1.000 950 900 850 800 4,7% 4,7% 4,6% 4,6% 4,5% 4,5% 4,4% 4,4% 4,3% 4,3% 4,2% Outsourced CRM growth in the Americas continues to be strong; Reprised economic activity and interest in the nearshore are key drivers; USA and Canada nearly at pre-gfc demand levels

EMEA Outsourced Contact Centers Expanding 500 450 400 350 300 250 200 150 100 50 4,7% 4,6% 4,5% 4,4% 4,3% 4,2% EMEA major markets are also showing signs of life; Annual growth continues to expand across the region; However, health of industry is being driven from emerging regions. 0 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 4,1%

Western Europe vs. Emerging EMEA Annual Growth 8% 7% 6% 5% 4% 3% 2% FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 Western Europe Rest of EMEA CEE, North Africa, South Africa driving contact center growth in EMEA Western European growth among slowest in the world

Asia-Pacific Outsourcing in Good Health 1000 950 900 850 800 750 700 650 9,0% 8,0% 7,0% 6,0% 5,0% 4,0% 3,0% 2,0% 1,0% Asia-Pacific outsourcing growth driven by demand for Philippines and India from Anglosphere; However, emerging domestic consumer classes also contributing to increase in agent volumes. 600 FY2014FY2015FY2016FY2017FY2018FY2019FY2020 0,0%

Mature Market Outsourced Contact Center Price Points France Australia Germany New Zealand UK Spain Canada United States 25 30 35 40 45 50 Australia, Western Europe price points among the most expensive globally

Enterprises Demanding Sophisticated Services Rate the importance of the following criteria in choosing an outsourcer (please rate on a scale of 1-4, with 1 being highly unlikely and 4 being very likely )? Agent language capabilities Security / fraud prevention capabilities Outsourcer financial stability Price Customer experience strategy capabilities Multichannel delivery capabilities Scope of customer lifecycle capabilities Stability of outsourcer's delivery location(s) Leading-edge contact center technology provision Horizontal functional expertise Contract flexibility Customer analytics capabilities Sophistication of self-service offerings Expertise in different vertical markets Geographical flexibility Ability to provide at-home agents Availability of social media offerings 2 2,5 3 3,5 Vendors are now have to be more focused than ever on going beyond just front-line care

Why Outsourcers Focusing on Value-Add Services Limited investment budgets among enterprises Technology Mindshare Heavy demand for value-add services Strategy Data management Channels Better margins for vendors offering these services

Home-based agents working 20 hours / week or more Outsourced Home Agents Gaining Traction 170.000 160.000 Main drivers for home agents include: 150.000 140.000 130.000 120.000 110.000 100.000 90.000 Reduced overheads Lower attrition Agent quality Scheduling flexibility Offshoring alternative 80.000 FY 2014 FY 2015 FY 2016 FY 2017

However, this market is still niche.. Over 90% of home based agents based in North America This proportion is unlikely to change in the foreseeable future Vertical adopters primarily Retail, Telco and Travel / Tourism However, Ovum forecasts increased interest from health care, insurance and utilities Key concerns holding back widescale outsourced home agents include: Security worries Remote management Home distractions Ability to engage in team-building

Enterprises resistant to offshoring in 2015 and beyond Less than 15% of enterprises plan to offshore in the next three years

Local / Regional Outsourcers Most Popular Among Clients To whom would you/do you feel most comfortable outsourcing your call center functions (please rate on a scale of 1 4 with 1 being not at all comfortable and 4 being very comfortable )? Average In-country contact center outsourcers much more favored than global players

Malta Sri Lanka Czech Republic Kenya Senegal Poland Albania New Zealand Costa Rica China Guatemala Serbia Turkey Belize Pakistan Philippines Guyana Dominican Portugal Egypt Argentina Romania Ireland Jamaica Haiti Honduras Bulgaria Croatia South Africa Nicaragua Mauritius Tunisia Colombia El Salvador Malaysia Peru Morroco India Mexico Hungary Latin America s Offshore Delivery Popularity is Clear 66% 64% 62% 60% 58% 56% 54% 52% 50% If you were to outsource, or currently do outsource, your call center abroad, what countries would you consider based on the following locations? Colombia is among the most considered offshore delivery locations among Western enterprises In-country contact center outsourcers much more favored than global players

Wrap-up There will be growth among contact center outsourcers through 2020 However, this growth will in large part driven by emerging markets Offshoring as a business model is a tough sell But Colombia has developed a strong reputation For outsourcers to flourish in the current environment, they must: Focus on what the enterprise can t deliver on its own Excel in value-added service delivery Position the right offshore markets based on price and quality

Follow-ups? Peter Ryan, Principal Analyst peter.ryan@ovum.com @peter_w_ryan