Managed and Hosted Contact Center Services

A Datamonitor report Managed and Hosted Contact Center Services Generating New Sources of Revenue for Vendors and Service Providers Published: Dec-04 Product Code: Providing you with: Hosted contact centers, speech recognition services, and traditional network services Use this report to... Identify the fastest growing applications on the market Full geographical coverage: North America, EMEA, Asia Pacific and Latin America Analysis of the complete value chain: vendors, service providers, outsourcers, and systems integrators Profiles of 15 vendors and their relationships with over 40 service providers www.datamonitor.com/technology

Managed and Hosted Contact Center Services Introduction In mature markets, there is little growth potential in selling traditional contact center products. At the same time, service providers are seeing a decline in their core revenue streams as a result of increased competition and price deflation. Are hosted contact centers and network based services the answer for both parties' troubles? This report analyzes the revenue generating opportunities that managed and hosted contact center services bring to vendors and service providers. It assesses who will migrate to managed and hosted services, why they will be doing this, and what services they will require. With insight into how the competitive landscape will develop and profiles of the key vendors, this report establishes how to effectively capitalise on this market's opportunities. Key findings and highlights By 2008 the global market for managed and hosted contact services will have more than doubled from its 2003 value, with annual spending exceeding $5bn. By 2008 there will be nearly half a million hosted agent positions globally, representing 7% of the total. Reasons to buy Identify the fastest growing applications on the market Understand the differences between the end-user demands and competitive environment in each region Determine the key demand and supply side drivers and barriers to the adoption of managed and hosted services Contact us... From Europe: tel: +44 20 7675 7258 fax: +44 20 7675 7016 email: tcmarketing@datamonitor.com From Germany: tel: +49 69 9750 3119 fax: +49 69 9750 3320 email: deinfo@datamonitor.com From the US: tel: +1 212 686 7400 fax: +1 212 686 2626 email: ustcmarketing@datamonitor.com From Asia Pacific: tel: +61 2 9006 1526 fax: +61 2 9006 1559 email: apinfo@datamonitor.com

www.datamonitor.com/technology Sample pages from the report Competitive Dynamics How will the competitive landscape develop? The competitive landscape for managed and hosted contact center services currently varies by regions, most notably the two largest and most mature regions: North America and EMEA. However, the market also varies by application type, and this is the best way to segment the market. Traditional network services Market Growth This is the most mature sector of the managed and hosted contact center services markets, and it is also the most closely related to traditional telco network services. Consequently, traditional service providers currently dominate this market, and this is unlikely to change, even in more rapidly As Figure growing 10 illustrates, markets. North Within America the traditional is currently the second largest global market service provider landscape, the large for accounts hosted contact and more centers complicated after EMEA. services This is despite the fact that North America is a particularly network level routing will much be dominated larger overall by the contact larger center service market providers. than EMEA. As Figure 9 illustrates, the However, more basic offerings at the reason lower end that of the the hosted market market will be is more smaller open in North to America than in EMEA is because competition, and smaller service providers the penetration that can of package hosted contact simple IN centers and is IVR much lower. Datamonitor believes that services with other call minutes and other there services are two will main be reasons well placed for this: to gain market share from their larger, more established competitors. The overall contact Why center Managed market in North and America Hosted is much Services? more mature than elsewhere, and consequently there are fewer potential green-field sites Hosted contact centers across all size-bands; There are two basic models emerging in the hosted contact center market: service North American service providers have been slower than those in EMEA to providers using third party technology, and ISVs using their own technology Figure to 3: Hidden vs. visible costs in a traditional contact center solution pick up on the potential of hosted contact centers and rollout services. As will provide hosted services. Currently, the former model is the most popular, especially in be discussed in the competitive section, this has led to the emergence of a EMEA, currently the most mature market. In fact, the latter model currently exists to number of smaller MSPs and ISVs emerging to fill the gap left by the service any real extent only in North America. The primary reason for this is that service providers. providers in North America were slow in setting up hosted contact center services, so Upfront costs a number of smaller ISVs stepped in to The fill the net vacuum. result is that the North American market will not really start to pick up until 2005, but when it does the growth will really start to accelerate. By 2007 it will have The argument against the do-it-yourself model is that in the long run maintaining your overtaken EMEA and in the long run is expected to account for around Hidden half of costs the own proprietary technology becomes prohibitively expensive, compared to purchasing global market. third party technology and gaining access to a whole community of support, labor and Installation partnerships. This is why the service providers, for example, use technology from Figure 10: Global hosted APs by region Integration Nortel, Lucent, Alcatel, Cisco, et al for their networks rather than build it themselves. Maintenance The counter argument runs that this model is not always the best: of the most popular Security applications that service providers offer, many have 100% they themselves have built, such Backup as network IVR and conference calling. Plus, look 90% at salesforce.com a great Servers example of a company that has made this model work 80% Internal labor 70% CALA Testing 60% APAC Development 50% EMEA Managed and Hosted Contact Center Services 40% North America Datamonitor (Published 12/2004) Page 58 30% This report is a licensed product and is not to be photocopied 20% 10% Source: Datamonitor D A T A M O N I T O R 0% 2003 2004 2005 2006 2007 2008 Purchasing a premises-based all-in-one solution rather than integrating a number of Source: Datamonitor D A T A M O N I T O R best-of-breed components will reduce integration and installation costs, but a managed or hosted service offers a number of other benefits on top of this. These primarily derive from the expertise and economies of scale that a service provider can achieve, and that very few enterprise or public sector bodies could. By sharing the Managed and Hosted Contact Center Services resources needed to achieve adequate security, testing and reliability among multiple Datamonitor (Published 12/2004) Page 36 clients, a service provider can offer significant cost savings. Then there is This report is a licensed product and is not to be photocopied maintenance: typically a client will pay between 10% and 25% annual maintenance fee on any technology it buys, but this is included in the monthly costs of a managed or hosted service. Proportion of global hosted APs Managed and Hosted Contact Center Services Datamonitor (Published 12/2004) Page 18 This report is a licensed product and is not to be photocopied Request more sample pages...for FREE! From Europe: tel: +44 20 7675 7258 fax: +44 20 7675 7016 email: tcmarketing@datamonitor.com From Germany: tel: +49 69 9750 3119 fax: +49 69 9750 3320 email: deinfo@datamonitor.com From the US: tel: +1 212 686 7400 fax: +1 212 686 2626 email: ustcmarketing@datamonitor.com From Asia Pacific: tel: +61 2 9006 1526 fax: +61 2 9006 1559 email: apinfo@datamonitor.com

Managed and Hosted Contact Center Services Table of contents EXECUTIVE SUMMARY INTRODUCTION What are managed and hosted contact center services? - The three types of managed and hosted contact center service - Naming conventions - Are managed and hosted contact center services the answer for service providers? What is this report about? WHY MANAGED AND HOSTED SERVICES? End-user benefits - Move from Capex to Opex - Reduced overall costs - Usage-based pricing - Access to new applications - Other benefits Service provider benefits - Generate extra revenues - Access to new and rapidly growing markets - Exploit existing network investments - Generate more loyal customers Vendor benefits Barriers to adoption - Demand side - Existing investments - Concerns about security and reliability - Lack of voice-enabled IP infrastructure - Market skepticism - Supply side Implications for vendors and service providers - Products and pricing MARKET GROWTH Global market growth - Regional growth Global hosted contact center growth - Regional growth - Revenue growth - The value chain North America EMEA APAC CALA Vertical markets Implications for vendors and service providers COMPETITIVE DYNAMICS Contact center technology vendors - Avaya - Cincom - Cisco - Cosmocom - Genesys - Lucent - NetCentrex - Nortel - Rostrvm / Marconi - Telephony@Work - Wicom Non-telco service providers - becogent - Contactual (formerly White Pyjama) - Echopass - Five9 - Streamdoor - UCN Service providers How will the competitive landscape develop? - Traditional network services - Hosted contact centers - Speech recognition services Implications for vendors Implications for service providers...do hosted and managed contact center services offer a solution with which to address the market? The answer is 'yes', to a certain extent... Robin Goad, Datamonitor Senior Analyst

www.datamonitor.com/technology APPENDIX TABLES Table 1: Further benefits of managed services Table 2: Global hosted and managed contact center services spending by application type, Table 3: Global hosted and managed contact center services spending by geography, Table 4: Global Hosted APs Table 5: Global hosted contact center penetration by geography Table 6: Global hosted APs by region Table 7: Global hosted contact center spending by geography, Table 8: Global hosted contact center revenues by type, Table 9: Managed and hosted contact services spending in North America by application type. Table 10: Managed and hosted contact center services spending in EMEA by application type, Table 11: Managed and hosted contact center services spending in APAC by application type, Table 12: Managed and hosted contact center services spending in CALA by application type Table 13: Key global service provider / vendor relationships Table 14: Total global APs by region Table 15: Global traditional network services revenue by region Table 16: Global speech recognition services revenue by region FIGURES Figure 1: Global hosted and managed contact center services spending by application type, Figure 2: Global hosted APs, Figure 3: Figure 4: Figure 5: Figure 6: Figure 7: Hidden vs. visible costs in a traditional contact center solution Cost savings achieved through usage-based pricing Typical contact center spending by type in Western Europe Global hosted and managed contact center services spending by application type, Global hosted and managed contact center services spending by geography, Figure 8: Global hosted APs, Figure 9: Global hosted contact center penetration by geography Figure 10: Global hosted APs by region Figure 11: Global hosted contact center revenues by type, 2004 Figure 12: Managed and hosted contact services spending in North America by application type, Figure 13: Managed and hosted contact center services spending in EMEA by application type, Figure 14: Managed and hosted contact center services spending in APAC by application type, Figure 15: Managed and hosted contact center services spending in CALA by application type Figure 16: The Vertical perspective...out of the 3.2 million APs that will be installed or replaced between 2004 and 2008, 371,000 or 11.5% of these will be hosted APs... Robin Goad, Datamonitor Senior Analyst

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www.datamonitor.com/technology The contact center market is being rejuvenated by the promise of IP, multimedia, networked call centers and advances in underlying applications. Interested in this topic? Datamonitor s contact center market and technologies research provides analysis of the growth areas and buying patterns affecting global call center markets. In addition, the service focuses on call center infrastructure technology markets, providing revenue sizing and forecasts by vertical market and call center size band for all major call center technologies, from the ACDs to quality monitoring. Other reports available in this series The Vertical Guide to Contact Centers in North America Analyzes the key drivers in the American and Canadian contact center markets Published: Aug-04 Product code: DMTC1028 Call Center Outsourcing in Latin America and the Carribean to 2008 Covers developments in the Latin American call center market, tracking the market by country and vertical with an additional focus on domestic and offshore outsourcing Published: May-04 Product code: DMTC0975 Vertical Guide to Call Centers in EMEA Analyzes the call center outsourcing industry across EMEA, with emphasis on vertical markets, size bands, and competitive issues within each region Published: Apr-04 Product code: DMTC0965 Creating Demand for Outsourced Voice Services Covers the developing market for voice business outsourcing from all participant vendor angles Published: Dec-03 Product code: DMTC0948 Enterprise Integration, Portals and Web Services 2003 Provides an in-depth update of two highly successful research projects from 2001 Published: Dec-02 Product code: DMTC0865 For more information on reports and briefs go to: www.datamonitor.com/technology Subscribe to Monitor A monthly update of Datamonitor's new products, delivered to you by email. Email: monitor@datamonitor.com

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