Key Factors Driving Accelerated Growth of On Demand Contact Centers

Forecast Growth – According to the Analyst Community“The real growth in the market will come from hosted contact center and speech recognition services… [B]y 2008 the global market will have more than doubled, reaching a value of over $5bn.” (Datamonitor)

Key Market DriversClear Advantages of On Demand Services“Over the past five years, IP hosted contact center applications with more robust feature sets and other inherent advantages including simple and rapid start-up cycles, and remote management and agent capabilities, have effectively leveled the playing field in the contact center marketplace.” (Saddletree Research)

“They key benefits of managed services to end users (customers) are: • A move from capital to operational expenditure; • Reduced overall costs; • Usage-based pricing and increased flexibility; • Access to new applications, particularly for smaller organizations that could previously not afford advanced contact center technology.” (Datamonitor)

Hosted Contact Center Market: Seat and Revenue Forecasts (North America), 2005-2012Compound Annual Growth Rate (2005-2012): 38.1%Note: All figures are rounded; the base year is 2005. Source: Frost & Sullivan

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Technology Drivers “The key business drivers of cost reduction and revenue growth have given rise to a number of significant trends, including: ‘offshoring’ and outsourcing, self-service and the growth of the virtual contact center. Underlying these business trends are two key technology enablers: voice-over IP (VoIP) and the replacement of proprietary, hardware-based technology with open, standards-based software solutions.” (Datamonitor)

“Driven by the power of IP telephony, enhanced feature functionality and inherent economic advantages, hosted solutions will garner the bulk of attention from contact center decision makers, and this will result in a rapidly growing number of hosted solution purchases.” (Saddletree Research)

Business Continuity Requirements“Another driver will be a desire by larger enterprises to insure business continuity and compliance with Sarbanes-Oxley. The combination of quick deployment, minimum or no upfront investment, a tight correlation of revenue streams with expenses, and the ability to free up enterprise personnel to focus on core business functions, makes the hosted contact center solution an attractive and smart choice for such organizations.” (Saddletree Research)

At-home / Remote Agents“With increasing broadband and VoIP penetration, at-home/remote agents are permeating the structure of contact centers. While still in the early stages, this model could become an industry norm in the coming years. Remote and at-home agents offer a number of benefits for call centers such as reduced seat costs, higher agent retention rates, and expansion of the labor pool to include more qualified agents.” (Frost & Sullivan)

Outsourcing Trend“The fundamentals of outsourcing remain strong in call center operations, however its forms are evolving. While customer relationships are core to any business enterprise, operating a contact center in many cases is not, hence can be outsourced.” (Frost & Sullivan)

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Hosted Contact Center Market: Market Drivers Ranked in Order of Impact (North America), 2006-2012

1 Shift from Cap-ex to Op-ex drives increased demand, especially in price-sensitive SMB markets

High High

2 Replacement cycle for legacy premise investments boost hosted solution adoption, especially in the mid-market

High High

3 Advancements in multi-tenant architectures increase demand for hosted solutions

High High

4 Growing sourcing of remote and at-home agents in contact centers High High

© 2005 Frost & Sullivan

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SourcesFrost & Sullivan | North American Hosted Contact Center Markets | © 2005Datamonitor | Managed and Hosted Contact Center Services | © December 2004Saddletree Research | Research Update - The Hosted IP Contact Center Selection Process – One Size Does Not Fill All | © January 16, 2006