Call centre outsourcing providers forced to reinvent themselves

A recently published report by independent market analyst Datamonitor reveals that outsourced call centres agent positions in the United States are losing their share of the global market. Ri Pierce-Grove, contact centre analyst at Datamonitor and author of the study, Contact Centre Outsourcing, explains why.

In a shrinking market call centre outsourcing providers are being forced to reinvent themselves by merging, partnering or competing with other types of companies in order to seize market share. Tight profit margins are driving outsourcers to move offshore and automate where viable. Competition is driving outsourcing firms to invade each others'' territories. In the US, there have been at least eight publicly announced acquisitions since 2003 and Datamonitor expects this to continue.

Outsourcers are introducing new services to grow revenue and compete more effectively in the US market. Firms that were founded as contact centre outsourcers are offering services which overlap other business process outsourcing (BPO) areas, and BPO providers are acquiring contact centre capability.

Companies are reinventing themselves either by moving a significant amount of their business offshore, by increasing the scope of their offerings, or both.

There have been a number of acquisitions in the last three years demonstrating company movement within the BPO sphere. Convergys bought Deloitte and Touche''s Finance and Accounting Business Process Outsourcing division, which will allow Convergys to serve companies interested in outsourcing their finance and accounting functions. ACS, whose strength has historically been in IT outsourcing and other forms of BPO, acquired Livebridge, a contact centre outsourcer. In 2004, NCO, a global provider of business process outsourcing services, acquired RMH Teleservices, a midsized contact centre outsourcer.

So large call centre outsourcers are increasingly competing against business process outsourcing (BPO) providers who offer call centre services in conjunction with less-commodified strategic outsourcing services.

This is the reverse of creating a competitive niche; companies are becoming generalists. Or rather, they are accumulating specialties, which allows them to engage in larger contracts, gives them more pricing flexibility, and provide greater value to clients. The danger here, as with all expansions, is the possibility that they may overextend themselves.

The following diagram illustrates the new competitive landscape. BPO providers and contact centre providers are beginning to offer each others'' core competencies as a way to add value. The systems integrators are not especially affected by this shift, since neither the BPO providers nor the contact centers are making a dramatic effort to attack their core competencies.

In shrinking markets it will be imperative for outsourcing service providers to choose between competing on the basis of cost or reinventing themselves.