Hosted contact center technology is the choice of service providers worldwide. The technology is a unified, scalable, and managed portfolio of contact center applications integrated with a high capacity and reliable voice and data network. It provides benefits of multimedia contact services like voice, email, chat, and co-browsing, as well as enhanced reporting and recording capabilities. It can be integrated with third party applications with ease, and offers exciting pay-as-you-go tariff plans. Also, it is an ideal framework which builds scalable and flexible network-based contact centers that provide best-in-class capabilities with minimal advance investment.

The hosted technology in India is an emerging model that is gaining traction. The Indian hosted contact center market in 2006 was valued at $10.8 mn and is expected to witness tremendous growth in the next four years to reach $85 mn by 2009.

Market Assessment
The Indian contact center market is a high growth market leading the offshore contact center space in Asia Pacific. The growth in the industry is driven by both the outsourcing of contact center services and setting up of new contact centers by foreign and local multi-nationals.

Also, the fast growing Indian economy, large number of English speaking, educated, and skilled professionals, low labor costs, and favorable government policies have made India a perfect location for outsourcing activities. Thus, the Indian IT services and IT-enabled services (BPO) industry have seen tremendous growth in the last few years.

In 2006, the IT/BPO industry in India was estimated to have grown by 33.5% y-o-y. The contact center market in India was one of the early successes of the business process outsourcing industry that led to other complex business processes such as financial, HR, animation and graphics, technical support. Now research and development, market research, and equity research are being outsourced to India. The cost advantage offered by India for the quality of service provided has been a key reason for the growth of the BPO and the contact center markets.

Apart from the cost advantages, the key reasons for the increasing growth in the contact center industry in India is the quality of work, ability to scale-up operations, and brand awareness and marketing campaigns by the Indian government, BPO firms, and industry associations, especially Nasscom. India has successfully portrayed itself as the hub for business process outsourcing and IT-enabled services, not only for low complexity jobs but also for high-end research and complex processes. This advantage has given India a yawning lead in the industry, which is likely to help sustain the growth of the market. Tata Communications expects India to continue to lead the offshore contact center market in Asia Pacific until 2011.

State of the Industry
There were about 800 contact centers in India with over 110,000 agent seats employing over 150,000 agents in 2006. Also, the number of contact centers in India grew by 43% y-o-y in 2006. Further, the number of contact centers is expected to grow at a rate of 30% from 2004–2011, and the agent seats by 2011 are expected to stand at 448,200 employing over 602,000 people.

Tata Communications sees an increase of 45.5% in 2010 over 2006 in the number of new contact center seats, to reach an estimated figure of 150,000 seats. Apart from new contact centers being set up, expansion of existing centers is also expected to take the number of agent seats in India to 115,000 by the end of 2009. And a majority of these seats belong to contact centers with capacities less than fifty seats.

Such centers form a significant fraction of the total number of contact centers in the country. But the proportion of such centers will diminish over time as sustainability and scalability are expected to become key determinants for the success of hosted contact centers.

Contact centers with capacities between 51-200 seats were observed to be the next major portion of all contact centers in the country. In order to sustain themselves, such centers would have to increase their capacity and move to the higher capacity segment.

In 2009, Tata Communications expects 43% of Indian contact center seats to be outsourced and the remaining 57% to be in-house. And by 2011, owing to the higher growth in outsourced contact centers, the outsourced contact center seats are expected to exceed the captive contact center seats.

Also, as more local and foreign companies have started to provide outsourced contact center services in India, and customers have started realizing the benefits of the scheme, even more government and public sector organizations are expected to outsource their customer relationship management services than setup their own captive centers to save on setup cost and time-to-market.

The top verticals in the Indian hosted contact center market are the BFSI, and travel and hospitality sectors. There has also been some demand from utilities, government, technology and IT, outsourced contact centers, retail, energy, logistics, and healthcare.

The government sector does not traditionally outsource a lot of their work but of late it has realized the importance of customer satisfaction and relationship, and hence the need to cost effectively engage their customers through contact center services. And this is where the hosted contact center model is a good fit for the public sector environment. The government also finds opex a better way to manage costs than investing capital into infrastructure.

Its demand is also expected to pick from all the three segments of the market, as awareness about the solution increases in the region. Government, BFSI, and outsourcing sectors will contribute to the growth in the mid-sized and large hosted contact center deployments. The primary players in the hosted contact center market are service providers that host contact center applications and offer them on a rental basis. The success of this market depends on the focus and commitment of service providers to their hosted services offering.

The main reason for telecom service providers to enter the market has been the relatively slower growth in the traditional telecom businesses, and hence they are looking toward providing peripheral VAS that will increase their revenue, increase customer loyalty by offering a broad portfolio of services, and achieve higher growth. Managed and hosted services are one of the areas that the TSPs are looking to invest in.

By offering hosted contact center services, telecom service providers are able to get the customers hooked on to a key application set like contact centers for a period of time, and thus increase the stickiness and loyalty of the customer. Also, with hosted service, the TSP offers bundled telco-minutes and other network services like international inbound service, load balancing, etc.

Benefits of Subscribing
The basic reason that hosted contact center is a good business for service providers is that subscribing to a hosted service is a good business decision for potential customers. The motivation for enterprises to choose a service provider's on-demand contact center offering instead of deploying premise-based call center equipment is considerable. The qualitative benefits are described below.

Capital Expenditure Avoidance: Instead of large upfront purchases of capital equipment, enterprises are able to work on a monthly expense basis, paying either by agent or by usage for the services they need.

Focus on Core Business, not Managing Technology: Contact center infrastructure has multiplied in complexity, and managing this infrastructure in-house requires significant IT and telecom expertise and manpower. Today's trend is to focus on core competencies. Businesses should do what they do best and leave the rest to other specialists. Companies don't try to supply their own electricity or telephone service. Why should they supply their own contact center infrastructure?

Adoption of Multi-Channel Contact Centers: There has been a major change in the way customers want to contact the companies they do business with. Telephone communications are being augmented by Web-based chat, email, and even voice and VoIP. This means that call centers in enterprises all over the world are rethinking the way they handle customer contacts. Many are focused on how to enhance legacy equipment and when they should replace it. In such an atmosphere of change, considering a new strategy such as hosted contact centers to achieve multi-channel makes a lot of sense.

Capacity Management: One of the strongest benefits of hosted contact centers is in the area of capacity management, especially as it applies to new contact methods. Enterprises simply don't know what the new mix of contact methods will be. To some extent, no one knows what it will be. Phone calls versus Web chat versus email versus VoIP versus video versus voice mail-who can figure out the right amount of capital equipment for enterprises to buy in each of these areas?

This is where hosted contact centers enter the scenario. With these services, customers pay for the capacity they need and have the ability to change the mix at any time without penalty and with minimum lead time delays.

The Best-fit Solution
Considering operational support requirements, total cost of ownership, and speed of implementation, the hosted contact center solution produces tangible benefits above and beyond those of a premises solution. But considering a long time scenario it ceases to be profitable compared to a premise-based model. With hosted contact center services, we can create a bundle of leading-edge network and application services that not only can help save customers a significant capital expenditure-it also gets their contact center up and working for them quickly and reliably.

Yazad Boga
The author is head, Hosted Contact Center Services, Tata Comm
vadmail@cybermedia.co.in