North American Contact Center Outsourcers Wake Up


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A great deal of contact center outsourcing business has moved abroad during the last few years, and more is expected to follow. The offshore business case is very compelling: It can save a company 25 percent to 60 percent if the offshoring goes smoothly. But doing it right isn’t so easy, and North Americans are increasingly voicing frustration with some outsourcers’ highly scripted agents, who do not understand their questions any more than customers understand the answers they are given.

Long term, offshore outsourcers are going to learn to do the job that North American customers demand. Some are already delivering outstanding service; we just don’t hear about this in the press. Over time, more countries, such as China, will get in on the act. Offshore outsourcing isn’t a fad. It’s a well-established business practice that will be taken for granted in the next 10 years.

Despite these trends, or maybe because of them, North American contact center outsourcers are a good option. North American vendors were slow to respond to competitive pressures from abroad, but once they realized offshore outsourcing wasn’t a temporary phenomenon, they responded aggressively though mergers and consolidations and creative business offerings. They are buying their way into other countries and will continue to expand abroad during the next few years, which is one reason why offshore service will ultimately be delivered to the satisfaction of North Americans.

These are some of the findings contained in DMG Consulting LLC’s 2006 North American Contact Center Outsourcing Market Report. Our report presents the advantages, risks and trade-offs of North American and offshore outsourcing. It assesses how U.S. and Canadian firms have responded to competitive pressures from abroad, and it provides detailed analysis of leading vendors, services, technology, pricing and the trends driving this hot market.

A wake-up call
The year 2004 was a challenging one for the North American contact center outsourcing industry. Attracted by the possibility of reducing operating expenses by the margins I quoted above, many companies in the United States and Canada selected offshore outsourcing locations offering lower costs and high quality labor. (Carrier costs are no longer a financial issue.) This placed great pressure on North American contact center outsourcers to reduce their prices, drove many to build a presence in India, the Philippines and other geographies and forced others to sell out.

The migration of contact center outsourcing activity abroad sped up the maturation of this industry, bringing about mergers and some fire sales. An example is the $32 million sale of LiveBridge to ACS in July 2005. Fewer than 10 vendors dominate the North American contact center outsourcing market, and these outsourcers are expected to expand through acquisition during the next few years. There remain approximately 80 small and mid-size contact center outsourcers that survived the downturn of the last few years. Additionally, global outsourcing firms, particularly those based in India, are making inroads in the North American market by purchasing U.S. and Canada-based companies, so they can compete effectively. The global expansion of foreign-owned outsourcing companies is expected to continue in 2006. Seven of the leaders in the North American market are ACS, arvato services, Convergys, ICT, SITEL, West and TeleTech.

Market projections
Contrary to popular belief, the North American contact center outsourcing market is responding to competitive pressures and is winning business. Convergys, a U.S.-based company, remains the largest contact center outsourcer, and other U.S.-based companies are also very large and viable. We’ve seen management shake-ups at a number of companies and expect more changes throughout the year, as these companies build the teams and solutions they need to respond to the competitive challenges.

By the middle to the end of 2005, the Canadian contact center outsourcing market started to see a resurgence. (Keep in mind that the Canadian market has a slight cost benefit over the U.S. market because of the strength of the U.S. dollar. Therefore, enterprises that want to keep their activities in North America while curbing costs often look to Canada rather than the United States.) Demand for Canadian outsourcing seats has grown, and a couple of new centers have opened. This trend is expected to continue, particularly as some companies look to bring back activities that were outsourced to offshore locations. As these companies move their activities abroad to benefit from cost savings, Canada has the advantage of offering prices a bit more appealing than in the US.

During 2006 and into 2007, U.S.-based outsourcers are expected to grow by adding new businesses and services. They will also continue to create packages as needed to provide low-cost services for their customers. Also expect to see these companies continue to grow through acquisitions.

North American outsourcers are responding to competitive pressure, and this is creating opportunities for enterprises looking to outsource business activities. Worldwide competition has helped decrease prices for many standard contact center services and has driven a great deal of market innovation, including increasing use of at-home agents. During the past couple of years, many North American outsourcers, large and small, have developed value-added offerings that go beyond basic transaction handling. They now offer professional services to improve their customers’ operations and have expanded into business process optimization.

Over the rest of this year and 2007, expect more mergers between outsourcing vendors, further specialization, new value-added services (for companies that want to pay for them) and deeper penetration into business process optimization (BPO) functions. Also look for North American vendors to expand their presence in offshore locations and for offshore vendors continue to buy their way into the North American market.

Both North American and global enterprises should seriously consider North America-based outsourcers when selecting a partner. For a detailed analysis and comparison of leading North American contact center outsourcers, see DMG Consulting’s 2006 North American Contact Center Outsourcing Market Report, available online at

Donna Fluss
Donna Fluss is founder and president of DMG Consulting LLC, a firm specializing in customer-focused business strategy, operations and technology consulting. DMG helps companies build world-class contact centers and vendors develop and deliver high-value solutions to market. Fluss is a recognized authority and thought leader on customer experience, contact center, workforce optimization, speech technology and real-time analytics. She is the author of The Real-Time Contact Center and many leading industry reports.


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