Companies worldwide continue to outsource contact center functions in search of lower costs and new technologies, despite a decline in the annual value of service contracts, according to a new report by Information Services Group (ISG).
The report noted that the annual contract value for customer service business process outsourcing (BPO) shrank from $1.2 billion in the first half of 2023 to $800 million in the first half of 2024. However, the number of contracts increased. This was in line with overall trends in BPO services as the market returned to pre-pandemic levels of demand following unprecedented growth in 2022 and early 2023.
"Cost reduction is the biggest driver of contact center outsourcing, but in most engagements, it is not the only objective," said Wayne Butterfield, ISG partner for digital solutions. "Enterprises want providers to infuse their operations with new technologies that will improve customer and agent experience."
As customer service technology quickly evolves, especially through cloud and AI innovation, companies are now integrating their internal IT resources with those of BPO providers, the report also says. The gradual growth of IT-BPO integration comes as enterprises recognize the need for solutions that combine technology, workforce expertise, and optimized processes.
The shift from on-premises to cloud-based contact centers is rapid and widespread, driven in part by the needs of employees working remotely and consumers who want to engage with companies over multiple digital channels, ISG said. Companies are also quickly deploying analytics tools to improve customer acquisition and retention.
The contact center industry is one of the most aggressive adopters of generative AI, with many use cases already implemented or in mature proofs of concept, the report said further. Emerging benefits of the technology include shorter query handling times, higher first contact resolutions, fewer errors, and improved customer and employee satisfaction. The most common use of genAI today is in bots assisting agents, and companies are also pursuing more advanced applications, such as customer self-service bots and real-time translation.
"Enterprises are keen to explore and invest in genAI," said Jan Erik Aase, partner and global leader of ISG Provider Lens Research. "It is raising their expectations for productivity and efficiency gains."
As companies adopt and implement AI in various forms, many seek strategy consulting services to optimize the technology and realize strong ROI, the report said, noting that companies improve contact center operations and align with industry best practices using transformation frameworks and tools to assess their own maturity.
The report also uncovered the growing importance of integrated workforce management and the advent of personalized agent training content.
The report identified Foundever, Genpact, HGS, Sutherland, Teleperformance, Transcom, and WNS as leaders in digital operations, intelligent agent experience, and intelligent CX. It also named Atento, Cognizant, Movate, and TTEC as leaders in two of these areas, and Concentrix, Conduent, and Tech Mahindra as leaders in one area.
In addition, Firstsource, Hexaware, IGT Solutions, and Startek were named as Rising Stars in one area.
In the area of customer experience, HCLTech was named the global ISG CX Star Performer for 2024 among contact center providers. It earned the highest customer satisfaction scores in ISG's Voice of the Customer survey, part of the ISG Star of Excellence program.