Overview of the Contact Center Market.

Outsourcing of operations by companies due to the urgent need to cut costs and enjoy higher profit margins has been the primary driver for the growth of the contact center market. The lower cost structure compared to other regions and countries such as the United States and United Kingdom, and its large English speaking population has attracted widespread offshoring and outsourcing in the Asia Pacific region. However, it is the emerging trend of outsourcing within Asia Pacific itself that is further bolstering the contact center industry in this region.

News Analysis from Frost & Sullivan reveals that the number of contact centers in Asia Pacific totaled more than 21,360 in 2004, and expects to grow at a healthy CAGR (compound annual growth rate) of 9.1 percent to reach some 39,247 contact centers by the end of 2011.

With in-region outsourcing and offshoring becoming increasingly prevalent, many companies in Japan and South Korea are looking towards China to offshore their contact center operations. Contact centers in Singapore are considering neighboring Malaysia as an attractive alternative for greater cost benefits, while some Australian companies are moving their contact centers within the region to India and the Philippines. Although cost is still the top reason for companies to offshore and outsource in Asia Pacific, the quality of service offered is the defining factor that will make any country the foremost choice for contact center outsourcing.

'Contact centers are fast assuming increased importance in the business process as customer service becomes the key differentiator for product or service preference,' notes Frost & Sullivan research analyst Shivanu Shukla.

'Thus, scalability of operations, flexibility, and increased focus on business processes -- rather than the management of the technology infrastructure and staffing issues -- are likely to drive outsourcing in the contact center segment.'

However, the contact center industry is challenged by high labor attrition rate, averaging at 19.8 percent at Asia Pacific level in 2004. In growth markets such as India and the Philippines, attrition rates are even higher owing to the increase in demand for contact center agents.

'With agents rapidly shifting to contact centers that either remunerate better or offer better incentives, recruiting, managing and retaining staff has become one of the biggest issues that contact centers across Asia Pacific need to deal with,' notes Shukla.

Developed markets such as Australia and Hong Kong have over the years established ways to maintain or even reduce attrition. The introduction of a structured agent career path, flexible and conducive environment, and provision of high incentives will further aid employee retention. In addition, training and motivation schemes need to be devised to maintain quality agents.

At present, banking, financial services, and insurance (BFSI) companies followed by telecommunications and IT companies continue to be the top contributors to total contact center seats in Asia Pacific. However, the government, education, retail and utilities sectors are increasingly opting for contact centers to improve their customer service.

Furthermore, as governments across Asia Pacific launch their e-government initiatives to provide channels for greater interaction with their general public, domestic demand for contact centers is expected to intensify. Such factors combined with the inherent benefits of contact center outsourcing will hike demand for this market in Asia Pacific, thus ensuring its steady growth.

 Top Stories

Offshoring in the publishing vertical estimated to be around $200 million
After the outsourcing of technology and BPO jobs, the next big offshoring business in India is in the publishing domain. Presently under business publishing outsourcing, newsletters are the largest category accounting for 53% of all business publishing in 2001, according to Publications Management. B2B journals and magazines comprises 24% of the market, while tabloids accounted for 6%. E-publication, which accounted for 17% in 2001 is the fastest growing type of business publishing.

Swansea finally signs 10-year outsourcing deal
Swansea Council and Capgemini UK plc have agreed the £64 million first phase of an intended £83 million contract to launch eGovernment programme in Wales.In the first phase, Capgemini will design and build IT systems and introduce more efficient working practices in an integrated programme of business process re-engineering and technology transformation. In addition Capgemini will also run the IT systems on an outsourced basis for the next ten years, along with the majority of the council's existing IT systems.

U.S. security deal for Unisys
The Transportation Security Administration (TSA) of the US Department of Homeland Security (DHS) has awarded Unisys an Indefinite Delivery-Indefinite Quantity (ID/IQ) contract with one base year and two one-year options, for securing and managing the IT infrastructure for TSA, and for DHS' headquarters. The value for the services provided by Unisys in the base period is USD 308 million, whereas, the total ceiling value, assuming all the options are exercised, is USD 750 million.

Hanover Insurance employs Whitehill Technologies for e-document conversion
The Hanover faced the challenge of building a company-wide agency portal, part of a larger project known as Policy Inquiry. The goal was to allow The Hanover's agents to search for, view and print policy documents online. The Hanover was able to use Whitehill TransformAFP to convert policy documents and agent reports from AFP to PDF format, then use Whitehill xml-Transport to distribute those documents to the agency portal, putting the right information into the hands of agents in a more timely fashion. Based on the success of the initial project to render policy documents into PDF form, The Hanover has engaged Whitehill for a second project to present Agent Commission Reports reusing the same infrastructure.

Encharter Insurance Group Selects CenterBeam to Manage IT Infrastructure
Encharter Insurance Group has chosen CenterBeam to manage its information technology infrastructure. Encharter Insurance Group, formerly known as Neighborhood Insurance LLC, is a group of community-based insurance agencies based in Massachusetts and Connecticut that provides individuals, families, and businesses with security against loss and financial services.

Virginia signs $300M IT contract with CGI-AMS
The Commonwealth of Virginia selected CGI as its private sector partner to transform the State's business and IT set-up. The contract is for a seven-year period, which comprises of one base year and two three-year renewal option periods, and is valued at USD 300 million. The public-private partnership, to be called Virginia Enterprise Applications Architecture (VEAA), will help the State in consolidating, modernizing and streamlining processes and technology for financial, human resources, supply chain, and administrative management.

State of Victoria WorkCover Authority Awards Cambridge Integrated Services a Four-Year Contract to Administer Workers Compensation Claims
Cambridge Integrated Services Victoria Pty Limited (Cambridge Australia) (a) today announced that the State of Victoria WorkCover Authority has renewed its agreement for four years to process workers compensation claims, effective until June 30, 2010. The contract's estimated value is $88 million (AUD), and gives Cambridge 15% percent market share of the Victoria WorkCover's workers compensation portfolio.

ADWEA outsources IT operations to Injazat
The Abu Dhabi Electricity and Water Authority (ADEWA) awarded an AED 300 million outsourcing contract to Injazat Data Systems, a local IT services company, for the management of its IT requirements.Injazat will provide integrated IT services including IT infrastructure management, application management and new project management and delivery.

 Service Provider News

Malaysia's Pikom forecasts 12% growth for ICT industry next year
The Association of Computer and Multimedia Industry of Malaysia (Pikom) estimates the Information and Communications Technology (ICT) industry in the country to grow by 12 percent in 2006, as against 10 percent in 2005. For 2005, the communications sector accounted for MYR 21.66 billion of the total ICT spending, while hardware accounted for MYR 5.7 billion, followed by software and IT services at MYR 2.66 billion and MYR 1.9 billion respectively

RP ICT sector generates 41,000 jobs in 2005—report
According to the Commission on Information and Communications Technology (CICT), ICT-related services have created around 41,000 new jobs in the Philippines in the first nine months of 2005. The Philippines outsourcing industry offers services in the field of BPO, medical transcription, animation and software development.

Accenture Posts Q1 Earnings
Buoyed by increases in consulting and outsourcing revenue streams, consulting giant Accenture posted a 12 percent rise in systemwide revenues, to $4.17 billion for its first quarter of fiscal 2006, ended November 30. The consulting business accounted for 62 percent of the net revenue, totaling around USD 2.58 billion, whereas the outsourcing business unit contributed the remaining 38 percent. The operating income for the quarter increased by 20 percent to USD 513 million, around 12.3 percent of the net revenue, against USD 427 million for the same period last year. New bookings totaled USD 5.54 billion, the highest quarterly bookings in seven quarters with the consulting and outsourcing units both contributing almost equally.

Intelenet eyes acquisitions in U.K.
Intelenet Global Services, a joint venture company formed by HDFC and Barclays providing BPO services, is expected to take steps to further expand its presence in the UK through a number of acquisitions. The company aims to operate a minor part of its high-end transactions businesses from the UK, while a majority of it will still be sourced from India. The expansion will raise Intelenet's presence in the UK to around 700-seats. The company may also be looking to expand in other countries, such as Canada, the US or Chile.

Alcatel Acquires Voice Self-Service Company GMK
Alcatel has acquired GMK, a Brazilian CRM services provider. The latest acquisition will enable Alcatel, which already commands a strong position in the CRM sector through its subsidiary Genesys, to further expand into the Brazilian and Latin American markets. GMK is based in Sao Paulo, Brazil, and currently employs a staff of 100 people. GMK will be merged into Alcatel Telecomunicações, Alcatel's Brazilian subsidiary.

Thomson acquires Quantitative Analytics
The Thomson Corporation today announced that it has signed an agreement to acquire privately-held Quantitative Analytics, Inc. (QAI), a leading provider of financial database integration and analysis solutions.

ITG completes Macgregor and Plexus Group acquisitions; forms new subsidiary
Investment Technology Group (ITG), a New York-headquartered equity trading and transaction services provider, has announced the completion of its acquisition of Macgregor, a Boston-headquartered trade order management technology provider, and the Plexus Group, a Baltimore-headquartered transaction cost analysis provider. The acquired companies will be merged with ITG's Analytical Products and Research business group. The acquisitions were financed with a bank debt of USD 200 million. Through the acquisitions, ITG will be able to offer integrated management technology, transaction cost analysis and pre-trade analytics services.

Ventiv Health and SIRO Clinpharm Announce Formation of Ventiv-SIRO ...
Ventiv Health, a US-based healthcare commercialization services provider, and SIRO Clinpharm, an Indian domestic contract research organization (CRO), have formed a joint venture, Ventiv-SIRO (India), to provide India-based clinical data management services to drug companies. Ventiv-SIRO (India) will provide pharmaceutical and biotech companies access to outsourced database design services and data and statistical analysis.