Executive Summary: ISG Provider Lens™ Contact Center - Customer Experience Services - Europe & U.K. 2022
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CX driven by business needs grows in sophistication
The managed services BPO market in Continental Europe is growing strongly, in line with global trends. Globally, the industry achieved one of the best first half-year levels ever, with nearly $6 billion in annual contract value (ACV). This represents a nearly 59 percent increase year-on-year (please refer to Figure 1). The majority of this growth was driven by the Americas and EMEA. In addition, industry-specific BPO saw huge market traction and doubled its ACV year-on-year. Engineering research and development (ER&D) also contributed heavily to the growth of managed services BPO in the first half of 2022.
The contact center also contributed to the strong growth of managed services BPO. Post pandemic, the need for enhanced and advanced digital customer experience (CX) as a prime strategic driver of change and customer perceptions of the enterprise has become crucial. In addition, CX scores have become or are becoming one of the vital KPIs measured by many enterprises, shareholders, and analysts. These factors have led to a surge in activity in this space in Europe and the U.K.
CX is now an essential focus area for all enterprises in Europe and the U.K., and the heightened importance is creating a stronger-than-ever market demand. To meet this growing demand and integrate advanced features that are now required to enhance contact center CX, many enterprises are transitioning their existing, own or outsourced operations to external service providers for transformation and to achieve advanced CX delivery and operation to address their business needs.
CX trends
There are several trends that are shaping the contact center industry in Europe and the U.K., in line with the global trends. We have identified the top trends that are impacting and redefining the industry and changing the way companies are operating across Continental Europe.
Massive change in the delivery model focused on talent
The contact center industry has always witnessed a high churn rate. However, in the past 8 to 12 months, the industry has experienced unprecedented attrition challenges globally.
According to the ISG Index, the worst is behind us as the attrition rates peaked in 2021. However, attrition still remains one of the top challenges for the industry.
Attracting and retaining talent has become more difficult now, and lack of skill sets is further accentuating this challenge across Continental Europe. In addition, the skill set requirement has dramatically changed over the last years, and agents are now required to have skill sets encompassing the new technologies and technologically powered methods and processes.
Flexible working conditions are a key driver for attracting and retaining talent. The contact center industry is innovating in this space. Providers that have introduced flexible working conditions are experiencing reduced attrition numbers, increased productivity rates and high employee satisfaction.
Service providers are taking multiple measures to enable effective and engaging remote or hybrid working.
• Providers are introducing small satellite offices called “hubs,” across multiple locations. They typically have stateof- the-art infrastructure that can be leveraged by agents who live closer to these hubs. Not only are these offices enabling collaboration and engagement, but they can also be leveraged by agents if their work-fromhome infrastructure cannot support the necessary quality or is suffering from downtime.
• Currently, providers are also actively leveraging technologies such as AI and cloud platforms to drive hiring and training. Companies have introduced extensive learning platforms that are either developed in-house or in partnerships with universities to enable training, reskilling and upskilling and are leveraging AI to drive agent sentiment analysis to proactively tackle attrition.
• Companies are also investing significantly in employee engagement platforms that can enable remote engagements. An example is gamification, which has proven to be highly successful in keeping employees engaged. Another example is social hubs and virtual teams, wherein employees can be a part of a team remotely and exchange ideas and interactions with their teammates regardless of their location.
• Some companies have now recognized lifestyle engagement as a retention mechanism and have shifted contact centers and hub offices and locations to attractive European countries, such as Portugal, to improve the lifestyle of their employees and, thus, raise retention rates — this was especially true of companies that recently moved out of Russia and wanted to retain their employees.
• To service clients, many companies are also investing in setting up nearshore centers in Portugal, Poland, and other nearshore destinations in Europe, that were previously not considered mainstream centers of excellence but have now gained prominence.
Many forms of delivery that have taken a combination of above-mentioned measures are now in operation within Europe and the U.K. There is no single model that can currently address all the challenges. Working from the physical office has its own benefits and drawbacks, while working virtually also has its own set of challenges. ISG believes that the industry is increasingly likely to adopt the hybrid working model because it brings together the best of both worlds.
Technological advancements that are redefining the industry
Technology has played a crucial role in shaping the CX industry over the last two to three years, moving its investment focus from robotic process automation (RPA) toward automation and other technological improvements, in line with business targets. Following the 2020 pandemic, true digital transformation acceleration was witnessed across many industries, covering AI, automation, and significant technology assistance, together with organizational change, that has also heavily influenced the contact center CX space.
Advancements in technology and adoption have grown rapidly and exponentially.
• AI has made significant inroads into the contact center industry. Whether leveraging a bot to serve a customer or improve agent experience, AI has gained traction in this industry and is considered an essential requirement by many customers.
• Enterprises are actively adopting a cloud-first approach. Since the pandemic, everyone is now aware that cloud is essential to enable business continuity and hybrid working and provides an effective business contingency plan.
• Due to remote working, security concerns and data assurance have become a priority. Security technology and software, protocols, policies and procedures, monitoring and analyzing, together with agent training, have become crucial. Voice biometrics, facial recognition, auto desktop lock, video proctoring, VPN and surrounding environment monitoring are some of the technologies now implemented to help secure work-from-home environments.
• Analytics are essential in redefining processes. Without analytics, CX is limited to customer service and engagement as opposed to creating a more comprehensive experience. Predictive analytics, sentiment analytics, speech analytics, text analytics, intent analytics, and skill routing are some of the techniques that are helping companies empower agents and enable contextual conversations.
• A more recent key offering gaining significant traction in the industry is social media services. Several industry verticals are adopting social media as a channel of communication. Customer support and engagement services are being delivered effectively through social channels, with many companies also adopting content moderation services to ensure clients’ trust and the safety of their information. Companies are also using AI and analytics in social channels to predict customer sentiments, moderate content and manage their product brands, therefore both protecting and marketing their portfolio more effectively.
Providers in Europe and the U.K., in line with the emerging trends seen in the U.S., increasingly offer advanced, highly automated, cloud-based CX solutions to address and meet the demands from enterprises. European and global providers are delivering AI and automation-driven, location-independent contact centers to the market. These centers include high levels of customer analytics, social media channel usage, moderation, control, and mining. They help deliver agent retention, training, and assistance, which, in turn, reduces churn. In many instances, lifestyle has also been taken into consideration when moving contact centers within Continental Europe, for example from Russia to Portugal, to help retain existing staff.
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