How the Economy is Affecting Decisions to Outsource Customer Care-

End-User Survey Results

Michael DeSalles Strategic Analyst

June 17, 2009

2

Focus Points

� Introduction

� Contact Center End-User Survey Results

� Outsource Provider Commentary

� Conclusions and Recommendations

3

Introduction

• For outsourcing engagements, what are contact center organizations planning and doing in this down economy?

• Frost & Sullivan surveyed 332 contact center decision makers in Dec 2008 on business priorities for 2009, technology adoption and future initiatives

• Our observations and recommendations focus on the current economic climate

4

Demographics - Primary Verticals

Which industry vertical is your company in?

Primary Industry Vertical

(N=332)

18%

16%

15%

13%

7%

8%

6%

18%

0% 10% 20% 30%

Retail & Consumer

Financial Services

Communications

Healthcare

Travel & Hospitality

Government & Education

Outsourcing

Others

Note: Proportions may not add up to 100% due to rounding

5

Demographics - Primary Functions

Thinking about the contact center(s) you currently manage, what functions do your contact centers serve?

Note: Multiple mention question.

Primary Functions of the Contact Centers

(N=332)

86%

70%

53%

35%

30%

25%

19%

3%

0% 20% 40% 60% 80% 100%

Customer service

Help desk

Tech support

Order processing/entry

Employee services

Collections

Telemarketing

Others

6

Demographics –Contact Center Size

Approximately, how many call center seats does your company have, including all divisions, branches and subsidiaries?

Contact Center Size by Number of Seats

(N=332)

49%

23%

26%

3%

0% 20% 40% 60%

10-99

100-499

More than 500

Don't Know

Note: Proportions may not add up to 100% due to rounding

7

Demographics - Languages

Does your contact center(s) support languages other than English?What other languages do your contact center(s) support?

Support Languages Other Than English

(N=332)

63%

37%

0% 20% 40% 60% 80% 100%

Yes

No

Contact Centers Supporting Other Languages

(N=208)

89%

29%

20%

16%

12%

13%

0% 20% 40% 60% 80% 100%

Spanish

French

German

Italian

Portuguese

Others

Note: Multiple mention question.

8

Outsourcing of Customer Care Operations

Do you outsource your customer care operations?

Outsource Customer Care Operations

(N=332)

29%

5%

64%

2%

0% 20% 40% 60% 80%

Yes, some

Yes, all

No

Don't Know

9

Reasons For Outsourcing Customer Care Operations

Reasons for Outsourcing Customer Care Operations

63%

36%

36%

30%

19%

18%

18%

4%

0% 20% 40% 60% 80%

Lower Costs

Language Skills

Higher quality customer service

Focus on core competencies

Market focus

Skills

Vendor expertise

Other

What are the main reasons for outsourcing your customer care operations?

Note: Multiple mention question.

10

Importance Ranking for Outsourcing Customer Care Operations

Importance Ranking for Outsourcing Customer Care Operations

46%

32%

22%

35%

26%

36%

17%

38%

38%

0% 20% 40% 60% 80% 100%

Cost reduction

Not our core competency

Outsourcers provide excellent

customer care

Rank # 1 Rank # 2 Rank # 3

Please rank in order of importance the following factors for outsourcing customer care operations.

Note: Proportions may not equal 100% since ‘don’t know’ responses are not displayed.

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Primary Reasons For Having Customer Care Operations In-House

What is the primary reason for keeping your contact center operations in-house?

Primary Reason for Having Customer Care Operations In-House

45%

28%

13%

5%

3%

1%

1%

4%

1%

0% 20% 40% 60%

Control of people, processes, and technology

Customer service

Cost

Labor pool and high skill level

Market focus

Other languages

Requirement for high level of English

competency

Others

Don't Know

Note: Proportions may not add up to 100% due to rounding

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Where Outsourced Agents are Based

Where Outsourced Agents are Based

57%

51%

20%

17%

0% 20% 40% 60% 80%

Onshore

Offshore

Near-shore

Remote agents

Where are your outsourced agents based?

Note: Multiple mention question.

13

Work-At-Home Agent Model and Outsourcing

How will the work-at-home agent model influence your decision to outsource?

Work-At-Home Agent Model Influence on Outsourcing Decision

39%

21%

21%

20%

0% 20% 40%

We already use our own

home agents

We will use an outsourcer

for home agents

We will use a combination

of in-house home agents

and an outsourcer

We have no plans to use

home agents

Note: Proportions may not add up to 100% due to rounding.

14

Future Outsourcing Destinations

Expansion Plan of Outsourcing Contact Center Operations in Next 2-3 Years

38%

18%

15%

4%

4%

3%

15%

32%

0% 20% 40%

India

Mexico, Central and/or South America

Philippines

Eastern Europe (Czech Republic, Poland, Russia, Turkey and/or

Ukraine)

Western Europe (Belgium, France, Germany, Italy, Spain, and/or

UK)

Other

Don't know

No plans to expand

In what regions do you plan to expand outsourcing of contact center operations in the next 2-3 years?

Note: Multiple mention question.

15

Impact of Current Economic Climate on Decision to Outsource

Impact of Current Economic Climate on Outsourcing Decision

38%

26%

25%

8%

4%

0% 20% 40%

Keeping outsourcing

levels the same

Increasing

outsourcing levels

Decreasing

outsourcing levels

No effect at all

Multi-sourcing to

multiple vendors

Will the current uncertain economic climate influence your decision to outsource your contact centers by:

Note: Proportions may not add up to 100% due to rounding.

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Number Of Outsourcers Utilized

Number of Customer Care Outsourcers Utilized

31%

34%

14%

15%

6%

0% 10% 20% 30% 40%

One

Two

Three

Four or more

Don't Know

How many customer care outsourcers do you utilize?

Note: Proportions may not add up to 100% due to rounding

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Given the current economic downturn, what do you believe is the net

effect on your plans for business growth?

“Our pipeline is full…downturns are great for outsourcers”

“Traffic volumes are down due to the economy”

“Deal flows are good..seeing specific call volumes..robust demand for LATAM geographies (bilingual and English Support)..Panama has proved to be good for us…”

“We had unanticipated vertical growth ..…largest in wireless and telecomm.. “

“Some insurance growth…good news in financial services… not as much churn…they are trying to displace their competitors..”

“There is movement in industries where consumers buy new products(Telecomm/wireless)…fixed telecomm more stable ”

“Overall cost going up…this means price increases for some clients”

Interview Feedback

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Given the current economic downturn, what do you believe is the net

effect on your plans for business growth?

“Growing sector:…little behind ..is Healthcare…we’re on the tipping point of that vertical

outsourcing in a significant way..only 10% outsourced…getting better feel for how it’s working.. …2% of global revenues..payer market…$40M part of bus…long process to outsource…3-6 mo. ….sometimes a year before they buy… Provider calls…focus on skills sets that are transactional..PI..or India…large number of nurses that PI exports..types of jobs supportinghealthcare…a great growth story”

“Lots of pressure on cost .seeing big client global vendor consolidation and move to get cost out of the equation..”

“New companies….a lot in the pipeline right now…have to sell hard..18 mo.-2 yr sales cycle…”

“Call volumes down over a broad spectrum (verticals)…must simply improve quality and customer sat. and lower call in rates…big growth opportunity!..1. Selling solutions..2. Growing share of live agent interactions

Interview Feedback

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Factors Influencing Selection of Outsourcing Partners

Rank the top three (3) most important factors that influenced the selection of your outsourcing partner(s)?

Influencers for Selecting Outsourcing Partner(s)

26%

21%

13%

12%

10%

10%

10%

18%

20%

9%

16%

13%

7%

13%

17%

13%

14%

6%

17%

14%

16%

0% 20% 40% 60%

Attractive pricing and cost structure

Expertise in and understanding of my industry

Vendor experience and world-class agent talent

Security certifications, disaster recovery and data privacy

safeguards

Site location and time zone proximity

Advanced technology and infrastructure

Previous long-term relationship. stable and reliable

#1 Reason #2 Reason #3 Reason

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Future Plans To Bring Contact Centers Back In-House

Future Plans to Bring Contact Center Operations Back

In-House

38%

34%

29%

0% 20% 40% 60%

Yes

No

Don't Know

Do you have any plans to bring your contact center operations back in-house?Why are you considering bringing your contact center operations back in-house?

Reasons for Considering Bringing Back Contact

Center Operations In-House

43%

33%

33%

26%

19%

12%

0% 20% 40% 60%

Customer complaints of poor

service

Inferior agent English skills

Promised cost savings not realized

Lack of support from Senior

Management

Brand protection or strategic

direction

Outsourcer did not meet Service

Level Agreements (SLA’s)

Note: Multiple mention question. Note: Proportions may not add up to 100% due to rounding

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Conclusions

� Customer service, help desk and tech support are very well represented in call centers today.

� Healthcare is a growing vertical for outsourced contact centers.

� Spanish will continue to be the lead language.

� Respondents report loss of control is the primary restraint to adopting outsourcing.

� Trend to multiple customer care outsourcers for a single client.

� Placement of remote service reps, esp. home agents, is gaining a lot of

traction in an outsourced model.

� Outsourcers can counter client moves to bring operations back in-house.

� The current economic climate is likely to have a net positive effect on overall outsourcing growth.

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Next Steps

� Request a proposal for a Growth Partnership Service to support you and your team to accelerate the growth of your company. (myfrost@frost.com)1-877-GoFrost (1-877-463-7678)

� Join us at our annual Growth, Innovation, and Leadership 2009: A Frost & Sullivan Global Congress on Corporate Growth, September 13-16 2009, Hyatt Scottsdale Resort & Spa at Gainey Ranch, Scottsdale, AZ(www.gil-global.com)

� Register for the next Chairman’s Series on Growth:

The CEO's Growth Team™: Marketing’s Role in Driving Growth (June 2nd)(http://www.frost.com/growth)

� Register for Frost & Sullivan’s Growth Opportunity Newsletter and keepabreast of innovative growth opportunities(www.frost.com/news)

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•

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24

For Additional Information

Jake Wengroff

Dir. Of Corporate Communications

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(210) 247-3806

Jake.wengroff@frost.com

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Global Program Director

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