Domestic Market Remains Key Revenue Source for Brazil's Contact Center Outsourcing Service Vendors

Growth in the contact center outsourcing services market was restrained by the overall cautious economic scenario in Brazil, according to new research from Frost & Sullivan. Increased efforts on improving operations' profitability have impacted the outsourced workstation's growth rate during 2012 and will continue to do so during 2013. However, new opportunities for outsourcing vendors are arising when positioning premium and online solutions.

Frost & Sullivan found that the market earned revenues of $5.39 million in 2012 and estimates this to reach $9.42 million in 2019 at a compound annual growth rate (CAGR) of 8.3 percent. The number of workstations will reach 292,454 by 2019 at a CAGR of 6.4 percent. The telecommunications vertical will be the highest revenue generator. Considering the benefits of strengthening outsourcing services in a still growing economy like Brazil, the government is looking to review current regulations in order to broaden the scope of services available for outsourcing business activities.

"Tax incentive policies have decreased the financial burden on the contact center industry, encouraging expansion," said Frost & Sullivan information and communication technologies industry analyst Daniela Pineiro, in a statement. "For instance, the 2012 payroll tax exemption for the Brazilian contact center industry has reduced employers' tax contribution from 20 percent on the payroll to two percent of the annual revenue."

Despite these breaks, several cost factors continue to plague the market. The lack of a skilled labor force affects service quality and hence vendor margins. The long-standing challenges concerning access to and quality of education in Brazil has compelled contact center service providers to heavily invest in training. As a result, operational costs have heightened, and along with the high turnover rate, delay returns on investment. Brazil's steep social labor cost and complex bureaucracy are causing a drop in foreign investments. Nevertheless, foreign contact center outsourcing companies continue to launch and expand operations in Brazil due to the overall solid economy and the upcoming boost of infrastructure enhancements, according to the researchers.

Detaching from business models based on pricing or workstations and migrating to comprehensive solutions will further ensure sustainable operations. Different industries have different requirements and fostering long-term client-provider relationships begins with offering custom, end-to-end solutions, said Frost & Sullivan.

"Innovative contact center leaders in Brazil are looking to diversify their services to provide a more professional and up-to-date platform, changing the perception that the contact center industry is just a commodity provider, while widening margins," said Frost & Sullivan information and communication technologies industry manager Juan Manuel Gonzalez, in a statement. "In fact, in the long run, communications, marketing, IT and financial companies will tend to merge some of their businesses with contact center services."