U.S. Spending for Cloud Contact Center Services Could Reach $1.6 Billion in 2018

The phrase "to the cloud" gained a lot of attention thanks to Microsoft's ad campaign, but the cloud has been inserting itself more and more into the enterprise and changing the landscape of contact centers. A new report from IDC forecasts that in the United States, spending on on-demand (cloud) contact center services was $733.3 million in 2013, and is poised to increase at a compound annual growth rate of 17.5 percent, to $1.6 billion in 2018. Traditional hosted contact center services are still front and center, with spending estimated to be $1.1 billion in 2013 and forecasted to climb at a compound annual growth rate of 11.9 percent to $2 billion in 2018.

While most companies are sticking to tried-and-true on-premises contact center solutions, many have at least been eyeing hosted contact center services, or even using the two in conjunction. IDC's survey data found that 39 percent of respondents were using a hosted or on-demand service and 38 percent were evaluating such services. Just 23 percent were using an on-premises system and not evaluating the hosted or on-demand model.

The author of the report, IDC research analyst Melissa O'Brien, spoke to SmartCustomerService.com about IDC's findings.

Smart Customer Service: How did you obtain these figures?

Melissa O'Brien: We looked at the market by taking the vendor data combined with demand-side survey, analyzed the data, and created a forecast.

In this forecast, we separated the contact center services market into two models: hosted, which are contact center services that are delivered via a dedicated, single tenant model, and on-demand or cloud contact services, often referred to as SaaS, which are services that are provided from a shared, multitenant architecture.

We provided these definitions because the term cloud is thrown around a lot, and we want to give some clarity to what we mean when we use the term. While hosted and on-demand services are different models, many of the same market factors apply to both, and hosted is often seen as a stepping stone toward pure cloud contact center services. The multitenant model increases some of the benefits of hosted services, such as flexibility and lower cost, due to its shared architecture model.

Smart Customer Service: What is the main takeaway from your findings?

Melissa O'Brien: The biggest takeaway is that a focus on customer experience is driving the greater adoption of cloud and hosted contact center services. In addition to traditional drivers such as cost cutting, companies are now also looking to provide multichannel communications for the contact center. The contact center is really changing; it's evolving, it's not simply what it used to be, with people answering phone calls. Now there are so many ways to communicate and it's driving a lot of changes with service providers and models.

Smart Customer Service: With all the different channels customers can use today, does that mean that contact centers are experiencing less calls?

Melissa O'Brien: We see a shift in communications, and it's not [because] call volumes are going down. Call volumes continue to go up but there's a greater percentage of overall interactions that are coming from digital channels, including text, email, and social media. Mobile is another layer on top of that, because you're using multiple devices to communicate to other channels. It's driving a need to communicate with customers on those channels and also the ability to have integration between those channels and other business systems to drive better customer experience.

Smart Customer Service: What would you recommend to a company that is considering a cloud solution?

Melissa O'Brien: Make sure you evaluate the providers carefully in terms of what your goals are for your organization, and ensure that they have the capabilities for what you need—capabilities in terms of channels, security, flexibility; those are some of the more important things to look at. Internally you need to decide what your goals are and use the opportunity to evaluate designing a better process for your customers. Make sure you build into the plan a flexibility to change and adapt to changes in customer communication trends.

Be aware of different players in the ecosystem, such as BPO providers and telecommunications companies. Some service providers are pure play cloud contact center providers and some are more traditional on-premises players that have developed or acquired a cloud or hosted capability.

Smart Customer Service: Based on these findings, it's clear that the cloud is here to stay.

Melissa O'Brien: Yes, we see greater growth in cloud adoption over the long term. We see this across IDC's research, not just in the contact center, and there's a greater acceptance of cloud and more spending moving toward the cloud model of delivery.

With social generating more customer influence on brands and greater expectations with all these different channels, companies need to transform the way they look at customers and look at that across the life cycle from a big picture perspective. This is really a big driver of growth for this market, because cloud solutions are typically much more flexible to add in newer channels and to connect and integrate with other business systems.

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