BPO market is experiencing a fundamental transformation

Recently the UCCA (Ukrainian Contact Center Association) published the annual report "Market review of Ukrainian outsource contact centers". In this report UCCA dedicated the material to technological state and readiness of the outsourcing contact centers operate in Ukraine (Eastern Europe). Here is the a short overview.

The main outcomes was that the market is in the process of transformation, where one of the reason is ongoing migration from human workforce to automation.

The number of OCC (outsourcing contact center) decreased from 248 in 2018 to 238 in 2017 mainly due to the three reasons:

1. Shortage of orders from Russia
2. Routine processes automation (bots, robots)
3. Customers return to internal capacities (back to in-house CC)

Despite the falling trend in the number of OCC, the number of agents, employed by the companies, increased with 25300 employees as of beginning of 2018, compering to 23000 in 2017.

Labor

As I have mentioned in my previous post Why Ukraine is the next destination for contact center outsourcing, the country capacity of the high educated, English speaking young people are tremendous. About 6 mln students in the country with 82% enrollment rate.

Languages

One weak point is English language proficiency. EF EPI score of Ukraine is 52.86 that stands Ukraine #28 out of 32 countries in Europe and 43rd place out of 88 countries Worldwide (participated in the ranking). But no dubdt this score has been improving every year starting from 2014.

Besides English, OCC in Ukraine provide services in almost all European languages:

Report indicates that more than half of the companies serve domestic or internal customers and almost half provide services to external markets. Reports says: "It is clear that such a system of work further enhances the competitiveness of the business, since OCCs with a permanent internal customer can afford lower margins already having a certain stability in their work, unlike companies working exclusively for external customers.

The massive introduction of automation will increase the number of such outsourcers, since many large internal CCs will be able to get a significant excess labor. All this will lead to the fact that working on the domestic market of Ukraine will be completely unprofitable for classic outsourcers, many of whom are already looking for ways out to Western customers. "

This is the great market opportunity for international players for M&A. I expect significant market concentration in 2019-2021. The market is still in its infancy and the total revenue is still fairly small comparing to Ukrainian Software outsourcing that brings more than $1B annually.

Standardization

"As for standardization, there is no clear understanding in the Ukrainian market of which OCC standards should be implemented and whether they should be."

Only 6 of the 22 companies that surveyed have indicated that they have various certificates:

• PCI DSS - 2 (SimplyContact is one of them)
• EN15838-1
• ISO 90001: 2008 - "Quality management in the contact center" - 1
• ISO 10002: 2004 - “Guidelines for complaints handling in organizations” - 1
• ISO 22301: 2012 - “Business Continuity Management” - 1
• ISO 27001: 2005 - “Information Security Management” - 1
• Cisco Unified Customer - 1
• Compliance ISO 27001: 2013 - 1 certificate and 1 pre-audit. 

Technologies

From the report we see that telephone and e-mail continue to hold leading positions, but self- and automatic service channels are becoming increasingly popular - they are used by almost half of the companies studied. 

Many OCC used in-house developed solutions to automate their business processes. Ukraine is one of the leading country in the World in software development and our OCC providers ready to setup any solutions necessary to manage customer relationship (CRM).

Figure on the left shows what other systems are usually used by Ukrainian OCCs in their work. 

The main features of a modern OCC should be the ability to integrate with the software of the client company based on the study. 

Reliability

"This is an important issue, since the outsource provider must guarantee the customer a permanent job. Despite the fact that almost all companies tick off several items at once, there is not one that all companies would fulfill. This indicates the absence of common standards and approaches to doing business. "

Conclusion

The report is concluded with the forecast and trends. Trends that attracted my attention:

• Technical innovation and increasing role of automation of the processes via AI, bots, etc.
• Movement to the West. The more ambitious and professional OCCs will be actively looking for the opportunity at Western markets, mainly in US and EU.
• Market concentration will accelerate. Small OCCs will leave the market.
• Standardization, certification and recognition trend is on the rise

You can download the complete report from here.

You and your company will enjoy and obtain many benefits while you decide to outsource your customer collaboration to Ukrainian provider. If you have any questions please feel free to contact me.