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Industry Update (Most Current) This is our fourth industry update; one more to go for the calendar year! In this edition I'd like to include one extra item at the end: the changes we have made at Paladin, to structure for the future.
Let me start with comments on some of the articles in this edition.
On the international front there are a couple of articles that address the general trends in the BPO&O sector. The first article "BPO exports grow 21.4 percent" higlights how the Indian market for BPO&O exports has risen over the past year to the value of Rs263.2 billion. Unsurprisingly, 74% of the revenue is generated by the top 20 operators some of whom have seen exponential growth during the last year e.g.: Intellenet (groth of 128%).
The European Market appears to be increasingly embracing the principles and benefits of outsourcing: read the article "Now, Europeans are more open to outsourcing".There are mixed opinions about the impact the American Presidential race could have on outsourcing, with indiustry leaders in India dismissing the risk of a drastic slow down or reversal of outsourcing jobs (read "Indian IT honchos shrug off Obama threat to outsourcing"). Then there is contradictory article titled "Trouble for BPOs" which talks to the negative impact that the global financial crisis is having, particulary on the outsourcing of IT jobs.
Meanwhile, back at home, we seem to be marking time (apart from the Western Cape, who increased employment in the BPO&O sector by 26% last year)! Aside from the industry workshop, hosted by the dti in Durban, to review the BPO&O Strategy, there has been little visible evidence of new progress in the execution of the sector growth strategy and in the development and communication of provincial strategies for this sector. The 2nd Economy Programme also appears to have a way to go before it gets any traction and makes a real difference to skills development and job creation in non-metro areas. At this rate of progress, we are either going to miss our opportunities completely or take much longer than planned to realise our goals: both outcomes are inexcusebale, since there is more than enough evidence of how effective and relevent our propositon is (in BPO operations across the country e.g.: read the article "Absa sets up in coega IDZ"); enough for us to mobilise around and to sell effectively to the global market. Much has been said about our strength in Financial Services; with the current downturn in the global Financial Services market, SA is well placed to support countries like the USA and the UK in providing alternative lower cost detinations that can assit turnaround strategies for ailing institutions.
For updates on international trends and practices you should read the article titled "Study finds growing demand for self service in contact centres". Findings of the research conducted by Forrester in 2008 and published in their report "2008 Contact Centre Technology Trends," are presented in this article. They address the take up of self service, the migration to IP Contact Centres and ROI on IT investments, amongst other things. While on the subject of research, I strongly recommend that you get hold of a copy of the latest Merchants Global Contact Centre Benchmarking report, 2008! You can get it for US$1,500 (email ccBenchmarking@za.didata.com). This report compares last year's state of the Contact Centre industry with that of 1997. There are some striking observations (some of which we commented on in our last update): overall service performance has deteriorated; people performance has got worse; interest in CRM has waned; while contact centres are generally more mature / developed, and they are better equipped technically; they are still viewed primarily as cost centres; and self service and outsourcing have increased.
Much of our work is focussed on achieving alignment between the contact centre and the customers it services; and on achieving alignment within internal operating model elements (frontline, support and enablement, and back office / fulfilment areas) - as this is where efficiency and effectiveness is driven from. Apart from lack of alignment within their value chains, a key challenge we observe contact centres facing is that they do not have suitable integration between their interaction management applications and their business applications, so while they might be properly organised they are limited in their ability to effectively manage each interaction end-to-end. Until you can measure FCR, conversion rates on sales, retentions and collections, service types; and link them to customer interactions, costs and revenues - you will be severely handicapped in the journey to become a profit centre.
There are a few articles on the local telco environment. It is worth noting in the article titled "Intelleca, Unisys, CosmoCom power telkom hosted contact centre", the progress of the contact centre on demand offering; Telcom, Intelleca and Unisys have teamed to deliver the Hosted IP Contact Centre (HIPCC); we have always been strong advocates of this type of offering (particularly for the growing small and medium sized contact centre market in SA) because it addresses so many of the day to day infrastructure and functional issues that contact centre operators face. It enables best cost routing; overflow and virtual routing by skills; offers flexibility to scale up or down cost effectively; manages interactions centrally in the cloud; provides easy to use and complete management information; and it offers the flexibility to add or remove front office functional and to pay only for what you use etc. etc.
The ten key elements of a dynamic contact centre are presented in the article titled "The dynamic contact centre". It serves to show how far ahead technology is of business! Intergation with branches and remote agents is one of the elements, and the evidence suggest that this trend (remote agents) has simply not taken up as forecast many years back (read the Merchants report). Multimedia integration is another element that has not been widely adopted, while operations still struggle to handle voice based interactions effectively and the costs of multi-media management still outweigh the benefits. We have always maintained that the state of readiness and the requirements of business should drive the technlogy roadmap of any contact centre, and not the avaialbility of technologies, to avoid over-capitalisation of under-utilised assets and to ensure fit for purpose IT capabilities.
Good news for Interactive Intelligence product users: the new I3 offering integrates with MS OCS to provide an all-in-one IP software platform (with SIP connection): read the article "Contact centre and IP telephony capabilities added to Microsoft office communications server enviroments".
Also in section 4 is a very interesting article titled "The end of outbound call centres?" by Andy Quinan. He addresses the regulatory environment (current and future) as it affects the use of customer data, discussing the impact on outbound calling of: the NCA; the Consumer Protection Bill; and the Protection of Personal Information Bill. Sobering reading! Of course there will always be a need for and acceptance of some outbound customer contact (collections; retentions; follow up and feedback etc) so the outbound call centre is not at risk of extinction!
The retail banking section covers some very interesting developments: FNB's extension of their inContact offering to include transactional type services (at no charge); Absa's partnership with Telkom to upgrade and maintain their WAN infrastructure with latest technology; Absa Capitals 10% stake in Dark Fibre Africa (Pty) Ltd - signalling their confidence in the African Market for broadband services; and the risk mentorship programme with PIC Solutions (on demand expertise on risk management).
The insurance section features a number of articles that cover developments in the short term and life insurance industry: the Road Accident Fund Amendment Act will force underwriters to design new offerings to address changes in needs and shortages in cover (read "Implications for the insurance industry"); issues pertaining to the regulation of standards in the after product market for vehicle tracking devices (read "The vehicle security association is in deep trouble"); and the evolution of the "preferred life" concept, as it affects consumers with the price and cover for life policies addressing the issues of equity versus equality in cover (read "Complete insurance equity as opposed to complete insurance equality").
The logistics section inlcudes the last of three articles by Supplychainforesight on their 2008 research into the local market. The article titled "Outsourcing increasingly becoming route to competitive advantage", looks at the trend to outsource assets and services to 3PL providers and services to 4PL providers in an effort to imporve efficiencies and to address critical skills issues at Strategy, Management and Operational levels. Interesting to note in this article is the trend to train operaional staff in-house, rather than recuit new staff, in order to build skills.
Finally, it gives me great pleasure to communicate to you that Ruhling Herbst, a director at Paladin Consulting for the past two years, takes over from me as Managing Director of the company on the 1st October 2008. I will remain as a director.
This role change signals a new milestone in the six year history of our dynamic consultancy business, which has evolved to become a highly credible player in the Contact Centre Industry in South Africa. We have built great intellectual capital value through our extensive work in the BPO & O environment across the public and private sectors and spanning key industries: Financial Services; Transport and Logistics; Telecommunications; and ITES.
A key aspect of our medium term strategy has been our ability to develop highly relevant skill development programmes; using the business insights acquired from the consultancy. These programmes have found great traction in the local market; giving rise to the need to restructure the business with two distinctive, yet interdependent, focus areas: business consulting; and skills development.
A separate company, Paladin People Solutions (Pty) Ltd, was recently established to provide the delivery reach and capacity to service the growing skills development needs in the local BPO & O Sector. This company is a collaboration between Paladin Consulting, People Solutions and TL Consulting. People Solutions and TL Consulting are both established providers of training solutions to the local BPO & O market.
I will fulfil the role of Managing Director of Paladin People Solutions, starting in this capacity on the 1st October 2008. Ruhling has also been co-opted onto this board of directors together with Nita Goodall and Thembela Masuku. This cross directorship will ensure that the two companies maintain close ties to exploit operational synergies and market opportunities for mutual benefit.
We look forward to continuing our relationship with you and to communicating with you on a regular basis about the burning issues facing our industry; we will be doing so with the two hats of our consultancy and skills development businesses.
Regards
Andy and the Paladin Team
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Industry Update It's hard to believe that we are already in August! Anyway, welcome to the third industry update for 2008.
Once again, thanks to so many of you for your valuable feedback and suggestions as to what should be covered; there is so much in the media about the BPO&O sector, highlighting the prominence it enjoys as a growth industry.
This edition is quite long, yet full of interesting articles, so I recommend you scan the contents list for those articles that will be of specific interest to you (that's if you have not read them already) and then go straight to them.
I'll begin by commenting on the articles that address activities in the international arena: starting with the article titled "UK Call Centres worsening". It's always difficult to make out what is really going on with customer service quality as, on the one hand, we hear of fantastic call centres (winning awards) making a really positive impact on customer service, and then we get another picture altogether from research stats indicating deteriorating levels of service. I must say that it's no surprise that service levels and levels of customer satisfaction are declining (not just in the UK)! With the growing pressures on cost, budgets have been cut for resources and for training, leaving centres under resourced and under skilled. The 2008 Merchants Global Benchmarking report highlights the deterioration in SLA from an average of 72% in 1997 to 63.5% in 2008 and the abandonment rate rising from 6% to over 13% for the same period. This would be o.k if there was an inverse correlation with customer satisfaction levels; but there is not! What are your service levels looking like; and how satisfied are your customers right now?
In the context of the deteriorating levels of service, recognition is again given to the critical role of the customer service representative, particularly in managing the customer experience once customers do get through to an agent to have the request / query addressed; read the article "Contact Centre report highlights importance of representatives". This article takes an interesting, but not unprecedented, dip at soft skills that are not backed up by resolution capability; I quote Sheri Teodoru, chief executive officer of CFI Group: "If customers just wanted to hear a friendly voice, they'd call their mom - but they are calling to get something done."
There are a few articles (six to be precise) on the subject of unified communications and IP Contact Centres. The first article titled " Unified communications and IP contact centres show strong growth" summarises some of the research findings made by Infonetics about market growth and industry leaders in this field; the second article titled " the contact centre suite is the best" is written by Pete Flanagan, of Intelleca, addressing the pros and cons of multi media communications. He makes some really good points that are relevant to the SA market in particular. The third article is titled "Avaya leads worldwide contact centre market in both revenues and shipments"; it talks to the growth in IP based contact centres and reiterates the point that the migration to IP telephony and IP based contact centres is well underway across the globe. A somewhat related article talks to the latest software release from interactive Intelligence, who is releasing a major upgrade in South Africa to all their all-in-one IP communications software suite operators; it contains some interesting security features including end-to-end encryption of voice and data. Then there is an article about the role of self-service in contact centres, titled "Self service drives success of call centres"; and finally an articled by Genesys on technology adoption across vertical industries.
All the technology related articles highlight the importance of enabling call centres / contact centres, thorough technology solutions, to: service customers through media of their choice; cater for multi-channel service models; to reduce the costs and improve the efficiencies of call and data management using IP networks; and to build relevant insights into customer preferences and behaviours.
There is quite a bit on the subject of BPO&O. Firstly, there is an article about India's market leadership in BPO&O and the emergence of the Philippines. We tend to look up to the Philippines as an example of how to use the BPO&O sector to drive job creation and growth in FDI. We could learn a thing or two about how the Philippines is driving the development of their "2nd economy" cities through the spread of BPO&O; since this is a major component of our local BPO&O sector development strategy.
Then we read about Telkom and the BPO&O industry being at odds with each other as to the status of competitively priced international calls. On the one hand, Telkom believe they have lowered international rates sufficiently over the past two years to enable SA to compete with the global BPO&O market; the BPO&O industry, on the other hand, refutes this saying that we are still up to 10 times more expensive than our rivals! It seems like we are just going to learn the hard way i.e: by watching many of the large business opportunities pass us by while we try to figure out how to collaborate around matters of national importance (job creation). Read the article "Telkoms, BPO square off".
Skills, or the lack of skills, resurface in this edition. Read the article "Business process outsourcing and administration becoming more popular". In this article Grant Thornton research focuses on the lack of skills in South Africa, highlighting this as a major inhibitor of growth in the BPO&O sector; for both front and back office activities. This leads nicely into the article "Paladin in the news" , communicating our partnership with Intelleca to address some of the skills issues in South Africa. We have spent much time over the past few years developing and testing a few skills development programmes at the team leader and agent level that enable high performance. With Intelleca adding the Skills Manager solution to the mix, we are now able to offer the South African market something unique, and highly relevant and effective, for the development of High Performance Skills. We are working on a reference site right now and look forward to sharing the results with you in due course.
We also read about the BPO&O standards, which have now been set; and we look forward to sharing success stories with you in future editions of this update, about those local companies who adopt these standards and realise the benefits of doing so.
Some good news!! We read about the success of a number of local companies who have successfully competed in the contact centres world global contest. Congratulations to: Pastel; Volkswagen SA, Sanlam, the Kelly Group, Standard Bank, and Absa! They certainly are helping to raise the profile abroad of the South African Contact Centre industry.
Certain trends that we have been following and commenting on over the past few years are addressed in the banking articles: the growth in take up of the internet for on-line banking; extending the mobile channel offerings to small and medium business; and infrastructure reliability and DR.
You can also read about the analysis of the local logistics industry using the "complexity vs capability" model; a very interesting method for highlighting strategic options and implications based on where your organisation is currently positioned. Read the article " where does your company fit into the global supply chain capability". Finally, there is a very interesting article titled "Going lean and green: the next focus of SCM"; which discusses the increasing focus being placed on fuel management and pollution.
Enjoy the read and don't hesitate to give me or anyone in our team a call if you are looking for specific information about the BPO&O industry or about Contact Centres in general. We would be very happy to assist you where we can.
Enjoy the read.
Regards
Andy and the Paladin Team
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BTEC Professional Award in Performance Management Paladin Consulting is pleased to launch the second, in a series, of high performance skills development programmes customised for the BPO&O industry.
In our experience in the local and international BPO&O industry, we have identified a number of key areas in which there is a real opportunity to improve business performance.
We have worked closely with our clients and industry partners to develop relevant and effective skills development programmes, informed by our consulting knowledge and tailored to the needs of South African business, to address these areas of opportunity.
The first of these interventions, launched in October 2007, is a blended learning programme aimed at building confidence and competence in basic business communication skills.
The second of these interventions is a Performance Management Programme for Team Leaders, in front and back office roles, and for subject matter experts in key support roles such as: Work force Management; Quality Assurance; and Management Information.
This Performance Management programme is intended to build / enhance the fundamental task-based skills required by leaders to drive high levels of operational performance in the above-mentioned roles. The programme has two delivery modes; the first (an intensive short term programme followed by coaching) is aimed at new team leaders; the second (a 14 week programme run in the learner's operations environment) is designed for the more experienced team leader.
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Basic Business Communication Skills - writing and speaking with confidence Paladin Consulting is pleased to launch the first, in a series, of high performance skills development programmes customised for the BPO&O industry
In our experience in the local and international BPO&O industry, we have identified a number of key areas in which there is a real opportunity to improve business performance.
We have worked closely with our clients and industry partners to develop relevant and effective skills development programmes, informed by our consulting knowledge and tailored to the needs of South African business, to address these areas of opportunity.
One of these interventions is a blended learning programme aimed at building confidence and competence in basic business communication skills.
This programme is intended to extend the skills, knowledge and understanding of any person whose role involves basic business communication in the form of: briefing / de-briefing teams; presenting; writing and receiving emails; and writing and reading business letters and reports
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Customer Service Management into the future In this item, adapted from an article entitled "The Customer is the centre of your business" by Costa John, published in the March 2006 edition of Succeed Magazine, Andy Searle shares his views on "Customer service management into the future" of South African businesses.
Customer service management is a rapidly-evolving discipline that will find itself on the board-meeting agenda more and more often in the future. It will become increasingly important in South Africa particularly, as local consumers become more aware of the difference between good and poor service and more enabled (through improved access, technology and economic standing) to exercise their choice / preference between competing service providers.
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International Outsourcing: a Market Overview This document was developed as an initial feasibility assessment for the potential entry of South African suppliers into the market for the provision of contact centre operational services to off-shore organisations.
It contains a consolidation of selected market research information (a snapshot view that is likely to change rapidly in the immediate future) specific to the international outsourcing of contact centre service operations, our personal view on the opportunity, and our recommendations for the possible strategic focus and positioning of offerings in this space. A service provider should use the contact centre's operational capability, its strengths and weaknesses, and the market's opportunities and threats to determine the most appropriate differentiation and offering to present to the international market.
The document is intended to inform strategic thinking and planning in preparation for future international outsourcing opportunities.
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Changing Business Context for Contact Centres Multiple customer interaction issues, as well as key interaction and business trends, are driving the need for Contact Centres to become fully integrated with the rest of the business. At the heart of this integration challenge is the continuous development of Contact Centre technology capability and the business' ability to invest in the right technologies.
In this presentation, Paladin Consulting reviews the different approaches a business could take to build the required technology capability through balancing strategic and operational benefit.
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Training - CC Optimisation Results from a recent benchmarking survey indicate that, in South Africa, the top three business drivers for contact centres are:
- Improving customer service
- Creating direct relationships
- Retaining profitable customers
To respond to the various business drivers and interaction issues, and to be able to compete effectively in a fiercely competitive market-place, the number one imperative of contact centre (CC) operators has become the need to enhance the strategic and operational capabilities of their contact centres and to optimise their performance to achieve business objectives.
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MIS: An Overview Contact centres are increasingly being placed under pressure to deliver value to the business, but are often seen only as cost centres. This view is based on the challenge of effective communication and measurement, which is often blurred by delivery.
Managers make decisions that impact the contact centre at all functional levels (Human Resources, Finance, Operations, etc.) on a daily basis. These decisions could result in a growing and sustainable business, or cause the business to fail. It is therefore imperative that we measure the correct performance metrics to ensure quality information is supplied, thus supporting informed decision-making.
It is said that if we can measure it, we should be reporting on it. Is this an acceptable method of establishing your contact centre's performance? Will an executive committee be interested in multiple individual performance measures or in a comprehensive, relevant view of the business' performance? These are some of the questions that are addressed in this document. In addition, we establish what contact centre management information (MI) is, and what information to report on at each management level (Operational, Tactical and Strategic).
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Building CRM Capability Until recently, the concept of CRM was hailed as the saviour of modern business and seemed to be the solution to all of management's problems. Many companies invested in CRM technology, but did not experience the promised returns; therefore, management has become very sceptical of the value CRM can add to a business.
The problem, however, lay not in the concept, but in the approach, the focus and the implementation these companies followed. In most cases, top management understood the philosophical statements of CRM and agreed in principle, but failed to commit and to see it through when times got tough.
Paladin Consulting combines various elements of best practice to create a unique process of due diligence applicable to the development of a customer-centric business strategy or Customer Management strategy. This document offers a summary of our approach and methodology.
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Defining the role of the CC in the business value chain and selecting the appropriate commercial model for your operations The Contact Centre can and should play a key role in an organisation's value chain. The Contact Centre's commercial model will depend on the environment in which it operates and the role of the Contact Centre in the business' value chain. The imperative of the Contact Centre should be to move from a cost centre to a profit centre and that will be determined by the role that the Contact Centre plays as a direct channel in the value chain of the organisation.
In this presentation, Paladin Consulting examines the Contact Centre within the business context of an organisation, the cost of ownership, the value proposition and the migration towards profitability.
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Charge-out and Transfer pricing Developing a multi-channel, multi-functional Contact Centre that is fully integrated with the business is the number one development planned in the SA Contact Centre industry for the immediate future.
This document addresses the complex challenge faced by many Contact Centre operations in South Africa (that of charge-outs and transfer pricing to other business units within the organisation) and the fundamentals of planning, selecting and implementing these models in an organisation.
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IT Investments Given that Contact Centres are the most significant tangible and ongoing investment that major organisations will make in their sales and marketing infrastructure, they need to be well understood by the executive decision-makers.
IT decision-makers are also faced with a conflict, i.e. to respond quickly and effectively to the growing demands of functionality in the channel while also being expected to plan strategically and build capability for the future.
This paper addresses these key challenges and discusses the various considerations that business executives need to keep in mind when investing in technologies.
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