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This story was printed from silicon.com, located at http://www.silicon.com/

Story URL: http://www.silicon.com/research/specialreports/offshoring/0,3800003026,39126052,00.htm

Offshoring faces automated call centre threat
Cheap labour versus speech recognition software…

By Andy McCue

Published: Monday 22 November 2004

Automated self-service call centre technologies are set to provide competition for low-cost offshore agents, according to a new research from analyst Datamonitor.

Spend on speech-enabled self service technology is estimated to more than double to $1.2bn in North America and pass $1bn in Europe, the Middle East and Africa by 2008.

As companies look to reduce costs and improve customer service the Datamonitor research says they are looking to both offshoring staff and speech automation technologies.

Datamonitor claims speech automation can deliver significant savings over offshoring where 95 per cent of the communication occurs over the phone. The report cites savings of 25 to 35 per cent by moving a US call centre to India, but that the same service done by self-service technologies offers the same thing for 15 to 25 per cent of the cost of a call handled by an agent in India.

Daniel Hong, voice business analyst at Datamonitor, said offshoring is still likely to be the main choice through to 2008 when speech automation technologies will then become more viable alternatives.

"The popular offshore call centre markets, such as India and the Philippines, are rapidly maturing, resulting in increasing wages and higher turnover rates," he said in the report. "This is likely to nullify labour arbitrage benefits and thus decrease the value proposition for businesses to open an offshore call centre. This has led to a sharpened focus among enterprises on improving and automating phone-based transactions through speech recognition technology."

In an interview with silicon.com last week RightNow Technologies CEO Greg Gianforte said software automation "eliminates the need to handle an enquiry manually at all".

But a separate report out today by the National Outsourcing Association (NOA) claims 80 per cent of organisations believe offshoring has improved their competitive position. The survey of 300 companies also found over a quarter (26 per cent) of businesses now offshore some element of their business process delivery.

Cost savings and improved customer service were the main benefits cited, with the average return on investment from offshoring put at 29 per cent by those surveyed for the NOA by analyst NelsonHall.