"I do expect cognitive and robotic automation projects to lead to some job loss... The offshore business process outsourcing industry is likely to be the hardest hit. If you can outsource a process to people thousands of miles away, you can probably automate it with RPA."
– Thomas Davenport, The AI Advantage (Management on the Cutting Edge)
A Changing Landscape for Contact Centers
As the Contact Center Industry enters a new era created by the global COVID-19 crisis, every business is now forced to reevaluate and adapt their Customer Experience and Employee Engagement strategies to thrive under still uncertain economic and social conditions.
Even before the global pandemic, Contact Center and Business Process Outsourcers (BPOs) were facing new headwinds and competitive pressures.
With the rapid adoption of Contact Center-as-a-Service (CCaaS) platforms, it's now easier than ever for companies to launch their own contact center rather than outsource the function.
All the while, Virtual Agents and Robotic Process Automation (RPA) threaten to eliminate much of the human capabilities that outsources have built their business on. The large cloud providers (ie. Amazon, Google, Microsoft) and well-funded start-ups are selling the value proposition of bots, virtual agents and AI to their enterprise customers. If BPOs are not in front of this trend, they risk losing revenue and seat count to this new class of competitors.
As Conversational Service Automation threatens to reduce agent counts and top line revenue for BPOs, the opportunities to take advantage of the technology may initially seem elusive. However, with every paradigm shift, possibilities arise and usher in a new era of services. Those that respond to and embrace the new digital economy will be positioned for long term strength and growth. Outsourcers that take these trends lightly risk experiencing their own Kodak moment and being surpassed by their digitally native brethren.
COVID-19 changed the entire industry in an instant. Contact Centers spent of much Spring 2020 scrambling to shift agents to work-from-home or bring agent seats back onshore from locations where at home agents simply weren't feasible due to lack of critical infrastructure.
As a result, most BPOs are asking themselves questions, such as: "how do we not let this happen again? Do I move everything to the cloud? Do I nearshore, or onshore? I can't charge my clients more to do this, so how do we build resilience without sacrificing margins?"
Given the new competitive pressures and environment, the real question on the minds of BPO Executives should be: "what percentage and number of interactions that we process today can be fully, or even partially, automated?"
The answer to that question represents the threat to their core business presented by Virtual Agents and RPA.
The follow-on questions are then, "How do we use this moment to create new service and revenue opportunities? How we do we leverage AI to deliver new outcomes for our clients that require less resources and outpace our competition?"
With Artificial Intelligence (AI) now at the forefront of executives’ minds as they look for ways to reduce operating expenses while retaining and acquiring new customers, we believe that Contact Center and Business Process Outsources (BPOs) are uniquely positioned to lead this transition.
We've seen this before
The Dotcom bust coupled with 9/11 was a cataclysmic event for outsourcers in 2000 and 2001. The industry had enjoyed rapid growth as a result of the millions of dollars pumped into Internet start-ups and their IPOs. The crash caused many companies to view their contact center as an expense, rather than as an asset for customer experience and revenue. As a result, BPOs were forced to shutter call centers overnight as they dealt with the new economic conditions.
At the same time, Voice-over-Internet Protocol (VOIP) emerged as viable technology. VOIP made it possible to answer a call anywhere in the world. Which meant that someone from Kansas could call a U.S company and speak with a call center agent in Bangalore. Offshoring thus emerged as a way for contact centers to reduce labor expense. The Great Recession in 2008-2009 accelerated the offshoring trend as companies grappled with the economic downturn.
However, unless a company was at scale, it was still cost prohibitive to open and manage an offshore call center. This made BPOs an attractive partner because they could assume the capital expense and associated risks. They mitigated these risks by investing in new technical capabilities and developing competencies in managing the complexity of global operations.
Much as VOIP was an enablement for BPOs to provide value added services to their clients, AI will serve a similar function for those that move quickly.
How this time is different
For decades, contact centers have been both Capital intensive as well as expensive to operate. This combination has made them the bane of many a CFO.
BPOs have benefited from this environment because they could absorb the large upfront Capital Expense of acquiring the assets to build and operate contact centers and depreciate those expenses across multiple years and clients. Outsources have also benefited from their economies of scale by creating business models that leverage common agent pools and resources.
Those days are quickly coming to an end. Starting a Call Center no longer requires a large up-front investment for things like phone systems, data centers, expensive per agent licensing for software, and real estate.
Additionally, the democratization of entry level bot building tools from cloud providers enables companies to begin developing their own in-house solutions, further undermining the traditional value proposition of outsourcing to live agents.
AI-powered Virtual Agents come of age
Recent advancements in deep learning along with inexpensive cloud resources and cloud-based communications platforms (CPaaS) have provided the ingredients to create Omnichannel AI Agents that deliver exceptional Customer Experiences across any channel including, natural language voice.
Additionally, the ability to combine Conversational AI with Robotic Process Automation (RPA) to create virtual assistants that can both comprehend what the customer is asking of it and is also capable of executing a workflow enables new applications well beyond simple website chatbots.
As a result, Contact Center Executives are moving past the notion that Virtual Agents merely automate interactions with customers, and are enjoying the benefits of expanded use cases.
For example, the opportunity to provide call center agents with personalized assistants for access to real-time information and guidance is immense. This could range from simplifying a complex knowledge base to making real-time recommendations to the agent derived from what’s being said in the conversation.
Savvy companies are able to personalize every customer interaction by infusing Virtual Agents with machine learning at every point in the interaction. Now a Virtual Agent can do things like make hyper-targeted up-sell or cross-sell suggestions based on contextual data. With the right framework in place, a Virtual Agent gets smarter with each interaction. Companies that take advantage of this will be able to leverage their customer experience as a differentiator.
A Whole New World
“The dual driving forces of generational customer experience expectations and the lessons being learned from maintaining customer service levels during the COVID-19 crisis have highlighted the immediate need for intelligent conversational voice automation to automate routine calls while live agents are redeployed to address more complex questions and customer service issues. Cloud delivery of AI-driven omnichannel virtual agents speeds and simplifies deployment while on-demand scalability makes it a cost-effective solution for contact centers of any size. Current market and economic conditions combined with future uncertainties have made conversational omnichannel automation bots critically important to the survival of the current pandemic and the preparation for whatever conditions the future may hold.”
- Paul Stockford - Chief Analyst, Saddletree Research
Virtual Agents and the BPO, Friends or Enemies?
Virtual Agents and Omnichannel bots are well suited for repetitive call types, such as: reservations, scheduling, FAQs, basic account queries and updates, checking order status and even level-one tech support.
These call types span across almost every vertical and represent a significant percentage of calls handled by BPOs, particularly those with offshore agents. Virtual Agents are not ideal for complex calls with long handle times, however, may be effective in reducing agent handle times and staffing requirements.
One optimized Cognitive IVR can automate the work for a near infinite number of live operators for a given call type. For example, if a contact center has 300 agents all handling calls for scheduling or reservations and 85% of those calls can be automated, then the Virtual Agent will replace the work of 255 live agents. BPOs will need to transform and shift their business models accordingly, or risk losing their core business to Conversational Automation companies.
The Opportunity for BPOs
BPOs are well positioned to embrace Contact Center AI and Virtual Agents to establish differentiation in the market as well as create business models with ongoing revenue streams.
The Virtual Agent market is still fragmented with multiple vendors and options, and challenges to developing production ready virtual agents. Therefore, BPOs should resist the temptation to become "bot factories" by building one-off bots for their clients using proprietary tools with vendor lock-in (ie. Amazon Lex, Google Dialogueflow, Microsoft LUIS, Twilio Autopilot), but rather focus on creating long term value and recurring revenue from value added services.
Conversational AI and Virtual Agents enable BPOs to create new services that lead their clients through the current economic uncertainty and Digital Transformation. A few of these include:
- Providing enhanced CX Services with differentiated value and higher margins
- Developing capabilities in advanced services, such as conversational analytics
- Building new SaaS Revenue Streams by shifting to automated and Omnichannel customer interactions
- Enjoy improved operational efficiencies
- Establish Market Leadership and Differentiation
Business Model Impact
BPOs, on balance, charge for their services either per call, per minute, per agent hour, or per sale. They can typically bill for ancillary services such as systems development, agent training and dedicated services. However, most BPOs are forced to absorb all other expenses, such as recruiting, QA, Workforce Management, real estate and infrastructure into their "per" call/minute/hour fees. These can vary widely based on the market and economic conditions. As a result, margins run thin and are often impacted by exogenous events.
With Virtual Agents, there is no recruiting, no shrinkage or illness and no turnover. There is also no real estate, infrastructure, or Workforce Management required thereby eliminating both expense and complexity in operating a contact center. When deployed and trained well, they perform their function 24/7, 365 regardless of the world around them. They are a form of Business Continuity for your clients.
Contact Center outsourcers should evaluate the economic opportunity based on call type and their respective business model.
For example, outsourcers that bill a client per-call are incented to shorten agent handle time to reduce their cost-per-call. Deploying a Conversational IVR can capture information from the customer or even authenticate them prior to routing to an agent, thereby reducing handle time on a per call basis. Whereas, for interactions when sales conversion is critical, a Virtual Assistant can personalize a Customer Journey with targeted sales recommendations.
When an outsourcer launches a new client or campaign, much time and effort is put into processes such as, designing the customer experience, creating agent scripts and call flows, telephony and infrastructure development, knowledge creation, agent training, QA processes, reporting and analytics. As Virtual Agents take hold in the market, each of the functions will be adversely impacted yet will create opportunities to develop higher value services, such as: Customer Experience Strategy and Development, Virtual Agent training and tuning, performance monitoring and analytics, Quality Assurance and Speech Analytics.
Operational and Productivity Gains
In addition to creating new client focused services, contact centers are adopting Conversational AI and RPA to improve operational efficiencies. Productivity gained through internal AI deployments, such as intelligent agent assistants, will directly improve the bottom line.
The Xaqt Approach
Xaqt’s Conversational Automation Framework and Engage Platform are among the most advanced AI solutions for production-quality conversational applications. It is the only Conversational Platform that is truly agnostic and portable across any telephony or cloud environment.
Our innovative "Human in the Loop" AI process coupled with Deep-Domain machine learning models are built to power the next generation of Voice and Chat Assistants.
Partnering with Xaqt
As a boutique and highly specialized Contact Center AI technology and service provider, we partner with our customers throughout every step of the process, from creating a Conversational AI strategy through ensuring the quality of each interaction handled by our technology and team.
Xaqt provides all of the technology and resources you need to develop and grow your Virtual Agent offering. Our "Conversations-as-a-Service" approach is all inclusive of ongoing performance monitoring, tuning, training and enhancements as part of a usage-based pricing model.
We also offer several flexible partnering programs and will work with you to develop the model that works for your business. A few of these include:
· You own and control your client's data
· White label and cobranding of software and services
· Bring your own CX team, use ours or yours
· Bring your own CPaaS, or choose from one of our partners
· Develop your own Conversational Applications and create value added services.
· Rapid Deployment Agents can be launched within a few days
Xaqt Executive Briefing and Opportunity Assessment
Conversational AI and Automation will drastically transform the BPO market, however the impact will not be evenly distributed. As some interaction types and lines of business are better suited for Virtual Agents than others, qualifying the potential threat and opportunities for your organization is the first step in the journey.
As the starting point, we invite you to participate in a virtual briefing and discovery session with Xaqt’s leadership team. Following that, an Xaqt business analyst will work with your team to conduct a complimentary assessment of the business impact that Conversational AI and Automation can have for your business and operations. Through this process, we will identify things like your cost-per-call, revenue-per-call, call types and complexity, annual call volumes and arrival patterns, and assess your current digital channel strategy. The output will a strategy and roadmap to realize the full potential and financial gains of creating a Virtual Agent offering.