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GCC Contact Centre Industry To Secure Average Growth Of 7.4 Per cent Within The Next Five Years
Published Jul 28, 2009
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The GCC contact centre industry is expected to register a single digit growth rate from 2008 to 2013, despite the negative impact of the global economic downturn, according to a study conducted by Madar Research in conjunction with marketing communications consultancy Orient Planet.
The study revealed that contact centre installed base or sites in the region will increase by around 7.4 per cent annually, bringing about 280 new installations by end 2013 or about 56 new contact centre installations per year.
Furthermore, aggregate operational spending by contact centres will also increase by approximately 8.1 per cent annually to reach around USD 768.3 million by end of 2013, up from USD 527.3 million in 2008.
Contact centre has been defined as a centralised department in an enterprise from which all customer contacts are managed with computer automation using various communication channels, including over the phone, e-mail, SMS, web forum, chat or video.
The moderate growth forecast of the contact centre industry within the next five years comes after a period of outstanding growth from 2003 to 2008, the nascent years of the industry in the GCC in terms of contact centre installations wherein the installed base achieved a compounded average growth rate of 14.2 per cent annually.
The number of seats per contact centre witnessed a phenomenal 18.2 per cent growth annually during the same period.
Abdul Kader Kamli, President & Research Director of Madar Research Group, said:
"At a time when the global economic downturn has affected the growth trajectory of other sectors, the GCC contact centre industry is expected to maintain a decent growth rate within the next five years. The government, services, healthcare and even the telecom sectors will act as the engine for growth as these industries have remained relatively unaffected by the global downturn and will be more inclined to adopt innovative technology solutions. Moreover, we will see a shift in the adoption trend for contact centre solutions towards small to medium sized companies, who are expected to pick up the pace in a bid to stay competitive against large, multinational companies that usually employ dozens and sometimes hundreds of contact centre agents".
Nidal Abou Zaki, Managing Director, Orient Planet, said:
"The GCC remains an important catalyst for the Middle East contact centre industry because of the region's strategic advantages and long term potential. The UAE, in particular, is expected to carry the banner for the region because of its advanced ready built contact centre facilities such as the Dubai Outsource Zone, the country’s ideal geographical location between Europe and Asia, and its multi lingual population. As businesses focus on improving customer loyalty and satisfaction as part of their strategies to offset the effects of the economic downturn, contact centres will play an important role in achieving these strategic objectives and helping companies maintain their competitiveness”.
With contact centre seats and agents projected to grow at a compounded average rate of 5.6 per cent and 6.1 per cent, respectively, the industry will see additional 4,800 contact centre seats and 5,900 agents between 2008 and 2013.
However, between 2009 and 2010, there is also a possibility that the number of contact centres and contact centre agents in the GCC will reduce due to contact centres closing down or laying off employees to boost their liquidity. Such contraction will not likely touch five per cent per year, even in a worst case scenario.
This period will also see the average number of seats per contact centre shrink from nearly 26 to 23.5, indicating that the adoption trend for contact centre solutions will shift towards small to medium sized companies, most of whom will not require more than 25 seats.
However, the number of agents per contact centre agents will exhibit a reverse trend (increase in number) as more companies will tend to keep their contact centres open longer than their official working hours, perhaps even extending to operate a customer service operation that is open 24/7.
The report noted that the regional contact centre sector will bank on mature industries such as telecom, government and finance, as well as companies in other industries that take a long shot view of the future to spur the industry's long term growth.
These sectors will be less inundated by the economic slowdown and therefore will continue to invest in
business solutions to retain existing customers, if not lure new ones.
The contact centre industry is strongly positioned to leverage such potential because as a solution, contact centres whether in house or outsourced are viewed as a viable option for establishments that rely on intensive customer interaction.
Moreover, the intra GCC nature of contact centre transactions could soften the impact of the global economic crisis, particularly on the region’s outsourcing contact centre industry, unlike in countries that are highly dependent on US based accounts.
For instance, about 90 per cent and 65 per cent of outsourcing businesses in the Philippines and India, respectively, depend on large US based accounts like IBM and Accenture.
According to Madar Research and Orient Planet, there were approximately 650 contact centres in the GCC at the end of 2008, with the highest concentration in the UAE, which accounts for over 46 per cent of the total, followed by KSA with 30 per cent. The rest is accounted for by Bahrain (7.4 per cent), Kuwait (6.5 per cent), Qatar (5.4 per cent) and Oman (4.6 per cent).
The GCC countries also accounted for over 17,800 full time contact centre agents during the same period, which exclude on call or freelance agents as well as off shore agents that provide services to GCC based companies.
UAE accounted for over 40 per cent of estimated contact centre agents in GCC, KSA accounted for a slightly lower 37.6 per cent and the rest is split between the remaining states.
The operational expenses of contact centres in the GCC is estimated to total USD 20.6 million, representing an average cost per agent of USD 29,214 annually.
The UAE accounts for half of the total value and KSA trails behind at 28.5 per cent. The average size of contact centres in the GCC in terms of agents would be 27 as at end of 2008, the size slides down to 26, when measured in terms of seats.
This means a good number of contact centres across the GCC still have unoccupied seats, signifying plans to expand in
the future. KSA enjoys the highest number of agents and seats, at 34 and 32, respectively, which reflect the presence of larger sized business establishments in its domicile compared to the rest of GCC.
Bahrain lies on the other extreme, where an average contact centre has about 23 agents and 20 seats.
Majority of contact centres in the GCC are considered to be small (less than 50 seats) about a quarter (24.5 per cent) are medium sized (between 50 and 250 seats), and the remaining 3.5 per cent are considered large, or those that have seats that exceed 250.
In a survey of over 330 sample companies in the GCC, Madar Research and Orient Planet also discovered that the banking and finance sector, which includes local and foreign commercial banks, investment companies, insurance, home finance and foreign exchange companies, holds the biggest share of the market at 28 per cent.
Travel and hospitality (comprising hotels, airlines, restaurants and travel or tour operators) accounted for 17 per cent, followed by IT, telecom and electronics (15 per cent); outsourced contact centre service providers (11 per cent); government administration agencies, excluding government owned corporations (9 per cent).
A live agent via a telephone is still the dominant channel in the GCC, but youthfulness of the overall population in the GCC and the presence of a large working expatriate community with access to internet communication means a more aggressive adoption of other modes of contact centre interaction such as SMS and e-mail.
The dominance of telephone or a live agent as a customer interaction channel in the GCC, which accounts for approximately 74 per cent of total channel utilisation, does not preclude rapid growth in the utilisation of e-mail, which accounted for as much as 18.5 per cent of contact centre interaction in the GCC at the end of 2008.
Outsourced Service Providers
There were at least 38 outsourced contact centres operating in the GCC in 2008, and they currently account for 5.8 per cent of the total contact centres operating in the region at the end of 2008.
These Outsource Service Providers (OSPs) include at least three operating companies with a presence in more than one country.
Of the total OSPs, 37 per cent operate out of the UAE, 29 per cent out of Saudi Arabia, 11 per cent out of Qatar, while the rest is spread equally among the three remaining GCC states.
These 38 companies account for a total of 4,920 seats and 5,095 contact centre agents, all contributing to a market worth approximately USD 157.07 million at the end of 2008.
OSPs are significantly bigger in size compared to their in house counterparts as OSPs account for 30 per cent of the total contact centre seats and 29 per cent of total contact centre agents found in the GCC in 2008, despite accounting for only 5.8 per cent of all contact centres present in the GCC.
Hence, OSPs employ an average of about 134 contact centre agents, compared to an average of only 27 agents for the overall market.
In terms of estimated revenues, UAE contributed roughly USD 67.75 million or 43.1 per cent to the estimated total outsourced contact centre revenues in the GCC, while KSA accounted for 37.6 per cent or an estimated USD 59.08 million.
The number of contact centre agents in the KSA is roughly 43.7 per cent higher than those found in UAE, but UAE OSPs still managed to generate roughly 14.70 per cent more revenues than OSPs in KSA would have generated in 2008.
Outsourced contact centres with a capacity of less than 100 seats (excluding captive seats) still dominate the GCC, accounting for a good 55 per cent of the total market.
Similarly, seats exceed the number of agents in over 55 per cent of the OSPs, whereas the reverse is true for only 15.8 per cent of them.
Two of the latter are located in the UAE, and another two in the KSA, and one each for Oman and Qatar. So far, no outsourcing company in Bahrain and Kuwait has more outsourced contact centre agents than seats.
Based on the analyses performed on data gathering through secondary and primary sources, government agencies appear to contribute the most in the OSPs' combined revenues as at 2008, accounting for a quarter of the total market.
IT and telecom companies, including fixed and mobile phone operators, internet service providers, application service providers and suppliers or resellers of IT products and services such as PCs, applications software and data communication products, account for 21.3 per cent.
The banking and finance sector contributed 19 per cent, while FMCGs and retail and wholesale companies contributed approximately 16 per cent to the GCC outsourced contact centre revenues.
Travel and hospitality account for 9.6 per cent, while the erstwhile up and coming real estate sector accounted for a marginal 2.4 per cent.
Various sectors, specifically services (e.g. conference and exhibition companies, recruitment agencies), media and communication, education and healthcare sectors accounted for the remaining seven per cent of the estimated outsourced contact centre revenues in the region.
At least 14 new OSPs could enter the GCC market between 2009 and 2013, most of which will be home grown companies that start small. Madar Research and Orient Planet further expect a modest growth in terms of seats (3.98 per cent CAGR) between 2009 and 2013, due to the high number of unoccupied seats particularly among small to mid sized OSPs in the region.
The number of contact centre agents working for OSPs will also register single digit growths (5.25 per cent CAGR), in response to the economic situation that will likely depress the demand on outsourced contact centre services particularly in 2009 and early 2010.
As in the overall market, the region’s industry should rebound on or before 2011, when oil price will make a comeback in the world market.
End users' and OSPs' opinions differ on the key factors that possibly influence business decisions to utilise outsourced contact centre services.
On a five point scale, with five as ‘extremely important,’ end users rated ‘access to latest technologies without making upfront investment’ as the most important factor that drive them to utilise OSPs with a score of 4.15, followed by reduction of operating expense (3.90) and access to expertise that is not available internally.
On the other hand, OSPs believe that access to expertise that is not available internally among end users (weighing 4.3 out of 5) is the primary reason for utilising outsourced contact centre services, followed by reduced operating expense, improved quality of service and focus on core business.
End users and OSPs were also asked to rate on a five point scale various factors that tend to inhibit end users from utilizing contact centre services.
‘Loss of control or leak of business information’ emerged as the primary inhibiting factor among end users, gaining a score of 4.01, while it ranked among the minor inhibiting factors as perceived by OSPs.
In contrast, OSPs rated ‘lack of awareness and appreciation of benefits’ and ‘sizable investment in in-house contact centres’ as the two most important reasons that keep end users from utilising OSPs, garnering scores of 3.8 and 3.9 respectively.
The same factors were less important to end users, scoring only 2.94 and 2.70 respectively.
For further information, please contact
Orient Planet PR & Marketing Communications
Tel: +971 43988901
Fax: +971 43988941
P.O.Box 23345, Dubai, UAE
Email: info@orientplanet.com
Website: www.orientplanet.com
Posted by
VMD - [Virtual Marketing Department]
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