According to a new report from Frost & Sullivan (News - Alert), 'North American Hosted Contact Center Markets,' as more companies migrate from premises to hosted call center software, the hosted call center market is becoming more competitive and price-oriented, resulting in hosted call center services becoming more 'commoditized.'

 

This, in turn, is driving more hosted call center vendors - who have been traditionally focused on the SMB space - to go after more large enterprises, where they can sell more seats. The study reveals that the hosted call center market will likely become a game of sheer volume as time goes on: Those vendors which sell the most seats win.

 

As the study notes, most hosted call center vendors are now offering all-in-one systems that integrate the core call center applications - ACD, IVR, call monitoring/recording, workforce management, reporting, etc. - on a single platform. Therefore feature sets and functionality aren't as much of an issue as they have been in the past: Most hosted call center vendors can now more nimbly deliver the features and capabilities that their customers really need.

 

'The feature sets available from hosted vendors, along with the ease of deployment and administration, is clearly encouraging many end users to consider on-demand applications as an alternative to replacing or upgrading their legacy premises infrastructures,' said Frost & Sullivan Principal Analyst Keith Dawson (News - Alert), in a release. 'Because of this, some of the key market entrants are the premise vendors themselves, seeking a hedge against losing their customers to smaller service providers.'

 

The study notes that some call centers might not necessarily stay loyal to the large vendors they used for years for their on-premises systems, as those large vendors shift their systems over to the cloud. Many smaller vendors are now offering cloud-based systems with the same level of features and functionality, the study finds.

 

One of the main things larger enterprises are looking for, when shopping for a hosted call center system, is security and reliability, the study finds. As a result, hosted call center vendors are marketing the 'strength and redundancy of their networks,' including providing uptime guarantees. 'Some are able to go head-to-head with reliability benchmarks that compare to that promised by internal IT departments,' a release promoting the report states.

 

The study also notes that service providers are doing a better job of illustrating the short- and long-term costs and total cost of ownership benefits for hosted platforms. 'As they move up the organizational value chain toward more complex, enterprise-hosted deployments (or mixed hosted/premise/managed service deployments), they are forced to provide more detailed references and case studies,' Frost & Sullivan notes.

 

According to the study, the hosted call center market earned more than $453.7 million in 2009, with revenue estimated to reach $1,195.6 million by 2016.

 

The report affirms the findings of another recent study from DMG Consulting revealing that enterprises are increasingly being drawn to the cloud model for their contact center software needs.

 

According to the DMG study, enterprises are being drawn to hosted call center software because of its scalability and flexibility. The extreme scalability delivered through the hosted call center model makes it particularly beneficial to larger-sized businesses that see massive peaks and valleys in their call volume and sales cycles. It's great for large companies that see volume fluctuate based on seasonal sales cycles. For one thing, they can add or remove seats on an as-needed basis, thus giving them greater ability to control the cost of the cloud-based service (most of which, by the way, are offered on a monthly or annual subscription basis, also based on the number of seats). What's more, the company doesn't have to invest in a large number of software licenses, up to three quarters of which it won't use during periods of low volume, or extra hardware.

Also driving larger organizations to consider the cloud-based model of delivery, as opposed to on-premises, is the fact that they in effect end up outsourcing some IT to the vendor - in other words the vendor takes on all responsibility for application performance, including monitoring and maintaining network performance and related equipment. This, in turn, helps relieve the strain on internal IT departments.

Also attracting larger organizations to the SaaS (News - Alert) or cloud-based model is the fact that they get all software upgrades and patches automatically via the service. That means organizations are always using the latest and most feature-laden versions of the software, which can sometimes translate into operational advantages over competitors using traditional systems.

'Hosting vendors have given small and mid-sized enterprises new servicing capabilities that do not require them to compromise on functionality,' the DMG Consulting report states. 'DMG research shows that the typical buyers of these solutions are mid-sized customers; the majority of purchases are to replace an existing premise-based contact center solution that no longer meets the organization's needs.'