Inbound teleservices outsourcing enjoys explosive growth: 29.1%. (Publisher's Outlook).

Interactive Grows 152.2%

Global Top 100 Grows 58%

Nadji Tehrani 

Pre-requisite: Please read the August 2001 Publisher's Outlook, "Go Inbound Young Man..." (www.tmcnet.com/cis/0801/0801po.htm), before reading this editorial.

In spite of the extremely severe recession, which led to more than 1 million American workers losing their jobs and bankruptcy afflicting countless major corporations, we are pleased and proud to see that inbound releservices outsourcing continues to grow at a phenomenal rate. In fact, growth of 29.1 percent is a record for the last five years in this sector. In my August 2001 Publisher's Outlook, while explaining the factors that contributed to the rapid growth of inbound releservices, I made the following statement:

"I believe these factors will multiply and therefore the growth of inbound will continue aggressively at about 28 to 32 percent, if not faster, for the foreseeable future."

In all humility, I cannot help but admit that this type of accurate growth forecast comes from more than 20 years of experience in the industry. As you know, in 1982, in a pioneering effort, this publication, which began by the name of Telemarketing magazine, laid the foundation for the growth of this industry and we are pleased that we have played an instrumental role in what has become the multibillion-dollar call center, CRM and customer interaction industry. What makes me even more pleased is the fact that you can practically call this sector of our industry recession proof in spite of the fact that practically all major bellwether corporations in America have suffered significant losses and little, if any. growth in the year 2001. Please note that the numbers indicated here refer to industry growth that took place in 2001, as the 2002 Top 50 rankings are based on billable long-distance transport minutes performed by the releservices agencies from November 2000 to October 2001 (see Figure 1 on page 6).

Inbound Outsourcing Can Grow Even Faster If...

I am a firm believer that inbound oursourcing can grow substantially faster if the industry actually takes rime to do a better job of promotion and marketing. Unfortunately, the current rapid growth of the industry occupies most of senior management's time to plan for growth as opposed to accelerating the growth. In retrospect, that may not be such a bad idea because of the great lesson we learned from the outbound sector when Wall Street began its love affair with our industry. The companies that went public were literally forced to grow faster and faster, which eventually led to overcapacity and subsequent price cutting, which later led to a drastic drop in quality. That initiated the disaster our industry has tried to get our of for the last five years. So, perhaps conventional wisdom dictates that we should be satisfied with 29.1 percent growth per year. There is nothing wrong with it and we should be content because practically every other industry envies our growth!

Lost Opportunities Leave Dollars On The Table

One thing that has always bothered me about our industry is the fact that there has never been true teamwork between inbound and outbound management. By that I mean that if cooperation existed between inbound and outbound departments, the outbound department could be the number-one beneficiary of the inbound sector, namely by feeding outbound with true prospect lists from inbound. When and if companies actually begin to use this phenomenal power of inbound feeding outbound, sales and profits must grow dramatically.

Forecast

Given the factors explained in the August 2001 Publisher's Outlook (please read this Outlook, which may be found at www.tmc-net.com/cis/0801/0801po.htm), as well as ever-growing new applications for inbound and a lack of any anti-inbound legislation, there should be clear sailing for many years of growth and profitability in the inbound sector. I therefore continue to forecast a minimum growth rate of 28 to 32 percent in the inbound sector for the foreseeable future.

To Meet The Above Forecast, Wall Street Must Remain Hands-Off

If you follow what has happened in the teleservices sector over the last six years, it becomes extremely obvious that the Wall Street growth pressures and infusion of inexperienced management at teleservice agencies at the expense of the founders and original entrepreneurs led to disastrous consequences. As I have indicated previously, this kind of ill-advised and unfortunate intrusion of our industry by people who are clueless about the complexity of teleservices spelled disaster in the form of millions of dollars lost and the elimination of some companies that annually ranked in the Top 10 in our magazines Top 50 rankings. I hope we have all learned a lesson from that and hopefully Wall Street will not try again to fix something that is not broken. Therefore, the 28 to 32 percent growth forecasted above is based on the condition that Wall Street will not interfere; otherwise, all bets are off.

Super Growth For Interactive

Growth of 152.2 percent in the interactive sector is truly phenomenal and admirable. Although this section is dominated by West Corporation, one of the most respected and reputable names in the industry, growth of this magnitude should not be surprising since our society and lifestyles are gravitating toward automated communications and transactions, not to mention the great performance of the outsourcing companies; therefore, this type of phenomenal growth should not be surprising.

Global Top 100 Grows 58 Percent

It is extremely gratifying to learn that the cumulative total billable minutes of the domestic and international inbound, outbound and interactive top 100 companies in our Top 50 rankings has shown a phenomenal growth rate of 58 percent. To be sure, one can rest assured the inbound sector will continue to grow and outbound, if professional "Pub Outlook" continued from previous page ly done, will also continue to maintain at least its current level and maybe even enjoy modest growth, barring adverse legislation.

To the extent that our industry is responsible for protecting millions of jobs and creating additional millions of jobs on an annual basis, we are hoping that lawmakers in Washington come our of their residence in cloud nine and pay attention to the fact that more than three percent of Americans are employed by call centers, CRM centers and customer interactions centers, which, of course, includes the Top 50 inbound and outbound globally.

What To Look For When Selecting A Teleservices Agency

As the growth rates from our Top 50 rankings clearly demonstrate, more and more companies are turning to teleservices agencies for their marketing and CRM needs, If you, too, realize that teleservices outsourcing is a key to your future success, you need to know how to go about selecting a teleservices agency and how to best work with an agency. I posed these questions to Bill Rieke, Director, Industry Solutions, Convergys Corporation. Here are Bill's responses.

What are the guidelines for judicious selection of inbound teleservices?

When evaluating teleservices outsourcers, it is important to find a provider that:

* Understands the needs of the client and the specific needs of the inbound program,

* Has the capability to craft solutions to those needs,

* Has the ongoing people and processes in place to effectively manage the day-to-day operations,

* Has vision that can be used by the client to help the client be more effective in their marketplace, and

* Has the financial strength to deliver results.

What are the keys to effective inbound outsourcing?

* The purpose of the inbound program should be supported by a clear business model,

* All the execution elements should be planned and complete, including advertising, fulfillment, etc,,

* Share and partner with an outsourcer forecasted call volumes and other key program elements,

* Plan together with the outsourcer all key changes in program design, fulfillment, advertising, etc., in order to achieve maximum results, and

* Look for an oursourcing partner who can implement and effectively manage even last-minute changes.

Join Us At Communications Solutions [TM] Expo

Executives from the Top 50 inbound and outbound teleservices agencies will be joining us this May 14-16 in Boston at the Boston World Trade Center for Communications Solutions [TM] Expo. So should you. Not only will the exhibit hail feature the latest technologies and services to upgrade your contact center, you can also register for cutting-edge, educational conferences that we will be offering attendees. Tracks at the conference will include Call Center Human Resources; CRM: Revenue-Generating Applications; Business Development Strategies (which will feature a session on "Outsourcing to the Top 50 Teleservices Agencies," as well as two given by myself, "How to Avoid Costly Marketing Blunders" and "How to Expand Market Share in a Slow Economy"); Customers Speak, e-Commerce Listens; Collaborative Enterprise; Mission-Critical Communications Infrastructure; Wireless Enterprise; Cost-Effective Operations; and IP Telephony Collaborative Enterprise. Please go to the Web at www.tmcnet.com/comsolexpo/s02/conf.htm fo r a full description of all the conference sessions.

While at the Communications Solutions [TM] Expo, you will also have the chance to find our what is going on in mobile communications at Planet PDA. The Global Summit On Enterprise & Custom Volume Handheld Computing Solutions, which we are also putting on at the same time in the Boston World Trade Center, So, you get two for one: the latest in communications technologies for the contact center at Communications Solutions [TM] Expo and the latest in handheld computing devices at Planet FDA, all in the same location, I look forward to seeing you there.

Sincerely,

Nadji Tehrani

TMC Chairman, CEO and Executive Group Publisher

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Figure 1

Growth in Total Billable Minutes by Top 50 Inbound Companies

(Cumulative Totals for Numbers 1-50)

1994                     493
1995  38.5%  Increase    683
1996  90.3%  Increase  1,301
1997  57.5%  Increase  2,048
1998  28.6%  Increase  2,634
1999  27.1%  Increase  3,349
2000  24.6%  Increase  4,172
2001  27.7%  Increase  5,326
2002  29.1%  Increase  6,873

Note: Table made from bar graph.

RELATED ARTICLE: Congratulations To The Top 50 Inbound Teleservices Companies

I am proud to extend my sincere congratulations to the 2002 winners of our industry's coveted Top 50 awards as determined by Customer Inter@ction Solutions * magazine's editorial staff. (See page 38.)

Seventeen years ago, Customer Inter@ction Solution? magazine pioneered this great institution known as the Top 50 inbound and outbound releservices award program. Our goal was, and is still, to give due recognition to a group of hardworking people who create sales and service customers, and thereby not only bolster our economy, but also protect and/or create hundreds of thousands of jobs in corporate America. We know how difficult it is to hire, train and retain multitudes of people and help them develop great careers, and also how difficult it is to service scores of demanding customers in a highly competitive environment, We salute you for a job well done. We stand in awe of your well-deserved growth. It is a pleasure to work with you on a daily basis.

Regards,

Nadji Tehrani

Inbound Industry Trends

Nadji Tehrani

Perhaps the best way to provide our readers with an accurate crystal ball is to consult with industry practitioners at the highest level who have proven to be true industry experts and visionaries. I have therefore worked with our editorial department to conduct the research in this sidebar. (Due to space limitations we could nor run the responses from all of the companies here. In total, we posed eight critical questions -- the complete answers graciously provided by these industry experts can be found in the online version of this Outlook at www.tmcnet.com/cis/0402/0402po.htm and I will draw upon them for future editorials). Here are the contributions from some of these companies on the following question:

Q: In your opinion, what is the trend in inbound teleservices?

Dominic Data, President and CEO of Teleperformance USA, representing the SR. Teleperformance Group and its Contact Center division, Teleperformance: Companies outsource functions so they can leverage cost, technology and customer management expertise while focusing resources on what differentiates them from the competition (core competency).

Whether they are looking to provide consistent service on a global basis (follow-the-sun service) or they view each contact as a chance to enhance the value of that customer, mote companies than ever are looking to free themselves of the many management issues that are inherent with operating an internal customer care operation.

Alicia Miyares, Vice-President of Marketing, Precision Response Corporation: E-learning is a very hot trend in this business. PRC is so confident of this, we purchased an e-learning company in 2001 to help us grow this as an internal solution. The success of any customer care program is highly dependent on the knowledge of the consumer care representative. By integrating sophisticated e-learning technology with our already robust CRM system, we are able to "push" modules to the agent desktop as necessary and create a constant loop of learning in order to improve the quality of our CCRs' performance.

Rob Apel, Vice President of Sales, Advanced Data-Comm, Inc.: Traditional outbound marketers are looking to inbound as federal regulations make outbound telemarketing more difficult, More marketers will look to inbound, with a continued focus on pursuing relationships with existing customers rather than jumping from customer to customer. Thus, the transition to CRM services will be imperative.

William McKinney, Executive Director of Marketing, TeleTech: Three major trends are surfacing in the inbound customer care market. First, companies seek to maximize the value of interactions at every point of the customer lifecycle; outside of traditional retention and upsell/cross-sell activities, firms are now demanding a demonstrable increase in the lifetime value of each customer touched. Second, the global firms that make up such a large percentage of the high-end customer care marketplace are demanding that their global customers be serviced globally in a fully integrated, centralized environment, with common execution and quality standards around the world. Finally, companies are increasingly desiring a consultative solution partner for the customer care process, nor just an arm's-length vendor relationship. The increasing complexity of multi-channel customer interaction mandates a parallel increase in the consulting skill sets of successful outsourced customer care firms.

Clark Sisson, Senior Vice President of Business Relationships, APAC Customer Services: Due to the weakened economy, more clients are looking towards offshore placement of inbound teleservicing business. The one flaw in this is that consumers are demanding greater value and a higher quality service interaction -- which often is not equated with an offshore solution. Clients are now realizing that to survive and retain their consumers, they must focus on maximizing the revenue generated from each customer interaction and resolve a customer's problem effectively and efficiently.

Simply, the latest trend is on effective customer contacts.

John Daffy Campbell, President, ICT Sales, ICT Group: ICT has noticed a marked increase in the number of clients choosing to outsource their customer care, More and more companies are beginning to realize the complexity and time/resource commitment necessary to develop and maintain an up-to-date in-house contact center. Additionally, these same companies are responding to increased pressure to reduce costs, eliminate expenses and maximize their profitability -- pressures intensified by operating in a weakened economy.

John Bartholomew, Executive Vice President, LiveBridge: The trend is for further outsourcing of noncritical functions, with the definition of what is critical being more challenged by organizations as they seek to optimize share holder value. This trend is also driving the requirement that outsourcing services look, act and behave similar to, and in conjunction with, existing client inbound activities.