Decentralization Becomes Important Feature of Brazil’s Contact Center Market

The Brazilian Contact Center Outsourcing (CCO) market faces some difficulties today, due to the concentration of sites in big cities such as São Paulo and Rio de Janeiro. …

Maiara Munhoz, Enterprise Communications Industry Analyst, Frost & Sullivan

The Brazilian Contact Center Outsourcing (CCO) market faces some difficulties today, due to the concentration of sites in big cities such as São Paulo and Rio de Janeiro. The has resulted in limited workforce availability and a high competitiveness in the market, which causes agents to increasingly migrate between companies in search for better salaries, benefits, and working conditions.

Building new contact center sites in regions such as the northeast and the south of Brazil provides outsourcing companies with lower turnover rates, improved quality of service, a reduction in operational costs and, in some cases, tax breaks. These advantages end up also affecting the end-user, since a better experience for the employee translates into a better experience for the customer.

Broadening the Market

The Brazilian CCO market is still highly concentrated (the top five participants represent almost 70%), however Brazil has a large domestic market that still holds a lot of potential for contact center outsourcing companies. In fact, small participants have gained share by focusing on alternative market segments or on offering qualified, personalized services. Konecta and Acticall are examples of foreign companies that have just entered this market, demonstrating that it has space for more competition.

The market grew a 4.7 percent in revenues between 2012 and 2013 (when measured in R$), which is considerably lower than the growth showed in the previous couple of years, given both the slower performance of important participants and the exit of two companies from the market (Tellus and Vidax). However, companies have been investing on strategies that will translate into an increase in revenues from R$11.18 billion (US$5.19 billion by today’s exchange rate) in 2013 to an estimated R$18.28 billion in 2018 (US$7.34 billion by the exchange rate forecast for 2018).

Such strategies comprise, on the one hand, a focus on offering qualified services rather than only providing a cost reduction alternative for companies. The purpose of outsourcing should be to let companies focus on their core business, while the outsourcer provider focuses on what it specializes on: offering qualified services for customers. On the other hand, participants have broadened their portfolio in terms of market segments’ served, to be able to reach more customers and meet all of their needs.

Areas With Growth Potential

Industries such as retail, insurance and healthcare still perform most of their operations in-house, indicating that they hold significant potential for these companies. In fact, these verticals have witnessed an increase in revenue from 2012 to 2013, which demonstrates they are starting to invest in this market.

Multi-channel and non-voice contact are starting to show some presence among outsourcing companies, indicating that contractors are turning their attention to these types of customer interactions. Although they account for only a small share of the outsourcing market services, Brazilian customers have been increasingly utilizing means such as social media, chat, and e-mail to contact companies (in 2013, there was an increase in penetration of social media (from 0.3% to 0.9%), chat and Web collaboration (from 1.2% to 1.5%), and SMS (from 1.2% to 1.8%). While some companies have those services internalized, and others have not yet invested in them, there is a lot of potential for these type of outsourcing services.

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Over the next 5 years, inbound services are expected to witness a decrease in outsourcing companies’ revenue share (from 61.0% in 2013 to 56.1% in 2018), opening space for BPO and back-office services, which are gradually starting to penetrate the market as companies increasingly perceive the need to outsource these types of services to improve customer service and experience.

Automated Voice Solutions

Companies have been increasingly investing in Interactive Voice Response (IVR) solutions, in order to increase productivity and reduce the need and dependency on live agents. The use of these solutions may improve the customer service quality and reduce the time of the call, mainly when it concerns matters that are easier to solve.IVR witnessed an increase in penetration in 2013 (from 14.4% to 15.6%), and companies are inclined to gradually make more investments in the technology.

Debt collection services slightly increased penetration from 2012 to 2013 (from 10.3% to 10.5%), and are expected to witness growth in 2014 as a few large companies are starting to invest in this service. The demand growth expectation from these companies is because lower-income population has been increasing their share in consumption when compared to the rest of the inhabitants. This movement leverages the credit market in Brazil, thereby boosting outsourcing companies’ potential to invest in debt collection services.

In essence, the Brazilian CCO market still exhibits plenty of room to grow in the coming years. Frost & Sullivan expects that the revenue compound annual growth rate for the 2013/2018 period will be of 7.2%. However, outsourcers will have to find means of overcoming market saturation, such as geographic decentralization.

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