In-region Outsourcing: Behind the Rise of Asia Pacific Contact Centers

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By Chiena Bondoc

The Asia Pacific region has turned out to be a great outsourcing destination. According to a new research from Frost and Sullivan, a business consulting firm, in-region outsourcing and offshoring is becoming progressively more widespread in Asia Pacific and increasing growth in the contact center market.

It has been found by the analysts that many companies in Japan and South Korea are looking towards China to offshore their contact center operations. While contact centers in Singapore are taking into consideration neighboring Malaysia as an outstanding option for greater cost benefits, at the same time as some Australian companies are transferring their contact centers within the region to India and the Philippines.

The number of contact centers in Asia Pacific amounted to over 21,360 in 2004, and is assumed to grow at a healthy CAGR (Compound Annual Growth Rate) of 9.1 percent to arrive at some 39,247 contact centers by end 2011, a new analysis from Frost & Sullivan reveals.

Even though cost is even now the topmost reason for companies to offshore and outsource in Asia Pacific, the quality of service offered is the essential cause that will make any country the foremost preference for contact center outsourcing.

Frost and Sullivan research analyst Shivanu Shukla mentions that, “Contact centers are fast assuming increased importance in the business process as customer service becomes the key differentiator for product or service preference”. “Thus, scalability of operations, flexibility, and increased focus on business processes – rather than the management of the technology infrastructure and staffing issues – are likely to drive outsourcing in the contact center segment.”

On the other hand, the contact center industry is challenged by high labor attrition rate, averaging at 19.8 percent at Asia Pacific level in 2004. In growth markets such as India and the Philippines, attrition rates are even higher owing to the increase in demand for contact center agents.

“With agents rapidly shifting to contact centers that either remunerate better or offer better incentives, recruiting, managing and retaining staff has become one of the biggest issues that contact centers across Asia Pacific need to deal with,” says Shukla.

Over the years, industrial markets such as Australia and Hong Kong have instituted ways to sustain or even lessen attrition. The introduction of a structured agent career path, flexible and conducive environment, and provision of high incentives will further aid employee retention. In addition, training and motivation schemes need to be devised to maintain quality agents.
Right now, banking, financial services, and insurance (BFSI) companies followed by telecommunications and IT companies remain to be the chief contributors to total contact center seats in Asia Pacific. However, the government, education, retail and utilities sectors are increasingly choosing for contact centers to enhance their customer service.
In addition, domestic demand for contact centers is expected to heap on, as governments across Asia Pacific start on their e-government initiatives to make available channels for greater interaction with their general public. Such factors merged with the inherent benefits of contact center outsourcing will increase demand for this market in Asia Pacific, thus guaranteeing its continual growth.

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