Study: IP-Based Contact Centers Speed Product Churn

At US$2.4 billion, the global contact center marketplace has grown mature. However, trends in the industry are still driving much growth in the space, according to a newly released report by Gartner (NYSE: IT) that looks at the market and its players.

These trends include a move -- after many years of analyst predictions -- to Internet protocol-based systems, which in turn is leading to more product churn, Gartner analyst Drew Kraus told CRM Buyer.

"There is not a lot of greenfield growth, but shipments of equipment continue to grow because the average life of a system was around 10 years or more, but with IP-based technology has reduced to five to six years."

Reaching a Milestone

This trend has been a long time coming and is only now beginning to manifest itself, Kraus said. For example, 2007 was the first year that the market saw IP agent-based shipments outpace TDM (time-division multiplexing) agent-based shipments, he pointed out. Given the hype surrounding IP in the call center, "you would have thought we would have reached this milestone three, four years ago."

Also, more companies are building vendor-neutral products and systems that don't rely on a particular switch -- a key demand from companies -- and that's driving growth as well, he said.

Gartner defines contact centers as computer-based systems that provide call and contact routing and prioritization for high-volume telephony and multimedia transactions. These systems are able to provide or support customer service functions and typically use real-time contact management and reporting systems.

Incumbent Players

Despite these changes in the market, growth in the industry clearly favors one of the main incumbents -- Avaya -- which Gartner identified as the clear leader with little close competition.

Avaya represents 38 percent of the global market for contact center revenue and 40 percent of the global market for contact center shipments -- figures that are in both cases about 25 points ahead of the nearest competitor.

Genesys comes in at No. 2, with a 14.4 percent market share.

Based on revenues, Nortel and Cisco (Nasdaq: CSCO) follow in the market at 12.6 percent and 10.6 percent, respectively.

Aspect Software followed at 5.5 percent, Alcatel-Lucent (NYSE: ALU) at 3.2 percent, Mitel at 2.8 percent, Siemens (NYSE: SI) at 1.9 percent, Altitude Software at 1.7 percent, and Zeacom at 1.4 percent.

Kraus attributes Avaya's lead to its huge installed PBX (private branch exchange) base, which provides a rich and active cross-sell and upsell audience. "It is reaping the rewards of making this market a serious focus years before other vendors did so," Kraus said. "It has a robust and mature product lines as well as sales capability."

Dislodging Avaya

It is unlikely that Avaya will be dislodged from its perch any time soon, he added. "It has a lot of momentum. But if I had to pick who will provide it with the most competition, that would be Genesys and Cisco." Genesys, in particular, is offering vendor-neutral equipment that frees companies from one particular vendor's switch.

However, Avaya is also exploiting these same growth trends in the contact center market, Vickie McGovern, vice president, global customer service solutions and marketing with Avaya, told CRM Buyer.

IP-based systems like Avaya's offerings "are absolutely driving migration from traditional TDM-based systems. In particular, customers are using them to develop a virtual contact center, so agents can be based anywhere," she said. Home agents are part of this trend, as is the follow-the-sun customer service strategies that many companies have, McGovern added.

"Without IP, it is very difficult to implement these techniques," she said, adding that Avaya also has been leveraging its own vendor-neutral products.

"Avaya Interaction Center and Avaya Voice Portal are both vendor-neutral, meaning they can working behind different switch and ADC types."