EMEA's Hosted Services Market Growing Steadily
Hosted services vendors in Europe, the Middle East, and Africa (EMEA) have reason to celebrate: Their market has finally emerged from its nascent state. Though not as popular as hosted services in the United States, EMEA’s hosted solutions market is steadily growing.
Research firm Frost & Sullivan studied the market’s growth in a January 2008 report titled "EMEA Hosted Contact Center Markets." According to the research, market-earned revenue in the EMEA hosted space is expected to reach more than $2.3 billion by 2014, up significantly from its $432.2 million level in 2007.
Increases in hosted application spending, according to Frost & Sullivan, stem from cost savings, the region’s prevalence of multilocation contact centers, and a shift from capital to operational expenditures. Kunal Kakodkar, a research analyst at Frost & Sullivan involved with the EMEA report, says the market is growing but still has some catching up to do.
"[EMEA] is maybe two or three years behind the U.S.," he states. "The number of players in the EMEA market is dominated by the tier-one carriers, the major telecommunication providers; in the U.S., you have a lot more players in the market. In the next few years, the [EMEA contact center] industry’s acceptance of hosted solutions will grow."
Large EMEA telcos dominate the EMEA hosted market right now, though companies like Genesys Telecommunications Laboratories and Cisco Systems are taking in profits from EMEA contact centers deploying their legacy systems, according to Kakodkar. Even though several barriers, such as security and system control, have kept both U.S. and EMEA companies from deploying hosted versus on-premises solutions, the general mindset is undergoing a change. For the hosted market to improve, two-tier vendors are "aggressively building partnerships and developing portfolios," Kakodkar states.
Much like the U.S., EMEA’s prime hosted solutions’ customers are made up of small to mid-sized businesses (SMBs), though the report states that larger companies have begun embracing the trend. And with hosting companies like TuVox offering multitenant platforms run on VoiceXML, more organizations will be able to implement hosted solutions regardless of their current hardware or back-end system’s make.
U.S. companies have also picked up on the EMEA hosted market and have begun offering services on a global scale. In March, for example, Verizon Business brought its hosted IVR to Europe.
"Because [European customers] have very large-scale contact center needs and are very often early adopters of new technology, they have very sophisticated technological needs," says Michael Barnes, director of contact center solutions product marketing at Verizon Business. "There’s a lot of demand."
Perhaps U.S. providers shouldn’t get too excited, though. According to Kakodkar, many U.S. companies interviewed for the report stated plans to offer global hosted solutions, but that doesn’t mean the projects will be a recipe for success.
"There’s a lot of opportunity, but at the same time I don’t think it will be all that easy," he notes. "There is some local knowledge for each country, specific purchasing habits, and telecommunication providers who have been there over the years and already have a market advantage."
Of course, as more contact centers open in up-and-coming contact center markets such as Russia, Eastern Europe, and northern Africa, companies with multiple locations will need to figure out how to offer business-wide solutions from a single site. According to Steve Pollock, executive vice president and cofounder of hosted solutions company TuVox, this is when hosting steps up to bat.
"If you’re not starting with a legacy solution, just a blank piece of paper, a lot of companies will consider and go toward a hosted solution compared to a premise solution," Pollock says. "IP telephony has also made it easier to think about a remote IVR as an extension of an existing premise solution. You can still have a premise-based ACD and have the IVR sitting remotely."
Currently, the most popular technologies for hosting include inbound call forwarding and automatic call distributors. The report projects that IVRs, outbound calling, and analytics will take off in success in coming years.