On the Move
The United States and Europe are separated by roughly 3,000 miles, five time zones, and the world’s second largest ocean. To travel from New York to Paris by plane takes about six hours. The trip from New York to the United Kingdom by transatlantic ocean liner takes about five days.
Despite this distance—one that can be measured both in physical and cultural divisions—the world is getting smaller. Thanks to technological advances and increased free trade, people the world over are citizens not only of their own countries but the much larger global community as well. This is not to say we don’t have our differences. After taking that six-hour flight to or from Paris, differences in the languages we speak, foods we eat, sports we play, and currencies we spend quickly become apparent.
While our differences are most evident culturally, they also play out in the business sector—both in how we interact with different technologies and the ways we conduct business. And this, of course, also applies to the way we design, deploy, and use specific speech technologies.
It’s safe to say that many people have preconceived ideas about both the U.S. and European speech markets—which one is more robust, which one makes better use of which technology, etc.—but often those attitudes are, like our cultural and societal preconceptions, just plain wrong.
According to Roberto Pieraccini, chief technology officer at SpeechCycle, interactive voice response (IVR) systems actually saw early adoption in Europe at a time when speech technology providers in the U.S. were focusing on dictation.
“As paradoxical as it may seem, speech processing, speech technology started very early in Europe,” Pieraccini says. “I would say Italy, France, [Germany], Spain a little bit later, and the U.K. were the precursors.”
Pieraccini says the mid-1990s—even before companies like SpeechWorks and Nuance Communications began massively deploying IVRs—boasts examples of early European installations, such as the IVR system built by Philips for OmniTel in Italy. He cites that one in particular as a textbook case of a deployment gone wrong because expectations were too high and the speech technology was simply not mature enough.
This failed deployment—and others like it—created what Pieraccini calls “a winter of speech recognition” in Europe. “Europe started earlier than the U.S., went out with speech recognition IVR systems, and then went back because of perceived inadequacy, the perceived poor performance of the technology,” he says. Public misperceptions about speech technology were a setback for the European market and allowed the U.S. market to overtake it, Pieraccini also notes.
Despite these early setbacks, the market for speech technology, both in contact centers and on mobile devices, is expanding in Europe, with speech finding its way into some new and surprising places.
Pieraccini says he sees speech technologies taking off in a variety of locations, most notably in Denmark, Holland, the Flemish part of Belgium, Spain, Portugal, and the Czech Republic, as well as in places like China, India, South and Central America, and Japan.
Also seeing market growth for speech technology in Europe is Umberto Basso, founder and CEO of H-Care, an Italian firm that specializes in IVR and virtual assistant technologies. According to Basso, the demand for IVR technology in Europe is twofold. In Europe’s older countries—the U.K., France, Spain, Germany, and Italy—Basso sees a push to replace or upgrade older, larger IVR implementations with new technologies that allow for more customer self-service. In countries that have not previously invested significantly in IVR—Russia and Turkey, for example—Basso sees a rapid implementation of what he calls next-generation IVR technologies.
“[Turkey and Russia are] very aggressive in terms of adoption of new technologies,” Basso says. “They are definitely jumping into the newest technologies without even the problem of the old investments.”
In Russia, H-Care is working on a large-scale implementation that uses speech technology in banking kiosks. Because of reasons related to geography and climate—isolated villages and intense winters—Basso says self-service ATMs are very widely adopted. “They’re looking to enhance the user interface of these ATMs, and we’re working with some companies on that,” he says. “We’ll see some speech technologies enabling more self-service in kiosks.”
Echoing both Basso’s and Pieraccini’s sentiments about market growth are Michael Codini, managing director of Voxeo Germany, and Sue Ellen Reager, CEO of @International Services, a translation and localization firm based in Atlanta.
“In the last year we’ve seen a massive spike—a good 30 percent increase—in business for Eastern Bloc Europe and certain parts of Asia,” Reager says. “We see the spike in Poland, [the Czech Republic, and] Russia.”
Codini describes much of Eastern Europe—especially Romania, Bulgaria, the Czech Republic, Poland, and Russia—as a hot market for contact center technology related to the replacement of legacy IVRs with proprietary application programming interfaces and proprietary protocols. “Lots of motivation comes from [Session Initiation Protocol] and [Voice over Internet Protocol], open standards such as CCXML, VoiceXML, and also due to the fact that the IVR market has been consolidated throughout the last few years significantly,” Codini says. He points to Nortel’s being folded into Avaya as an example of that consolidation.
Basso agrees with Codini’s assessment of the changing nature of IVR systems in Europe, noting that while the U.S. market is historically more mature, Europe is closing the gap. “We are switching to the next generation of IVR, where we are not just handling calls and passing them through to the operators, but we are really doing self-service functionalities through the IVR,” he says. “Everybody is moving from the old IVR infrastructure to the new IVR infrastructure.”
However, the experts are not in total agreement about the European market for speech. Basso is quick to point out that growth is not universal. In countries like Romania, Bulgaria, and Poland—where there are many call centers and call center operators are still paid low wages—there is a dearth of big IVR investments, he says.
Alexander Davydov, marketing manager at SVOX, an embedded text-to-speech solutions provider based in Switzerland, offers a different perspective, suggesting the Eastern European market for speech has less to do with speech technology and more to do with simple economic development. “What you can easily see is that some countries in Europe are developing economically more dynamically than others,” he says. “And then you have the split between old Europe, which is Germany, France, Italy, Spain, and Scandinavia, and Eastern European countries, like Poland, the Czech Republic, Romania, Ukraine, and Russia, where the levels of wealth are growing very fast, so you can say that they are gaining weight.”
Regardless of the reasons for market growth in parts of Europe, a host of factors might be preventing companies from investing.
According to Massimiliano Ferrero, Loquendo’s sales and marketing manager for Europe, the Middle East, and Africa (EMEA), the company had viewed Eastern Europe as a market with growth potential. However, he says, this potential has been hampered by the global financial crisis. Ferrero explains that countries with unstable political institutions and economies have been more affected by the global recession and are less equipped to deal with the crisis. For this reason, he says, some market potential is on hold.
Ferrero suggests another factor slowing growth relates to the size of emerging markets: Apart from Romania, Bulgaria, and Poland, most emerging countries are also smaller countries. “We have to invest much more to develop the language,” he says. “And we [see] even less return on investment because of the size of the market.”
And while these factors could be deterrents to growth, they also illustrate how the European market can be uniquely challenging for investors, speech providers, and enterprises.
According to Ferrero, the biggest difference between the U.S. and European speech markets relates to cultural factors. He says the acceptance of speech is tied to the way humans relate to technology, which differs from country to country and region to region. Ferrero says this “cultural obstacle” can raise costs and require the adoption of different approaches for different markets.
He also notes customers in the U.S. are more willing to interact with automated speech technology than their European counterparts, which is why different market approaches are needed even within Europe.
Learning the Language
Closely related to these cultural differences is the language barrier, which Ferrero says is the second biggest challenge for speech companies working in Europe. “If you want to come to Europe, not only will you have to develop new languages for each country—almost each country has its own language—but in some countries, like Spain, for example, you are going to have more regional languages,” he says. “This means it’s really, really coming to a point where the investment needed to come to the European market is higher than the one needed to come to the U.S. market.”
The language barrier makes it difficult to sell big projects, he adds. “If in the U.S. a medium project is 1,000 ports, in Europe a big project is 400 ports,” Ferrero says.
Davydov notes that working in Europe is very different from working in North America, where a company needs to offer only three languages: U.S. English, Mexican Spanish, and Canadian French.
“It’s really a low barrier to entry, so I think there are more players in the U.S. market,” he says. “But in Europe you can’t get away with that. You need a huge portfolio of languages.”
In Europe, Davydov says speech providers need to offer no less than 20 languages—a factor, he adds, that has led to more market consolidation.
“If you really want to enter the market big-time, you need those or else you wouldn’t even qualify in many cases,” he says. “And of course you need to have a pretty flexible system. So unlike many of our competitors, you need to be able to support those languages at the low cost. You can’t deploy five different engines to support 10 different languages. You need to have just one engine and a very streamlined architecture so you just swap languages. You can’t really afford to build everything from scratch for every different country.”
According to Codini, another factor that differentiates the European and U.S. markets relates to hosted versus on-premises deployments. He says in Europe most IVR deployments are on premises.
“If a large brand is operating in Europe, they’re all facing the problem that they have to deal with local carriers in these countries…and therefore they have to rebuild the system locally all over the place,” he says. “This has been done for years that way, and it’s not easy to change that business model. Many companies going the hosted path in the U.S. don’t necessarily go that path in Europe.”
Nonetheless, Codini sees this changing “due to the fact that the VoIP model is giving you more flexibility.”
And while Codini cites other differences, like more regulation of outbound IVR in Europe due to privacy concerns, he also points to the challenge of maintaining multiple languages in the same application context.
“The real challenging part is if you build a speech portal in the States, primarily you cover sometimes two, sometimes three languages—Spanish, French for the Canadian market, maybe, and obviously U.S. English. If you go into Europe, you end up fairly quickly with 25 to 30 different languages. The trick here is if you go into that market, you need to be aware of all the challenges you’re facing on multilingual application design and rollout scenarios.”
Despite the cultural and language barriers—barriers that primarily affect U.S. speech vendors looking to work in Europe—Reager says companies can overcome market differences.
“In the rest of the world, especially in Europe, they work with partnerships,” says Reager, who speaks 10 languages fluently and is proficient in dozens more. “If a [small] American company would partner with someone in Europe—right now everyone sees them as competition—that’s the way into the European market.”
In looking toward Europe’s future, Pieraccini says he sees more penetration of IVR, but thinks the market will eventually shift toward other speech applications. “IVR is a kind of transitional technology,” he says. “More and more consumers are massively moving to smartphones, so we need to change the paradigm and move from IVR technology to some other technology that involves not only speech, but also other input modalities.”
Basso is also optimistic about the future, particularly about the availability of next-generation mobile broadband networks to increase the level of interaction on mobile applications.
“We envision the convergence of the browsing experience and calling experience into one single application, which will be definitely possible,” he says, noting that self-service on phones will change with the growth of this capability. “I think this will be the most important step in the next few years.”