Hosting has become the norm, not the exception – but is it working for you?

Gartner has said that there will be a 17% compound growth over the next 5 years for contact center adoption of hosted call center solutions.

April 9, 2013

1Stream

Gartner has said that there will be a 17% compound growth over the next 5 years for contact center adoption of hosted call center solutions, and they expect that by the end of this year, 75% of global call centers will be leveraging hosted call center solutions. The same report reveals that the Enterprise Software market is flattening at about 5% and will remain so for the next few years – another strong indicator that the Contact Center as a Service Model (CCaas) is becoming the industry standard.

Hosted call centers operate as a network-based service, whereby a service provider operates the underlying tech platform and then leases its services and features to end-users or a usage-based or monthly fee, thus lending its economy of scale and expertise to the call centre. Simply put, the service provider handles the technology of the call centre (including security measures, software upgrades and other functionalities) whilst the operator focuses on the day-to-day running of the call center.

The trend has clearly reached South Africa as well. According to industry experts, 1Stream, competition in the model has become widely accepted locally. 1Stream recently won the Frost & Sullivan award for the Most Entrepreneurial Firm in the hosted call centre space.

Gartner attributes the sudden uptake to the increased financial pressure placed on companies as a result of the global recession, but as the functional gap with premise-based solutions began to narrow, call centers began to view hosting as the most logical way to run their operation.

However, Jed Hewson, director of 1Stream, cautions that companies should be discerning about which hosted solution they choose as not all are created equal. “Although the recession might have had a part to play in the rapid adoption of the hosted model, cost is not the only factor to consider before choosing a provider,” he explains. “There are several companies who entered the market by simply adding hosting to their existing services, such as PBX or telecoms, without the necessary expertise or experience required to truly make it work. Hosting is not just about cutting costs – it starts with enabling a call centre to run as efficiently as possible. Cost savings is one aspect of that.”

That being said, it is easy to understand why the reduction in operating costs is so attractive to call centers – Frost & Sullivan estimates that switching to a hosted model can cut costs by at least 45% or more.

“It is meant to be cheaper, but not cheap,” Hewson says. “You need a best of breed product, and you need a company who can deliver it. We’ve seen situations where call centers download free software and pay a nominal fee to an IT professional, only to find that cutting corners cost them dearly in the long run when they have to update the system or add a new functionality. The capex investment is significantly lower when switching to a cloud-based hosted provider, but you do however have to invest in a provider with the necessary expertise and support if you want to optimize productivity.

Hewson advises call centers to choose a partner with a proven track record and a consultative approach. “You are going to need someone who is able to reduce your operating costs – but still provide you with the support you need should something go wrong or if you need changes. Simply buying a solution-in-a-box is not going to be sustainable long-term.”