Contact centre industry grows 18% in S'pore

2006/08/17

CUSTOMER service, technical support and telemarketing were the three major services which helped propel the Singapore Contact Centre outsourcing industry to a 18.4 per cent growth to US$40.7 million last year, according to a recent study.

The study, by global consulting company Frost & Sullivan, shows that this year the market is expected to grow by 17 per cent to US$47.6 million. Thereafter, due to the fact that the market is already mature, growth is expected to slow. Until 2012, the market will grow at a compounded annual rate of 9.9 per cent to US$80 million.

Modern contact centres, loosely called call centres, typically provide service to customers through varied means - from Web self-service, interactive voice response, Web chat and e-mail, to the traditional live phone call interaction with a customer service representative. Last year, the number of agents working in Singapore contact centres rose by 21.7 per cent to 1,600. This is expected to rise to 3,100 by 2012, growing at a compounded annual 9.8 per cent.

The numbers of agents and seats are expected to increase steadily, albeit with single-digit year-on-year growth in the near term till 2008, according to the survey. Thereafter, there will be very negligible growth till 2012, the end-year of the survey.

Speaking about the results, Shivanu Shukla, Frost & Sullivan's industry analyst, said the market is already mature and 'is expected to register declining year-on-year growth in the coming years to reach 4.5 per cent in 2012'. He added, 'This steady decline is due to the emergence of countries like Malaysia and the Philippines in the region which perform the same tasks at lower cost and nearly the same quality.'

The companies that use Singapore as base of operation will concentrate on providing higher quality of work and service, building better and long-lasting mutual relationship with their clients, and increased reliability as their unique selling points in order to compete with lower-cost countries, he added. 'Singapore's major strengths are the high quality of skilled labour, emphasis on quality of work, excellent infrastructure, professional business environment, and supportive political atmosphere . . . These become the major drivers for the contact centre outsourcing industry,' he said.

Mr Shukla pointed out that among the factors inhibiting growth of the Singapore market are the high costs of labour and infrastructure. 'Although the quality of existing labour is high, it is getting increasingly difficult to attract and retain quality labour in the workforce,' he said.

According to him, agents are not keen on contact centres as a career option. 'This is reflected in the average agent attrition rate of over 20 per cent,' he added.

Mr Shukla said banking, financial services and insurance (BFSI) and technology support-related work are expected to be the major services in the near and long term in Singapore. BFSI had the biggest market share, followed by technology and telecoms in 2005. 'The companies that outsource from Singapore emphasise more on quality of work rather than cost. This is due to the nature of work in BFSI and technology sectors as they require higher skilled agents.'

The Frost analyst pointed out that customer service, technical support and telemarketing (in that order) were the top services in demand in 2005, with collections being a relatively minor contributor. 'Customer service is expected to continue to be top service as there is increasing demand for it in the market,' Mr Shukla added.

'Outsourcing jobs requiring lower skill level are expected to be allocated to other countries with Singapore taking up higher-level outsourcing jobs in the banking, financial, and technology domain. Hence BFSI and technology sectors are expected to increase their market share by 2012, while telecoms is expected to remain stable,' Mr Shukla said. This is also the reason why technical support and telemarketing are expected to steadily increase their share of the market.

In terms of countries serviced out of contact centres in Singapore, the proportion of work for the domestic market will increase slightly as more and more companies relocate some of their work to neighbouring countries.

'The major bulk of revenues are expected from the domestic sector till 2012,' Mr Shukla said. He added that telephone as a contact medium is expected to dominate with a market share of 80.6 per cent in 2005, slowly decreasing to 70 per cent in 2012 due to increasing use of other media like e-mail, Web, SMS (short messaging service) and IVR (interactive voice response).