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Summary

With the reporting season for publicly traded contact center outsourcing vendors coming to an end, a healthy picture of the CRM outsourcing industry’s 2014 revenue performance is emerging. For the most part outsourcers posted net gains in both their full-year and Q4 results, giving ample reason for optimism. However, Ovum cautions that 2015 will be a challenging year for the CRM services space, both in terms of industry-driven disruptors and external factors.

Q4 results point to strong finish in 2014

The final three months of 2014 were generally good for publicly traded CRM outsourcing vendors, representing a solid finale to what most observers believe was one of the most positive for the industry since the global financial crisis. Notable performances in 4Q14 include Teleperformance, which reported a 24% increase in turnover relative to the same period in 2013 (6.5% on a like-for-like basis), and Sykes, whose quarterly revenue increased 4.5% year-on-year. While for the most part the industry performed positively, a notable exception was Firstsource, whose revenues for the period dropped nearly 6% compared to 4Q13.

2014 revenues indicate CRM outsourcing is regaining strength

Broadly speaking, 2014 was a solid year for contact center outsourcing. This was illustrated by the fact that all US-based publicly traded vendors grew their revenues year-on-year, with standout performers including Sykes, TeleTech, StarTek, and Convergys (whose revenues were boosted by its acquisition of Stream Global Services in January 2014). Among non-US outsourcers that had reported their financials at the time of writing, Teleperformance was certainly a standout performer, with annual revenue growth of 13% (9.9% on a like-for-like basis).

2015 will challenge vendors to maintain momentum

CRM outsourcing vendors will need to innovate in 2015 in order to navigate potential business obstacles and continue to grow their revenues. Within the industry, outsourcers will face tremendous pressure from clients to limit price growth, and this trend will be compounded should more consolidation occur within the sector. Equally, uncertainty related to the economic situation in developed economies across Western Europe and Canada could hurt consumer demand, reducing call volumes and the need for contact center services. Outsourcers will need to focus on quality in all delivery centers, while at the same time promoting value-added services, such as consulting and analytics, in order to ensure 2015 finishes on the same positive revenue footing as the previous year.

Appendix

Author

Peter Ryan, Principal Analyst, IT Services

Peter.ryan@ovum.com

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