Point of View

Will COVID-19 put the nail in the coffin of the legacy contact center?

April 3, 2020

The coronavirus pandemic is exposing an outsourcing industry that has been wildly unprepared for an event like this in many ways, and the contact center BPO industry is no exception.  India and the Philippines have become the examples of world class service delivery centers, but sadly their infrastructures for moving their delivery to work-at-home environments is far from adequate, especially when there is no time to prepare for the transition.


The customer services outsourcing industry has stagnated for more than two decades with a tired “butts-in-seats” delivery model due to lethargy on the part of both the enterprise buyer and service provider to invest in changing how they delivery customer experience to customers. In short, there never was a burning platform for either to make any radical changes to the model that would enable a more digital, scalable approach that would result in greater efficiency, lower cost and rapid access to critical data. 


With the onset of COVID-19, they now have a platform that literally has flames leaping out of it, where they have no choice but to make dramatic changes at a speed that will negatively impact many enterprises’ customer experiences because many simply were not prepared for it.   Some service providers will likely fall by the wayside because they didn’t have the resources of leadership wherewithal to compete and stay afloat in this crisis market.


Those providing third-party services to companies desperately needing to assist their surviving customers require incredible leadership, agility, prior investments, and the ability to adapt to a digitally enabled and optimized customer service model.


The immediate problem: COVID-19 will increase contact volumes in the short term, but who is equipped to handle them?


The constant customer queries to request flight re-bookings and refunds are already starting to subside, but some industries, such as ecommerce, will continue to see a spike in volume in the short term. The immediate reaction from contact center services providers was to attempt to make delivery centers safe in areas where delivery centers are still allowed to operate.


We were eager to look to providers’ diversified geographic models to mitigate the impact from places that are heavily affected, but it quickly became clear that the far-reaching nature of this virus would mean that no geo would be unaffected. Plus, it also became clear that policies instituted were woefully insufficient for protecting employees from the scale and danger of the pandemic. The disruption to brick and mortar centers created a lot of scrambling to implement work-from-home policies, which has myriad challenges, including client resistance, safety and security, infrastructure inadequacy, and many more.


Service providers that have already invested heavily in a work-from-home model will be the only ones able to rise to the challenge as many enterprises quickly shift to a remote model. Other providers that have invested in a crowdsourced model, such as Concentrix’ SOLV platform, or Wipro’s Topcoder and emerging providers that began on a crowdsourced digital platform, such as TaskUS and Needle, also have the potential to step up and fill some service gaps. Still, this is a tremendous challenge even for those that proactively made upfront investments. For those who were largely reliant on the traditional service center model, they are scrambling to create some scale in a work at home model in locations that are not very fit for purpose, in inadequate home environments with spotty broadband and many needing a new computer to process their calls.


COVID-19 will bring out the good, the bad, and the ugly in customer experience


Aside from all the disruption the pandemic has created, making brick-and-mortar contact centers a thing of the past nearly overnight, the COVID-19 crisis will quickly unearth an underlying, more fundamental disruption. With contact volume up and fewer healthy people available to handle it, it will be clear that many customer engagement strategies lack a fundamentally sound and customer-oriented design. COVID-19 will shine a spotlight on all the broken customer processes, value chains, and digital experiences—especially highlighting the lack of self-service and automation that consumers crave. While many service providers have proved adept at rapidly transitioning to a work-from-home model, very few customer contracts and relationships enable the quick transitioning to digital channels.


This crisis will drive the development of a digitally optimized contact center, but the short term will be painful


While for now, it seems there’s enough capability to keep critical interactions functioning, a lot of customer service functions will suffer. When this pandemic shakes out, there will be more repercussions beyond handling call volumes and dealing with sick employees. This crisis has the potential to shake the very foundation that the contact center services market has been built upon. We’ve been talking a lot about the rise of the intelligent customer engagement paradigm at HFS in the last few years, but it’s been largely viewed as aspirational. This global COVID-19 crisis is ripe to expose just how un-intelligent customer engagement is at most companies.


In a digitally optimized contact center model (see Exhibit 1), you would completely eliminate interactions that have no value and frustrate customers and enterprises. Eliminating mutually unsatisfying interactions is not just about call deflection for the sake of it. It’s about being smarter and understanding where in the value chain it makes sense to engage customers. It is surprising how much contact center volume still focuses on low-value or no-value interactions that are so easily eliminated or automated, such as password resets. A digital contact center would use automation and self-service options for low-value interactions, saving the person-to-person interactions for topics that require empathy, expertise, and all the other things that humans are good at, whether they’re taking the call or chat from a newly designed brick-and-mortar center or a secure station in their own homes.


Exhibit 1: The digitally optimized contact center is the prototype for future services models 




Source: HFS Research 2020



The Bottom Line: COVID-19 will bring about the eventual digitally optimized contact center, and smart service providers can play a pivotal role.


The crisis at hand will make or break many brands’ customer engagement models, and will heavily impact contact center service providers. Those that have invested heavily in work-from-home infrastructure and taken an aggressive approach to digital solutions will survive, but COVID-19 will accelerate the bifurcation we’ve seen between firms in this space that have invested in technology platforms and future-proofing their businesses and those that have kept their heads in the sand. Emerging at the other end of the pandemic stronger will require the capabilities we outlined above: be prepared to preserve customer contact during a global crisis and to be smarter about customer engagement moving forward.


Moreover, the how the current crisis is managed from the service provider will dictate the level or trust and empathy for the future relationship with the client.  Those with some degree of preparation, humility, honestly and flexibility will surely retain the business of their clients for years to come, while those that hid behind a deluge of PR and failed to connect with their distressed clients will quickly be confined to the road kill this current crisis will leave behind.


At some point, when business gets back to whatever the “new normal” looks like, companies will re-evaluate their service providers and their customer service processes across the board. Providers that have weathered the storm will have the expertise and capabilities not just to shift a bunch of bodies around but also to re-design and implement the new optimized digital customer experience (CX) model. The pandemic is also going to make and break some relationship models; service providers and their clients alike will be rethinking the way they want to engage moving forward. In a time of crisis, how providers and clients work together in a real partnership and how much trust remains will be put to the test.

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