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Science fact: Voice systems next step in customer contact


Even as offshoring call center activities continue to gain popularity among many financial services industry companies, there are signs that some companies are beginning to move to the next step in cost savings.

London-based market analyst Datamonitor P.L.C. took note recently of signs that speech recognition technology may be poised to take the place of some companies' offshore call centers.

Noting that it predicted three years ago that voice recognition technology would compete with offshore customer service agents, Datamonitor last month cited London-based bank Lloyds TSB as an example of such a move.

The bank recently announced plans to close its contact center in Mumbai, India—primarily used to handle overflow calls from U.K. customer service agents—as use of a voice-recognition self-service phone system has eliminated the need for the offshored customer service capacity.

In support of its belief that voice recognition systems will offer competition to offshored call centers, Datamonitor says an offshored call center in a location such as India saves Western businesses about 25% to 35% per transaction, but calls serviced through an automated speech recognition system cost far less—just 15% to 25% of the cost of an offshored customer service call.

Datamonitor analysts note that while globalization and cost pressures will continue to fuel interest in offshoring for many companies, the use of speech recognition technology will grow as well and in some cases compete with offshoring as an option.

Companies will look for "the optimal blend of automation and agents for customer care," Daniel Hong, lead analyst of voice business research at Datamonitor, said in a statement.

"It is important to note that increased reliance on speech will not supplant the need for offshore contact centers for a lot of companies, rather the technology will serve as an adjunct to offshore operations as these companies look to improve customer interaction in a cost-effective manner," Mr. Hong said.

Indeed, the likely outcome for many companies will be a blend of offshored call center and self-service voice recognition capabilities, according to Datamonitor.

Another Datamonitor analyst, Peter Ryan, senior analyst of contact center outsourcing research, noted in a statement that while Western companies see a variety of benefits in placing some customer service functions offshore, "It is also apparent that many firms that feel offshoring is a one-stop shop are rethinking their strategy, and are incorporating nearshore/onshore capabilities in addition to self-service."

While speech recognition was once seen as a "futuristic technology that would never leave the realm of science fiction," Datamonitor said technological and commercial achievements in speech recognition along with increased central processing unit performance and reduced information technology hardware costs have helped make speech recognition technology a commercially viable option for a variety of businesses.

And voice recognition technology is becoming more available in the marketplace. By some accounts, the market for voice recognition technology exceeded $1 billion for the first time last year. Meanwhile, according to San Francisco-based Opus Research, the market for call center-type voice technology was approximately $600 million in 2006 and will be twice that by 2009.