Diversification
for Activities of call centres (ISIC 8220)
Diversification is highly relevant and critical for the 'Activities of call centres' industry. The sector is undergoing profound transformation driven by technological advancements (IN02) and shifting customer expectations. Relying solely on traditional voice support is unsustainable given the...
Strategic Overview
The call center industry (ISIC 8220) faces significant challenges from market obsolescence (MD01) due to automation and changing customer preferences, coupled with sustained margin pressure (MD03) from intense competition. Traditional voice-based support is increasingly being replaced by self-service and digital channels, leading to shrinking demand for basic services. Diversification, therefore, is not merely a growth strategy but a critical survival imperative for many call centers.
By expanding into broader Business Process Outsourcing (BPO) services, leveraging advanced technologies like conversational AI, or targeting new geographic and industry verticals, call centers can mitigate these risks. This strategy allows firms to move up the value chain, capture new revenue streams, and reduce over-reliance on commoditized services, thereby addressing the talent reskilling imperative (MD01) and competitive pressures (MD07). It also helps stabilize revenue streams against currency volatility (FR02) if geographic diversification is pursued.
4 strategic insights for this industry
Mitigating Market Obsolescence and Margin Pressure
Diversification into specialized BPO functions (e.g., data analytics, finance and accounting, legal support) or complex technical support services allows call centers to move beyond basic customer service, directly addressing 'Shrinking Demand for Basic Services' (MD01) and 'Sustained Margin Pressure' (MD03). These specialized services typically command higher margins and offer greater differentiation.
Leveraging Technology for New Service Offerings
Investing in and developing expertise around conversational AI, machine learning, and robotic process automation (RPA) enables call centers to offer 'AI implementation and management' services to clients. This addresses the 'Technology Adoption & Legacy Drag' (IN02) challenge by transforming it into an opportunity, and also helps address the 'Talent Reskilling Imperative' (MD01) by creating new roles for agents managing AI solutions.
Geographic and Vertical Market Expansion
Targeting new geographic markets (e.g., underserved regions, countries with stable economic conditions) or specific industry verticals (e.g., healthcare, fintech) allows call centers to reduce reliance on mature, saturated markets (MD08) and mitigate 'Structural Currency Mismatch' (FR02) if expanding internationally. This also helps in navigating diverse regulatory environments and cultural expectations.
Optimizing Talent Utilization through Cross-Training
By diversifying service offerings, call centers can better utilize existing agent talent through cross-training for new, complex tasks, combating 'Agent Under/Over-utilization' (MD04) and providing career development paths. This reduces the 'High Recruitment & Training Costs' (CS08) associated with constantly hiring for new, distinct roles and makes the organization more resilient.
Prioritized actions for this industry
Develop and Market Specialized BPO Service Lines
Leverage existing infrastructure and operational expertise to offer higher-value services like back-office processing, content moderation, or data analytics, moving beyond transactional customer service. This directly addresses 'Shrinking Demand for Basic Services' (MD01) and improves 'Sustained Margin Pressure' (MD03) by offering premium services.
Invest in Conversational AI and Automation Integration Capabilities
Build internal expertise or partner with AI firms to offer services in implementing, managing, and optimizing AI-powered customer interactions (chatbots, voicebots). This positions the call center as a technology partner, addresses 'Technology Adoption & Legacy Drag' (IN02), and creates new revenue streams.
Conduct Strategic Market Scans for Niche Geographic or Industry Verticals
Proactively identify and enter less saturated markets or industry sectors (e.g., specialized healthcare support, legal tech BPO) where competition is lower and demand for specific services is higher. This mitigates 'Structural Market Saturation' (MD08) and reduces competitive 'Pressure on Pricing and Margins' (MD01).
Establish a Dedicated Innovation Hub or Skunkworks Team
Allocate resources to research and pilot new service offerings, technologies, and business models. This formalizes the diversification effort, addresses 'Resource Allocation for R&D and Pilot Programs' (IN03) and ensures a pipeline of future growth opportunities.
From quick wins to long-term transformation
- Identify existing agent skills transferable to new service lines (e.g., data entry, basic transcription) and offer these to current clients as value-added services.
- Pilot a new service offering with a single, willing client to gather feedback and refine processes.
- Form cross-functional teams to brainstorm and research potential new market segments or service categories.
- Invest in specific software, training, and certifications for identified high-growth BPO services (e.g., Salesforce admin, RPA development).
- Formalize partnership agreements with technology providers (e.g., AI platforms) or specialized consultancies to gain expertise quickly.
- Develop comprehensive marketing and sales strategies tailored for new diversified service offerings.
- Establish dedicated business units or subsidiaries for significantly diversified operations to ensure focus and clear accountability.
- Consider strategic mergers and acquisitions to acquire niche capabilities or market access in new areas.
- Expand internationally to leverage different talent pools and access new customer bases, managing 'Structural Currency Mismatch' (FR02).
- Lack of clear strategic focus, resulting in scattered efforts and diluted resources across too many new ventures.
- Underestimating the investment required in technology, talent, and marketing for new service lines.
- Failure to effectively communicate the value proposition of diversified services to existing and prospective clients.
- Neglecting the core business while pursuing diversification, leading to decline in existing service quality.
Measuring strategic progress
| Metric | Description | Target Benchmark |
|---|---|---|
| Revenue from New/Diversified Services | Percentage of total revenue generated from services introduced in the last 2-3 years or from non-traditional call center activities. | Maintain >15% annual growth in diversified service revenue; aim for 30%+ of total revenue from diversified services within 3-5 years. |
| Customer Acquisition Cost (CAC) for New Services | Cost to acquire a new client for a diversified service offering. | Achieve a CAC for new services that is 20% lower than traditional services, or a CAC payback period of less than 12 months. |
| Gross Margin of Diversified Services | Profitability percentage of the new service lines after accounting for direct costs. | Aim for gross margins at least 5-10 percentage points higher than traditional voice support services (e.g., >35%). |
| Employee Skill Development Rate | Percentage of agents cross-trained or upskilled in new areas relevant to diversified services. | Increase by 20% annually; ensure >70% of agents have skills applicable to at least two service lines. |
Other strategy analyses for Activities of call centres
Also see: Diversification Framework