Executive Summary: ISG Provider Lens™ Customer Experience Services - Global 2023

14 Sep 2023
by Namratha Dharshan, Sandya Kattimani, Jan Erik Aase

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The individual quadrant reports are available at:

ISG Provider Lens™ Customer Experience Services - Digital Operations - Global 2023 

ISG Provider Lens™ Customer Experience Services - Hybrid Working Solutions - Global 2023 

ISG Provider Lens™ Customer Experience Services - Intelligent CX (AI & Analytics) - Global 2023 

ISG Provider Lens™ Customer Experience Services - Social Media CX Services - Global 2023 


Despite economic headwinds, Customer Experience continues to be a key priority for organizations that ties closely with their organization’s strategic goals.

State of the industry

The growth of CX services has been phenomenal in the last couple of years, which reflects its growing importance among enterprises and their drive to ensure the best and most seamless experience for customers, with the intent of winning and retaining them. Enterprises are leaning on managed services partners to help them drive and transform their CX functions.

Contact Center CX Managed Services Grow

The contact center market generated over $2 billion in annual contract value (ACV) in 2022, an increase of 34 percent YoY. The number of contracts awarded in 2022 was high by around 30 percent over the previous year.

ISG has noted that a majority of executives worldwide consider CX as a top strategic priority that is off limits to cost optimization efforts. The global ISG Buyer Behavior Study, which included a survey involving more than 250 senior executives, found that 48 percent of respondents consider CX of prime importance in their organization’s strategic direction, and 53 percent expressed an intent to completely protect CX from the cost optimization programs adopted. Despite the economic headwinds, CX continues to be a top priority that must align with an organization’s broader strategic goals.

However, in our latest buyer behavior research, we see enterprises in customercentric industries such as retail, banking and healthcare showing a significant gap between CX performance and business performance — reflecting that a top corporate strategic priority is falling short of internal expectations. Part of the gap exists because of the changing landscape of the global CCCX market, where traditional approaches to contact centers is seeing a disruption.

Providing the best CX requires a fine balance between people and technology, and if organizations do not realize the importance of doing so, they will continue to fall short of achieving a successful CX strategy. Under these circumstances, enterprises will continue to invest in CX and be rigorous in choosing providers that can address this gap.

Complexity of the CX environment driving growth in consulting engagements

The complexity of designing a customercentric approach has increased manifold, which is driving the need to take a consultative approach to designing an enterprise’s CX strategy, involving people, processes, data and technologies. Enterprises are leaning on CX service providers to have a holistic understanding of changing customer expectations, conduct an in-depth assessment of an enterprise’s digital maturity, bring in the best practices and even understand the industry nuances to deliver tailored solutions that enable a quick go-to-market strategy.

Pricing evolution

In today’s market conditions and uncertainties, enterprises face the challenge of finding a balance between investing in CX and optimizing costs. They depend on their partners to bring in innovative pricing compositions that include outcome-based pricing and commercial structures such as the gain-share model to drive business values and outcomes.

The need for right shoring

Businesses have been through a rude shock, facing disruption due to the pandemic and the war in Europe. This also led to the increased prevalence of work-from-home or hybrid working models. Enterprises are facing challenges on several fronts, where balancing business continuity and cost optimization and managing and retaining talent have become a priority. In this environment, right shoring has been increasingly gaining traction, where companies want a fine balance between onshore, nearshore and offshore centers.

Under the ISG Provider Lens™ Customer Experience Services study, we observed that apart from cities in India, such as Coimbatore, Indore and Jaipur, Bulgaria, Poland, Egypt, South Africa and Mexico are some of the other prominent locations that are emerging as delivery centers in the CX space.

Increased investments in industry-specific solutions

During Q1 23, industry-specific BPO services surpassed $1 billion in ACV for the second time in history. This reflects CX providers increasingly recognizing the need to invest in developing solutions that go a level deeper and address industry-specific requirements, which is a key enabler in providing highly contextual and personalized services.

The rise of digital channels

Voice calls continue to reign the customer service industry. Despite the growth in AI adoption and with generative AI taking technology to the next level, voice calls will continue to hold a position as one of the preferred channels for complex tasks and, most importantly, play a crucial role as a key CX differentiator for enterprises. There is a significant rise in the adoption of conversational AI, where around 90 percent of service providers have begun using it as a key option for their customers. Social media has become another key channel; more than 80 percent of service providers are harnessing this channel to reach their clients. As the number of channels increases, providing a seamless experience across channels and taking an omnichannel approach will take center stage.

The growing importance of AI and analytics, especially in boosting agent experience (AX)

AI is here to stay and has already made significant inroads, especially in the customer service industry. With the advent of generative AI, the technology is scaling to new heights. These technologies are important and being leveraged not only in the area of CX, but also being recognized as equally important to improve AX through the use of AI-based tools. Enough has been spoken about leveraging AI to enhance CX, but the direct correlation between enhancing AX and improved CX can no longer be overlooked. While organizations are focused on building a highly customer-centric business, the foundation lies in having a good agent experience, which explains this area gaining a huge focus. While enterprises are leveraging technologies such as conversational AI and intelligent IVR as customer-facing tools, both enterprises and CX providers realize the need to boost AX. To this end, adoption and innovation in this space are changing dramatically. 

While many enterprises have large volumes of data, many are still grappling with the twin challenges of structuring and monetizing data. Investments in data analytics are growing as the importance, use cases, and benefits are taking shape. Data analytics is becoming table stakes as opposed to being a value addition in any deal structure. It acts as a differentiator for enterprises in their engagements with their service partners; enterprises can effectively measure the ROI with the use of data analytics and, most importantly, empower agents with insightful data.

In addition, the use of data analytics is also enabling data monetization and the establishment of data ecosystems that improve data sharing and foster new revenue streams.

The hype around generative AI

It is the most talked about technology today. But what does it mean to the CX industry? Generative AI — even though it is in its nascent stages — has a huge potential to disrupt CX. It can have positive implications for this industry, as evinced from the number of use cases already identified and the number of POCs in place. Some of the use cases include call summary and smart agent assist, further empowering FAQ/self-service, live translation, conversational AI and content moderation/management. However, since the concept is relatively new, many aspects related to security need to be ironed out, with guardrails defined, for its effective and safe use.

These are exciting times for the CX industry. While it is a known fact that customer expectations are dramatically changing, the advent of advanced technologies can play a crucial role in enabling organizations to meet the exponential demands of customers.

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