Distributed Speech Revenues Predicted by Zelos Group to be $1.1 Billion by 2008

A report released by Zelos Group indicates that service providers are capturing a growing share of interactive voice response (IVR) equipment and software, as well as both live and automated outsourced voice.

"Outsourced, automated speech applications is a high-growth, but stealthy business that is carving out a growing percentage of the $1 billion automated teleservices industry," said Dan Miller, senior analyst for Zelos Group and author of the report, "Hosted Speech: Applying the Distributed Model to Managed Services."

Zelos Group conducted interviews and surveys with outsourced service providers. Respondents said enterprise decision makers are turning to outsourced providers of interactive speech, as well as services that leverage Web-based self-service applications. In essence, they outsource capital costs, business risk and technology risks to the likes of teleservicing companies West, Convergys and First Data Voice services and a group of "pure plays" that include: Tellme, NetbyTel, Eckoh (U.K.) and Vail Systems.

"After a period of relatively flat growth, the speech industry is poised for a dramatic upswing," said Miller. "Although businesses have long relied on IVR to put a ceiling on customer care and sales costs, much of the installed base of IVR is reaching retirement and needs to be replaced. This is a defining moment for hosting providers to step up."

In the report, Zelos Group states that open standards, like IP and VoiceXML, can allow for portability of these applications, while making them more affordable to enterprises. It also contends that outsourcing provides a mechanism whereby enterprises can pay a third party for network connectivity, call processing, voice processing and interfaces to existing databases and business logic, while avoiding a capital investment and sharing operating costs across a number of companies and applications.

"Enterprises historically regard the use of outsource as a way to reduce capital expenditures, operating expenses and technology risks," said Miller. "We believe that all enterprise decision makers who are considering IVR upgrades or replacement of CPE should think of a service universe that includes outsourced call handling."