VoIP reaches tipping point for call centers, analyst says

Voice over Internet Protocol, though used in call centers since 1997, is just now reaching a point where it can save a large amount of call center operating costs, Yankee Group senior analyst Art Schoeller says. “VoIP is reaching a tipping point for call centers,” he says.

VoIP has been used to a limited extent in call centers for several years, but is now beginning to attract widespread attention among retailers looking to increase efficiency in the administration of call centers, experts say. “VoIP is big,” says Shawn Schwegman, vice president of technology for Overstock.com Inc. “We’ll be moving to it over the next six months.”

Although VoIP is promoted as a less costly means of transmitting telephone calls when compared to traditional phone lines, the advantage to call centers is mainly in a more efficient way to route incoming customer calls to available agents located across more than one center, Schoeller says. He adds that cost savings from VoIP may not even be a factor for call centers, because they typically already pay discount rates for large call volumes.

VoIP automatically routes calls through a single computer system to agents in multiple call centers, rather than through a separate system dedicated to each call center under traditional telephone networks, Schoeller says. Earlier types of technology could support a single system, but it was expensive and difficult to implement, he adds.

Until recently, the infrastructure underlying VoIP, such as Internet routers, was not good enough to provide calls consistently without a noticeable delay in transmission, Schoeller says. “You don’t want to mess up customer calls with poor transmission quality,” he says.

But the latest versions of routers and other elements of VoIP technology have recently reached a point where they can support transmissions without any noticeable loss in time or quality, he adds. “The technology is feasible now, but you have to do this right,” Schoeller says. “You need a solid IP network that supports real-time voice traffic. For many companies, their IP network is for data only and is not up to the task of doing VoIP.”

With the right technology in place, however, call center operators should be able to save about 7% of their labor costs, Schoeller says. A typical call center has an efficiency rating of about 78%, meaning that 78% of its agents are being used at any one time. By using VoIP to route calls to agents in multiple centers, Schoeller figures that call center operators should be able to increase efficiency to about 85%, an increase of 7 percentage points. “If you have 300 call center agents and can reduce staff by 7%, that’s 21 salaries,” he says.

VoIP will become part of the common infrastructure of most call centers over the next 2 to 5 years, as companies replace telephone equipment last updated in 1999 for the Y2K overhaul, Schoeller predicts.