WHEELING & DEALING
Your Call Is Important To Us
By Jean-Marc Levy

First published in HRO Today (July-August 2004)
 

Speech recognition systems continue to attract call center outsourcing investment capital.
 

In an early-2003 column, I introduced Livewire Logic, a provider of web-based virtual agents offering online customer service through intelligent text-based conversations. At the time, I speculated that a speech-based solution would be the next step in the evolution of CRM and customer service outsourced solutions.

A few months later, I reported that several leading VCs seemed to agree and had invested $7.5 million in Unveil Technologies, a provider of voice and text-based customer service solutions, and the winner of Call Center Magazine’s 2003 Product of the Year Award.

Later that same year, TuVox, another provider of call centers speech-based applications, raised $6 million from a group led by Foundation Capital. With an application offering aimed at helping businesses automate call types ranging from typical “transactional” calls (making payments, checking balances) to “knowledge-based” calls (problem resolution, step-by-step instructions for product usage, FAQ's), TuVox became in turn Call Center Magazine’s 2004 Product of the Year.

While readers of this column know that I don’t mind tooting my own horn, I am not the only one taking notice of the considerable potential of speech-based call center applications. Yankee Group estimates that solutions based on VoiceXML, the current leading standard for speech-based applications, are expected to handle 10 billion calls in 2004. And Microsoft’s Speech Server 2004, released earlier this year, aims squarely at the space occupied by legacy call center applications based on the more expensive and harder to maintain Interactive Voice Response (IVR) technology – “press one for … press two for …”

And of course, VC’s and private equity investors, who had cooled off quite a bit to a mature CRM and call center outsourcing market, are now warming up again to the significant opportunity made available by a next-generation technology that can reduce a call center’s already low operating costs by an additional 15% to 20% annually. For instance, recent investments in the space have included El Dorado Ventures and Palomar Ventures’ $6 million investment in Voxify, and an $11 million investment in UK-based Fluency Voice Technology led by Favonius Ventures. Both companies have developed technologies that allow their customers to use automated agents to engage callers into “conversational” dialogue and to perform advanced customer service functions such as finding out a bank account balance or booking travel tickets using natural language over the telephone.

Of course, as is often the case when a particular industry segment heats up for private capital investors, funding has also started trickling down by association into other related areas of that industry, and several more traditional CRM companies successfully raised capital earlier in the year as well. Earlier this year, for example, Five9, a provider of hosted contact center solutions based on the more traditional IVR technology, raised a $5 million first round of funding from Hummer Winblad and Mosaic Venture. And in the midst of the heated and emotional debate surrounding the outsourcing of U.S. jobs to countries that offer cheaper labor, Alpine Access, a company offering outsourced customer service functions through a network of 3,000 part-time home-based U.S. employees, raised $5 million in support of its anti-offshoring platform from a group led by Stolberg Equity Partners. An ironic twist given the notorious track record of call centers as outsourcers of jobs.

So the next time you call a customer service line, don’t assume anything about the person at the other end of the line. You might be on the phone with a technical service rep in India, a part-time work-at-home mom in Indiana, or a state-of-the-art computer speech processor.