Enterprise products, solutions & services
Source: Telecom Asia
China's Huawei is known mostly for its telecoms infrastructure, but it has also emerged as one of Asia’s most important contact center vendors. Its release of a cloud-based system, the eSpace Cloud Contact Center solution, raises the question of what it would take for Huawei to muscle its way into the first rank of global contact center infrastructure vendors.
Leaving aside political considerations (particularly security and protectionism), Huawei can choose from three pathways to establish itself as a strong, global contact center competitor. These are:
the purchase of an established western vendor direct investment in sales and marketing to capture customers in the mature markets of North America and Western Europe aggressive expansion across the global emerging consumer markets, where contact center growth will be quicker than in the West. Ovum believes that the company will concentrate on the third option to grow its contact center profile.
Huawei has two distinct contact center product lines, one aimed at telecoms carriers and one at enterprises. The eSpace cloud system comes out of the enterprise division, but is said to be designed on the same core technology infrastructure as the company’s IP Contact Center (IPCC) solution, which is built for carriers.
Both IPCC and eSpace are sold worldwide, with the majority of deployments in China and many of the rest in emerging contact center markets. IPCC is running at 2,000 sites with a combined 150,000 agents.
From a networking and scalability point of view, Huawei clearly has the capability to provision high-volume, high-criticality contact centers, and to do it with technology that includes state-of-the-art applications such as multimedia call routing, self-service, and workforce optimization.
The offering that is available is as sophisticated as those available in the mature North American and European markets. With a dedicated cloud offering, Huawei is feature-positioned to compete with Avaya, Cisco, Siemens, and other established vendors.
The fastest and most dramatic move Huawei could make would be to acquire all or part of one of the existing vendors. Although Alcatel-Lucent sold it to private equity firm Permira, Genesys would be an attractive option for Huawei, as it also has a healthy business in both the enterprises and carrier sectors. Other potential acquisition targets include Aspect (also held by private equity, with a major investment by Microsoft), Interactive Intelligence, Altitude Software, or pieces of Siemens.
Direct acquisition is the least likely scenario to come to pass. There are obvious regulatory hurdles to any one of these acquisitions. And even though Huawei appears to have sufficient funds to meet even a billion dollar asking price, the greatest hurdles lie in the integration of product lines, sales forces, and underlying technologies.
What Huawei would want from any western company that it bought would be market presence, sales channels, patents, and an existing customer base in new geographies. Those goals could be attained just as easily through partnerships and joint ventures, at lower cost and with less risk. If Huawei is in a rush, buying an existing provider makes some sense. Otherwise, there are smarter ways to grow globally.
Western companies regularly attempt to enter global markets on their own or with channel partners, relying on their experience and brand recognition to pave the way for their marketing efforts. However, it is unlikely that such an approach would work in reverse, with a large, but relatively unknown, Asian company entering the US or UK market for contact center infrastructure.
The mature markets are saturated, with slow growth prospects for new centers in the coming years. Most of the infrastructure business in North America is replacement or upgrade business, not greenfield, which makes it much more difficult for an outsider to gain a foothold.
Also, new customers in these regions require advanced features at a low price, with the maximum of handholding. They rely heavily on their technology vendors as deployment partners and repositories of industry best practices. Huawei is unlikely to be able to play those roles in the mature markets of North America and Europe.
Already Huawei has numerous R&D centers in Europe across its ICT businesses, and has become a strategic vendor to many of the region’s carriers. It would not be surprising to see Huawei expand its efforts to establish name recognition and visibility in the developed world. For carrier providers and consumer electronics companies, such a hybrid strategy makes sense, but it is unlikely that Huawei will pursue it as a means to capture contact center customers and market share.
The real prize for all contact center vendors is the “Rest of the World”: the huge regions where the rising middle classes are adopting western-style consumer cultures, along with the desire for telephone- and web-based customer service. These regions, which are mainly in Asia, but also in Latin America, parts of Africa, Eastern Europe, and the Middle East, are where new centers will be developed and new infrastructure purchased.
Huawei already has a beachhead here. Its tools scale up beyond 10,000 seat centers, and with the release of eSpace it has a hosted solution that adapts to the price-sensitive middle of the market. The company has succeeded in positioning itself as a lower-cost provider of tools that appear to match the capabilities of its western peers.
Rather than competing to displace, for example, an Avaya switch in Nebraska, it makes more sense to look to China, India, Mexico, Indonesia, and Brazil. These are huge markets in which Huawei can leverage its expertise without the baggage of western cost structures and incumbent competitors. The company has already started down this road, and counts rapidly growing carriers such as MTN Nigeria (2,000 agents), Brazil Claro (10,000 agents), and China Mobile Guangdong (13,900 agents) as key customers.
As Huawei does more business outside China, it is likely to become better at brand management and international marketing. This will provide opportunities to then backfill among customers in the more mature markets, creating a cycle of increasing name recognition and customer awareness. Opting to concentrate on the emerging markets would allow Huawei to sidestep regulatory and political issues in the developed West while still claiming a sizable share of the global market.
It may be that all it will take for Huawei to become a global contact center powerhouse is time.