2020 was a very disruptive year for CX services, marked by supply problems in the first half and a massive shift to WAH. It also proved to clients the key role of their CX services suppliers and the major benefits of outsourcing. The year started several trends and accelerate multiple others which will shape a dynamic 2021 for the industry. Here are five CX services trends for 2021.

1. Growth Returns

The Q3 results of CX services providers showed a mixed picture of record year-over-year growth (e.g., SYKES) and continued contraction (e.g., Atento) with the unifying impact of depressed margins due to the significant costs of WAH transition. Many of the variations stem from the ongoing restructuring of the individual players or their target markets' economic performance. Companies are moderately bullish in their guidance for 2021, with more aggressive targets rare, such as TTEC's ~15% y/y increase.

Overall expectations are positive, with NelsonHall predicting ~5% y/y expansion for 2021. Vendor goals for the year are to capture a greater number of first-time outsourcers and expand share with existing clients who realized the benefits of risk diversification and the challenges of running a hybrid on-site and at-home customer service delivery structure.

Further evidence of a strong future is the increased investment in the industry by private equity (for example, Everise and several smaller ones) and the public offerings such as the public spin-off of Concentrix from 1^st December and IBEX's IPO in August. 2021 will see more of this activity, starting with the listing of TELUS International.

2. Multilayer Delivery Networks Become Standard

The long-predicted scaling of work-at-home underwent a quantum leap last year, with vendors shifting 50%-75%-100% of their workforce to WAH. With the health and safety situation hopefully improved, 2021 will see less of a reverse than a recalibration of the delivery format. Certain destinations such as India and the Philippines will see greater diversifications to tier 2 and 3 cities; others such as China will see almost full return to the office, while still others in Eastern Europe, North Africa, and LATAM will maintain a smaller proportion of employees at home.

Both clients and CX services suppliers understand the need for a combination of on-site and remote workers from a BCP perspective and gain from a whole set of advantages, including greater flexibility in addressing demand uncertainty, access to new talent and higher employee satisfaction, and better productivity. This model is not a straightforward split of employee numbers between workplace types, but a more complex network combining hub and spoke delivery and gig and flexible work platforms such as the strongly performing Concentrix Solv. This network's success is underpinned by an ecosystem of tools and frameworks for effective remote employee recruitment, training, and engagement.

3. Relationship Balance Between Consumers and Brands Shifts

Two of the engines for CX services providers in 2020 have been content moderation work and asynchronous messaging interactions. Both are products of a changing relationship between consumers and brands. Factors such as the shift of consumer habits, including the rise of ethical and environmentally conscious buying, cross-sector benchmarks in personalization and convenience, and the megaphone of social media, push towards a more agile CX where these elements are actively incorporated. CX services leaders in the space have a range of offerings to support the need for one-to-many communication, proactive intervention, brand protection, automation, and self-service; for example, Concentrix's play in messaging or HGS' capabilities in social media crisis management.

The question for the next two to three years is how early consumer interactions will migrate to direct messaging and social channels and how quickly businesses can build these pipelines for marketing, sales, and support. In turn, these digital-only customer journeys require CX services providers to offer integrated services to a broader range of buyers within client organizations. 

4. CX Services Providers Go Beyond CX Services

The turbocharged move to remote work and online marketing, sales, and support in 2020 forces organizations to realign their CX services, marketing, and IT services suppliers. A mature ‘work from anywhere' model and a true digital CX require cloud-enabled contact center infrastructure, a world-class security practice, automation and ML development capabilities (and partnerships), analytics expertise for continuous insights, and deep domain and sub-process knowledge.

CX services vendors reacted in their 2020 M&A moves by vertically integrating, adding technical capability, or building vertical expertise. Some of the examples include:

• Teleperformance's acquisition of U.S. Health Advocate
• TELUS International purchase of data training and annotation services company Lionbridge AI
• Majorel's acquisition in the French banking sector for account switching
• Konecta's deals in marketing
• TTEC's additions in Amazon Connect integration and RPA.

2021 will see more of the same targeted deals and a few consolidations as in the Australian example between Probe Group and Stellar. As BPS providers create expertise to meet the more complex CX needs of businesses, smaller and local players will be squeezed out of the advanced market.

5. Key External Factors Demand Attention

2021 will continue to put a premium on external factors affecting CX services. Some of the obvious ones are disruptions in client industries, recession in core markets, and high unemployment. In parallel, CX services providers and clients will need to factor in potential issues with regional and global repercussions:

• Policy changes such as the new U.S. administration's position on offshoring and corporate taxation
• Data barriers and freedom of movement restrictions from the U.K. & EU Brexit trade deal
• Regulatory changes such as EU's PSD2 or social media user-content moderation
• Uncertainty around major events such as the Tokyo Olympics
• Data breaches and security threats
• Natural disasters and environmental issues.

In 2021, these risk multipliers will favor providers with scale and financial backing, delivery presence across continents, and client sector diversification.

How Should CX Services Leaders Prepare?

Vendors should focus on digitally integrated BPS with vertical expertise, an ecosystem of own and third-party technology accelerators, and new GTM targeting a broader array of stakeholders. They also need to reinvent their talent end-to-end lifecycle management for the workforce of tomorrow.  

How Should CX Services Clients Prepare?

Clients should prioritize CX services vendors that are ready to operate in highly fluid client markets and support a dynamic, demanding, and empowered customer.