CCaaS Market Drivers and Inhibitors

June 2023

With a 21.3% increase in seats in the 12 months between December 2021 and December 2022, the CCaaS market remains one of the fastest-growing sectors in the contact center technology market, a trend DMG expects to continue for the next few years. An influential driver of this sector’s growth is the expanding footprint of these platforms, which increasingly include many workforce engagement management (WEM) applications and intelligent virtual agent (IVA) self-service capabilities. Enterprise customers continue to pressure CCaaS vendors to provide a broader offering of contact center applications to reduce the necessity of integrating disparate solutions. 

The number of CCaaS seats and revenue per seat are both growing rapidly. Increased seat adoption is driven by many first-time customers, including larger on-premise contact centers that have finally begun their migration to the cloud. Growth is also impacted by companies adding seats. And while it doesn’t contribute to seat growth, many enterprises are transitioning from one CCaaS vendor to another as they search for more reliable, secure, and feature-rich offerings. 

Both traditional and generative artificial intelligence (AI) technologies are influencing CCaaS adoption. Vendors are incorporating AI throughout their solutions, including in core routing and queuing components, to increase their value and “stickiness” to organizations. Adding AI to CCaaS solutions enables previously unimaginable practical innovations that benefit customers, employees, and the companies making these investments. AI-enabled solutions such as IVAs, virtual assistants (VAs), and real-time guidance are empowering service and sales organizations to transform customer and employee experiences. 

The impressive pace of CCaaS market innovation is attracting vendors and partners, including technology providers, distributors, value-added resellers (VARs), professional services firms, system integrators (SIs), master agents, and others, to this sector. Some of these vendors are resellers, and others enrich the offerings by adding their own capabilities or services to increase market value. As of the end of calendar year 2022, more than half of CCaaS revenue is coming from partners, a trend that is expected to grow.

Consumers are making their expectations known, including their preference for self-service and digital channels. Calls are not disappearing, but the fastest-growing CCaaS seat segments are omnichannel and digital. Furthermore, while more than half of today’s seats are voice-centric, the rapid demand for digital support is going to change this during the next five years as enterprises continue their digital transformations.

During the last few years, some noteworthy technology companies, specifically Amazon, Google, Microsoft, Salesforce, Zendesk, and Zoom, have entered the CCaaS market, if only to protect their customer bases. Much of the impetus for this can be attributed to their ongoing fight for ownership of the employee desktop. Regardless of their reason for entering, they will impact the trajectory of the CCaaS market, as they can reach audiences who did not previously consider using these solutions. 

The CCaaS market is fast-paced and exciting, but is not without its challenges. The unified communications as a service (UCaaS) vendors are causing confusion as they fight to retain their dominance over corporate and knowledge workers, who have not traditionally required advanced CCaaS capabilities. In reality, corporate employees only need one communications tool. When CCaaS is sold on a consumption basis for low-volume users, it may be as cost-effective as a UCaaS offering, yet it can include functionality such as transcription, voice biometrics, recording, quality management, interaction analytics, surveying, workforce management, real-time guidance, and more. 

Great progress has been made in improving CCaaS up-time, reliability, and security since many competitors rely on high-performing public data centers. Concerns regarding system outages, which most CCaaS vendors experience on occasion, still prevents some larger public companies from transitioning their contact centers to the cloud. As more CCaaS vendors deliver a reliability level of 99.999% and commit to financially-backed service level agreements, they are convincing the holdouts to migrate to the cloud. However, DMG expects about 20% of voice and omnichannel contact center seats to remain on-premise for the foreseeable future. 
To learn more about the innovative CCaaS market and its direction and for assistance in selecting the right solution for your company, see DMG’s Cloud-Based Contact Center Infrastructure/Contact Center as a Service Product and Market Report. To gain insights into the competitive landscape and market activity, see DMG’s Contact Center as a Service Worldwide Market Share Report.