It seems that the telemarketing services market favors buyers. Indeed, several recent reports indicate that telemarketing services have a buyer power score of 3.5 out of 5. In light of this, IBISWorld, a business intelligence firm, has released a new report on the procurement of telemarketing services, which the company says can be of great help to procurement professionals when looking to purchase telemarketing services.
According to IBISWorld, such a buyer power score indicates favorable negotiating conditions for buyers. The score reflects the largely positive market structure and market risk associated with telemarketing services.
“The market for suppliers exhibits a low level of concentration, keeping competition up and helping to cap price growth. Additionally, switching costs for buyers are low, as long as they protect themselves through a service-level agreement, and there is little risk within the supply chain for telemarketing services, which shields buyers from large price fluctuations. Buyers can also feel comfortable with the financial health of telemarketing service providers,” Olawale Harrison, procurement analyst at IBISWorld said in a statement.
The report also suggests that the recent price increases in telemarketing services have been minimal, slightly exceeding inflation targets. Nevertheless, the report does expect a slight increase in prices over the next three years, due to a shift of labor back to the United States. This is primarily due to increases in wage costs in countries like India and the Philippines, as their respective economies have continued to develop.
“However, buyers should analyze prospective suppliers on a case-by-case basis to determine if any room in margin exists,” added Harrison.
IBISWorld analysts insist that as prices rise, buyers should look to take advantage of new value-added services that suppliers have begun to provide, such as cross selling and upselling. While such services increase upfront costs, they can generate additional revenue streams for buyers and thus result in a higher return on investment.
IBISWorld’s new report also highlights the top four companies in the market, namely Convergys Corporation, West Corporation, SITEL Corporation, and Sykes Enterprises Inc.