Microsoft poised to tackle telco call center after $19.7B Nuance deal

Microsoft closed a $19.7 billion deal to acquire artificial intelligence (AI) software company Nuance Communications, setting the stage for the cloud giant to better address a top telco priority: digital transformation of the contact center.

Operators are increasingly looking to incorporate cloud technologies into their operations. Peter Durlach, Nuance’s chief strategy officer, told Fierce that the contact center tends to be one of the first operational areas that gets targeted for an overhaul. That’s in part because improving the experience of customers dialing into call centers can help boost net promoter scores and increase revenue generation by making it easier for consumers to step up to higher-priced plans or add on new services.

Shifting to a digital contact center model with the help of AI and the cloud can also help operators cut costs by reducing the amount of staff required to field calls. “If you don’t have automation technology, you just have to hire more people and no one has the money for this,” Durlach said. “We can often automate as much as 70-80% of the interaction time across use cases for a telco customer with an increase in service quality.”

Nuance already works with nine out of the top 10 communications service providers today. By combining its technology with the scale of Microsoft’s cloud infrastructure and AI resources, Durlach said the pair will be able to “accelerate the raw performance” of Nuance’s automation systems.

For telcos, that means faster deployment of digital contact center technology and much greater flexibility to make changes to the customer journey on the fly. It also means deeper integration with customer relationship management (CRM) systems to remove silos and maintain context between different communications channels including web, chatbot and phone lines.

“The technology is only as good as the outcomes it delivers,” Durlach said. “So by connecting these two things we believe that a telco client, when they’re looking and saying who should I use to help modernize my contact center, when they see Nuance and Microsoft together that will look very different to them from a KPI capability and outcomes point of view than when they’re looking at potentially other large cloud providers.”

Microsoft struck the deal to acquire Nuance in April 2021. The transaction closed at the end of last week. Now that the deal is done, Durlach said the pair can get to work on integration. While some initial planning was already done, it doesn’t yet have a set timeline for the rollout of new or enhanced services, he added.

Recent data from Grand View Research showed the global contact center software market was valued at $23.94 billion in 2021 and is expected to grow at a compound annual growth rate of 23.2% through 2030. The U.S. region accounted for $4.6 billion in revenue in 2021 and is expected to grow at a CAGR of 18.9%, the report showed.