Contact centers can reduce the cost of their contact handling and workforce optimization infrastructure by 43 percent over a five-year period by leveraging cloud-based offerings rather than installing equipment in their own facilities, according to Frost & Sullivan (News - Alert).

The report titled, “Premise Vs. Hosted Contact Center: Total Cost of Ownership Analysis,” was sponsored by inContact, a provider of on-demand contact center software and contact center agent optimization tools.

“This study not only validates the financial benefits of a cloud-based contact center infrastructure, but also clearly demonstrates that the appeal of the hosted model is not limited only to small businesses without the resources to purchase and maintain on-premise equipment,” said Paul Jarman, CEO of inContact, in a statement.

“The fact that the TCO increases as the number of seats grows will be a strong driver in the enterprise market, where we are already seeing significant traction for our own cloud-based contact center offerings,” Jarman added.

Frost & Sullivan analyzed 12 contact center configurations ranging in size from 50 to 500 seats, and in functionality from ACD-only to a full-function ACD, IVR, chat, outbound dialer, quality monitoring, workforce management, customer feedback, agent hiring and eLearning system.

According to the study, hosted contact center services substantially reduce TCO over premise-based systems in both three- and five-year scenarios for all 12 of the configurations analyzed.

The savings will improve in line with the size of the contact centers with the hosted model. Over five years 100-seat centers averaged 23 percent savings, 250-seat centers averaged 34 percent savings and 500-seat centers averaged 43 percent savings.

Pay-as-you-go hosted pricing model that eliminates in-house hardware investment, as well as related IT infrastructure, maintenance and upgrade expenses is fueling the savings.

Recently, another Frost & Sullivan report said the Asia Pacific contact center applications market revenue grew to $334.5 million in H1 2010. The H1 growth will keep the industry on track to grow at a 5-7 percent by the end 2010 over 2009.