Microsoft’s AI-powered contact center service takes on AWS, Google

With an eye on the growing contact center-as-a-service (CCaaS) market—which is being spurred by enterprise efforts to offer better customer service and experience—Microsoft on Tuesday released a new, all-in-one, cloud-based offering to take on hyperscalers such as AWS and Google, and other rivals including Oracle, SAP and ServiceNow.

Dubbed Digital Contact Center and available now, the new offering combines AI capabilities with existing Microsoft services and products including Dynamics 365, Teams, Power Platform and Nuance, said Charles Lamanna, corporate vice president of business applications and low-code platform portfolio at Microsoft.

The new service was launched at Microsoft’s annual Inspire conference. The idea behind the new contact center service is to provide omnichannel engagement, self-service, intent prediction, biometric authentication, and customer analytics in order to allow companies to offer personalized services that ultimately can drive revenue growth, Lamanna said.

AI capabilities allow the service to detect the intent behind a customer call, connecting the customer to the agent best-suited to handle the issue at hand. Other features, according to Lamanna, include knowledge-article recommendations for agents during a call, to help resolve a particular issue, and intelligent case swarming—a feature that allows agents to look at case history and help them connect with experts if need be.   

The Digital Contact Center allows agents to interact with customers across multiple channels (voice, video, chat) at the same time and conduct biometric authentication, Microsoft said, adding that it also allows enterprises to design chatbots for handling repetitive and complex tasks.

In addition, Microsoft’s new offering includes a module called ContextIQ, designed to perform sentiment analysis and suggest next-best responses to agents during a call. This capability also helps create a learning loop for automated applications, such as chatbots, to become smarter.

Microsoft has partnered with companies including Acenture-Avanade, Genesys, and HCL, to make the new offering interoperable and compatible with other existing contact center systems, it said. System integrators such as EY, TCS, KPMG, and PwC will also aid enterprises in integrating the new digital contact center, Microsoft said.

Microsoft might be late to the CCaaS party but the company is taking a step forward by essentially folding its unified communications-as-a-service (UCaaS) product, Teams, into the new CCaaS platform, along with Dynamics Customer 365, said Liz Miller, principal analyst at Constellation Research. Dynamics Customer 365, which will continue to be sold, is Microsoft’s existing customer service module, which resides within the Dynamics 365 ERP suite.

“The new Digital Contact Center takes the foundation of the service offering in Dynamics Customer 365 and integrates Teams, Nuance and the scale and availability of cloud,” Miller  said.

The move to unify UCaaS and CCaaS is on trend because increasing use of UCaaS tools has forced customer support operations to become increasingly dependent on cloud communications to meet customer needs, Miller said.

“The announcement comes at a time when buyers of CCaaS solutions are desperately looking around for the easy button. These are buyers being tasked with turning the contact center from an operational cost center unintentionally delivering negative customer experiences into a revenue growth opportunity through the delivery of exceptional experiences,” Miller said.

Microsoft faces competition in CCaaS market

While the new CCaaS offering seems like a logical extension of Microsoft’s existing product portfolio and puts the company in the end-to-end, customer-services provider market at a time when one-stop solutions are in demand, the competition will be tough, said Vasupradha Srinivasan, a senior analyst at Forrester.

“The new product will face stiff competition as it goes up against players that have years of contact center and customer service expertise,” Srinivasan said, adding that there is an undercatered, midmarket business segment that may become a strategic sweet spot for the new product, especially if Microsoft wants to package it with a Dynamics or Azure enterprise buy. 

The global CCaaS market is growing, expected to reach $15.07 billion in 2029, which would represent a compound annual growth rate of 17.5% from $4.87 billion in 2022, according to Fortune Business Insights.

Microsoft’s rivals in the market are not standing still. In June, for example, Amazon Web Services (AWS) added a new case management feature, dubbed Amazon Cases, to its Amazon Connect cloud-based contact center service

In March, Google Cloud tweaked its Contact Center AI (CCAI) service to give it the ability to integrate with CRM (customer relationship management) applications in order to provide enterprises with real-time insights and data analytics.