New research from Frost & Sullivan found that the North American hosted interactive voice response (IVR) services market has experienced double-digit growth over the past couple of years, and that trend is not expected to slow down any time soon, as revenues reached $877 million in 2006 and can soar to $3.2 billion by 2013.

One of the main reasons that hosted solutions are gaining ground is the perception that cost-based pricing represents an attractive and cost-effective alternative to premises-based solutions, says Frost & Sullivan senior analyst Seema Lall.

Also driving this trend are reductions in upfront capital expenditures, an associated lower total cost of ownership, a greater acceptance of self-service and Voice over Internet Protocol (VoIP) technologies, and new product offerings from technology vendors with shared infrastructure support and carrier-grade reliability and scalability.

"Apart from lower costs, the motivation to improve customer experience is also likely to substantially improve the uptake of hosted IVR solutions,” Lall says. "An IVR-enabled customer service front end significantly enhances and simplifies self-service menus, thereby generating a more positive customer experience." There are a few hurdles that hosted solutions have to overcome before reaching greater adoption. Primary among them is a perceived loss of control to a service provider. “End-user education on the benefits of the hosted model is a key factor in addressing these challenges,” Lall notes.