Hosting is not a new notion in call centers. For quite some time, hosting providers have offered call center technologies such as training software and knowledge management tools with varying degrees of success.

However, one area where the hosting model is thriving is in speech recognition. Typically, speech rec was only available to companies that had the budgets big enough to invest in expensive speech servers and applications. Smaller companies without the capital or the resources to maintain these complex technologies were left in the dark.

Michael Kuperstein, CEO and founder of Metaphor Solutions (Wellesley, MA), which provides both hosting and on-premise solutions, says that it costs an average of $500,000 to $1 million to install a speech rec system on site. "Companies like Amtrak have high enough call volumes that they can justify spending millions to deploy a speech rec system," he says. "But 85% to 90% of the market can't afford to spend that amount of money."

According to a January 2004 report from The Yankee Group, authored by Art Schoeller, the speech recognition market reached maturity three years ago, just in time for a worldwide economic downturn. The timing was auspicious for hosted speech applications as they provided a low-cost low-risk entry into speech rec.

But the biggest boost to the hosting market has been the transition from focusing on proprietary hardware ports and software license fees to open systems based on VoiceXML. Through the use of a common language, application developers, platform developers and software providers all benefit from code portability and reuse.

VoiceXML also helps ease some of the issues that prevented call centers from outsourcing their voice self-service applications in the past, such as loss of control and security issues; with VoiceXML companies can retain their own databases on site.

And while VoiceXML is opening many new doors for call centers, it's also a source of confusion in the marketplace. If you ask ten different people to define "hosting," it wouldn't be surprising to get ten different answers. However, there are several common hosting models that you can choose from when considering outsourcing speech rec. We outline these models in the sidebar.