Market Analysis – 83111505 – Directory assistance services

Market Analysis Brief: Directory Assistance Services

UNSPSC 83111505

Executive Summary

The global market for traditional directory assistance (DA) services is in terminal decline, driven by near-universal adoption of free, superior digital alternatives. The market is projected to contract sharply with a 3-year CAGR of est. -18%. While legacy contracts and specific demographic needs provide a small, residual demand base, the primary threat is technology obsolescence, which has rendered the service largely irrelevant. The single biggest opportunity is not in sourcing optimization, but in aggressive demand elimination to achieve 100% cost avoidance.

Market Size & Growth

The global Total Addressable Market (TAM) for directory assistance is shrinking rapidly as telecommunication providers de-emphasize or decommission the service. The market is sustained only by residual per-call fees from a diminishing user base, primarily in developed nations. The projected 5-year CAGR is sharply negative, indicating a near-total market collapse within the next decade.

The three largest geographic markets are: 1. United States 2. Japan 3. Germany

Key Drivers & Constraints

1. Constraint: Technology Substitution (Critical) - The proliferation of smartphones, internet search engines (Google), and voice assistants (Siri, Alexa) provides instant, free, and more accurate information, eliminating the core value proposition of paid DA services.
2. Driver: Residual Demographics & Niche Use Cases - A small, shrinking user base, primarily composed of seniors, individuals without internet access, or drivers in hands-free situations, continues to generate minimal demand.
3. Constraint: Carrier Decommissioning Strategies - Telecom providers are actively discouraging use through punitive pricing (>$2.50/call) and are petitioning regulators for the right to cease service entirely, accelerating market decline. [Source - FCC, 2023]
4. Driver: Legacy Contractual Obligations - Some enterprise contracts and public sector service level agreements (SLAs) may still include provisions for DA, though these are rarely utilized and are being phased out upon renewal.
5. Constraint: Low Strategic Importance - For both suppliers and buyers, this category represents a negligible and declining portion of telecom spend, receiving minimal investment or strategic focus beyond cost reduction.

Competitive Landscape

Barriers to entry are functionally irrelevant due to the lack of a viable business case. The primary asset—access to subscriber databases—is controlled by incumbent carriers who are exiting, not expanding, the market.

⮕ Tier 1 Leaders * AT&T (USA): Incumbent carrier with a massive, albeit declining, legacy user base; actively petitioning to end service obligations. * Verizon (USA): Major incumbent focused on premium wireless; treats DA as a high-cost, non-strategic legacy service. * Deutsche Telekom (Europe): Leading European incumbent managing a declining DA service portfolio across multiple national markets.

⮕ Emerging/Niche Players * Concentrix (Global): A BPO leader that manages outsourced call center operations, including DA services, for major carriers seeking to reduce fixed costs. * Teleperformance (Global): Major BPO provider offering automated and agent-assisted customer care services, absorbing DA functions from telcos. * Infobel (Global): A digital directory provider, representing the technology that has replaced traditional DA rather than a direct competitor in the legacy service itself.

Pricing Mechanics

The predominant pricing model is a per-call fee, often ranging from $1.99 to $4.99. This model is intentionally punitive to discourage usage. For enterprise clients, some legacy contracts may include a small bundle of "free" calls, but this is increasingly rare. The price is designed to be significantly higher than the underlying cost to serve, acting as a deterrent.

The cost build-up is simple, comprising labor, technology, and data. The most volatile elements are related to the operational costs of a service with collapsing volume, where fixed costs are spread over fewer transactions. 1. Labor Costs: Agent wages for the remaining human-serviced calls. Recent call center wage inflation has been +5-7% annually. 2. Punitive Pricing Adjustments: Carriers can arbitrarily increase per-call fees with minimal notice to accelerate user migration. Recent examples show hikes of +25-50% in a single adjustment. 3. Technology Licensing/Maintenance: Costs for maintaining legacy IVR systems and database access do not scale down perfectly with volume, increasing the per-unit cost.

Recent Trends & Innovation

• Regulatory Relief (Q4 2023): The U.S. Federal Communications Commission (FCC) has increasingly granted forbearance requests from carriers like AT&T, allowing them to cease offering DA services in designated service areas, signaling a regulatory acknowledgment of the service's obsolescence.
• Hyper-Automation (2023-2024): Suppliers are shifting remaining call volume to fully automated, AI-powered voice response systems to eliminate the last vestiges of human agent costs. This reduces service quality but slashes operating expense.
• Aggressive Monetization (2023-2024): Instead of a flat fee, some carriers have experimented with tiered pricing, such as an additional charge for call completion (i.e., connecting the user to the requested number), further increasing the cost per successful inquiry.

Supplier Landscape

Regional Focus: North Carolina (USA)

Demand for directory assistance in North Carolina mirrors the national trend of steep decline. Residual usage is concentrated in rural areas with below-average broadband penetration and among the state's significant retiree population. The state hosts major telecom providers like AT&T and Spectrum (Charter Communications), who are the primary suppliers. North Carolina also has a robust call center and BPO industry, particularly in the Research Triangle and Charlotte metro areas, providing a pool of low-cost labor for any remaining outsourced DA operations. However, the sourcing strategy for NC-based operations should be identical to the national strategy: complete demand elimination.

Risk Outlook

Actionable Sourcing Recommendations

1. Execute a "Managed Exit" Negotiation. Consolidate any remaining DA spend with your primary wireless or wireline carrier. Negotiate to eliminate all per-call charges in exchange for a zero-cost or nominal fixed-cost allowance within the master services agreement. Target a >90% reduction in variable spend on this category within 6 months.

2. Launch an Internal Demand Elimination Program. Proactively identify the few remaining internal users of DA services. Mandate and provide training on using free alternatives (e.g., mobile search, voice assistants). Implement a policy to cease reimbursement for DA charges corporate-wide, with a goal to achieve zero spend within 12 months.