The word on the street is that Nuance is buying the online virtual agent company VirtuOz for an undisclosed sum (see the TechCrunch article here). So what does this acquisition mean?

Let's start with Nuance. Nuance’s solutions help engage customers with what it terms “smart, automated conversations.” Its customer service solutions revolve primarily around the voice channel and support both inbound and outbound interactions. Nuance’s main building blocks focus on speech and touch-tone automation solutions, speech-enabled call-routing solutions, voice authentication, and outbound notifications. Recently, it launched Nina, a virtual assistant product targeted at the enterprise for mobile customer service. Again, Nina leverages much of Nuance’s core expertise in voice biometrics, speech recognition, text-to-speech rendering, and natural language understanding to empower customers to ask questions and receive relevant answers to questions like “Did my last check clear?” without tortuous back-and-forth conversations between the customer and the service organization.

What Nuance does not have is a complete customer service solution, being so focused on voice interactions. Specifically, Nuance lacks web self-service solutions to support the increasing popularity and usage of these digital channels. This is where VirtuOz comes in.

VirtuOz products are enterprise-grade web-based virtual agent solutions. They answer customer questions asked in natural language instead of just keywords. They can lead customers through a set of clarifying questions as well as execute transactions such as changing a flight reservation. VirtuOz solutions integrate with existing CRM and ERP systems and knowledge bases to support contextual, personalized, and efficient service. In addition, when a conversation is outside of the the scope of the virtual agent, VirtuOz is able to hand over the interaction to the most appropriate human-assisted channel, passing along the context of the interaction so that the customer does not have to restart the interaction.

Net-net, this acquisition makes a lot of sense, and signals Nuance’s focus and attention on providing the market with enterprise-grade, end-to-end customer service solutions across a broadening range of touchpoints and communication channels. With all the attention in the virtual agent space, I would not be surprised to see other virtual agent companies also being acquired and their technology becoming a building block of a broad customer service offering.