Present Indicative: Contract Verbs

Why contract? Because, if the stem ends in α, ε or ο, for reasons of fluency of speech, that stem α, ε or ο combines with the ending. In Attic Greek anyway.
Look at English: We say things like "doesn't, won't, he's gone, they've left, the're not here". Why? Because it's easier - for us! That's elision, the Greeks do that too. But they found out that for them, contracting action verbs was also easier. For them!
 
 
  shouts, is shouting 
  
βοά ω   becomes  βο ῶ 
βοά εις   becomes  βο ᾷς 
βοά ει   becomes  βο ᾷ 
βοά ομεν   becomes  βο ῶμεν 
βοά ετε   becomes  βο ᾶτε 
βοά ουσιν   becomes  βο ῶσιν 

 
 Note 
 
All the endings are regular, only the stem has changed: it has lost its end vowel, α in this case. And that vowel has combined with the regular endings, lenghtening them. But this α was an accented ά and the accent has remained with it, changing to a circumflex to let us know that it really is 2 syllables fused into one.
 
Contraction Rules
unaccented accented
  α + ε     becomes      α       ά + ε     becomes      ᾶ    
  α + ει     becomes    ᾳ       ά + ει     becomes    ᾷ    
  α + ω     become      ω       ά + ω     become      ῶ    
  α + ο      ά + ο   
  α + ου      ά + ου