A quarter BPO providers will not exist by 2012: Gartner

Last Updated: Wednesday, September 30, 2009 - 21:11

Mumbai: One-quarter of the today`s top business process outsourcing will not last beyond 2012 as separate entities as market exits, acquisitions and the ascent of new vendors will re-arrange the landscape, said a research firm, Gartner said.

Gartner is a leading information technology research
and advisory company.

"As providers are exposed to the economic crisis, with
loss-making contracts and inability to adapt to standardised
delivery models, many will struggle to survive in their
current form," Gartner Vice-President (Research) Robert H
Brown said.

Gartner has identified six key signposts to watch out for
that might herald the predicted market shakeout and has
identified the BPO vendors that might be acquired or exit the
market outrightly.

Some BPO providers are carrying unprofitable contract
portfolios, largely stemming from too-much, too-soon pursuit
of deals and are without much thought as to how to transition
them to a standardised, profitable state of ongoing
operations, it said.

Vendor selection teams of enterprises should gain insight
into prospective BPO providers` deals to understand how
profitable the vendor is. While most vendors will be reluctant
to share this information, those that stand the best chance of
longevity will realise that BPO is a partnership and being
open about profitability can limit long-term risk to both
parties, Gartner said.

All the same, handling multiple deals at once is a
necessity in outsourcing and buyers need to know that a vendor
can successfully cater to the needs of more than one customer.
A lack of recent new business activity can indicate that a
vendor is choking on a backlog of business, it said.

The financial services sector accounts for about
one-third of the total BPO market globally and providers with
more revenues from the banking sector were first exposed to
the credit crunch and ensuing the financial meltdown, Gartner
said.

While exposure to the banking sector is by no means an
absolute harbinger of doom, sourcing executives should be
aware of the potential impact if their provider has a
significant amount of revenue (more than 85 per cent) as a
financial services pure-play BPO vendor, it said.

Bureau Report



First Published: Wednesday, September 30, 2009 - 21:11
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