Gartner warns of shake-out among Indian BPOs

Research firm Gartner has sounded an alarm bell for Indian business process outsourcing companies. The research firm says that in the coming six months as many 70 per cent of the top 15 Indian BPOs will cease to exist as they will either merge with the bigger ones or be marginalised.

Gartner's predictions are based on the fact that off shore call centres and offshore customer service centres represent a tiny two per cent of the total market for such services and are expected to grow to less than five per cent by 2007. The world-wide market for customer service outsourcing is set to grow from $8.4 billion in 2004 to $12.2 billion in 2007.

Gartner also says that up to 2008, 80 per cent of organisations that outsource customer service and support contact centres with the primary goal of reducing cost will not succeed while 60 per cent of organisations that outsource parts of the customer-facing process will encounter customer defections and hidden costs that outweigh any potential savings they derive from outsourcing.

The organisation sees significant risks associated with outsourcing customer service and says a poorly managed model can reduce the quality of customer experience, dilute the brand values of the company and fail to deliver cost savings. This is also partly due the fact that customer service outsourcing providers in Asia have high staff attrition rates of up to 70-80 per cent compared to an average of 19-25 per cent in in-house contact centres.