One-Quarter Of Top BPO Providers Will Not Exist in 2012

One-quarter of the top business process outsourcing (BPO) operatives will not exist as separate entities by 2012, according to Gartner, Inc. Gartner said that market exit, acquisitions, and the ascent of new vendors will rearrange the BPO provider landscape in the coming years, and enterprises should look for warning signs when evaluating BPO vendors to mitigate risk.

“As providers are exposed to the economic crisis, loss-making contracts, and an inability to adapt to standardised delivery models, many will struggle to survive in their current form,” said Robert H. Brown, research vice president at Gartner. “Some will be acquired and some will exit the market completely to be replaced by dynamic new players delivering BPO as automated, utility services.”

Gartner has identified six key signposts to watch for that might herald the predicted market shakeout and identified which BPO vendors might be candidates for acquisition or outright market exit.

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1. Chronically Unprofitable Portfolio BPO Deals

2. Sustained Inability to Win Significant New Business or Drive Growth and/or Profitability

3. Loss of Visible, Established Marquee BPO Deals To Competitors Because of ‘Recompetes’ at the End of a Contract Life

4. Capitalisation Prevents Funding for Bidding on New Deals

5. Exposure to the Banking and Finance Sector

6. Levels of BPO Contract Cancellation and Re-Insourcing Rise Even Higher