25 percent of existing BPO service suppliers will cease to operate in 2012. This is reliant on a lately revealed Gartner research which is part of the Special Report titled’Assess and Manage vendor risks to guard Your Business’. This is credited to the current economic downturn, lapses in outsourcing contracts, and not being able to adjust to homogenized delivery models.
With these factors to mind , Gartner spotted that BPO buyers must take caution before venturing into any new outsourcing contract, and will be aware about the 6 warning signs meaning that a service provider is not stable enough to maintain a long term outsourcing relationship :
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three. Loss of major contracts to other service providers – Losing a’marquee’ deal spells difficulty on the part of the vendor. 4. Incapability to bid on new BPO deals because of absence of enough funds – Some service providers cannot take on new BPO contracts because of absence of enough capital. Moreover, the so-called’lift and shift’ technique in which a business process is moved offshore to reduce costs because of lower salaries will eventually create issues for service providers that rely on it because they continue to need capital for the resources needed to do that outsourced task. 5. Exposure to banking / financial sector – With the present financial crisis, those service providers with revenues coming from the finance or banking sector will be in a tight spot. If the outsourcing partner has more than 85 p.c of revenue from the banking sector, the purchaser should know if this will affect their business operations.
six. Inflating levels of contract cancellation and insourcing – Gartner says that before signing an outsourcing contract, buyers must come up with a plan on what to do when contract ends.
During these troublesome times when outsourcing has become an avenue for companies basically to chop costs, it is essential to pay very close attention to your outsourcing partner. Know the warning signs and be consistently mindful of what has happened in the BPO industry. Have a clear image of what you need to realize before signing any outsourcing contract.
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