One in four BPO providers will cease to exist by 2012

One in every four of today’s top BPO providers will no longer exist by 2012, predicts a report from analyst company Gartner. That means organisations that employ BPO services must carefully consider the long-term viability of their supplier engagements.

A number of factors have left many BPO providers perilously vulnerable to acquisition, to disruption by innovative competitors or to going out of business, Gartner said. Chief among these factors are the number of unprofitable contracts that many BPO suppliers have signed in order to remain competitive, and a failure to grow their business, whether through a lack of financing or due to operational inadequacies.

The collapse of the financial services industry in 2008 has also endangered BPO providers. “Sourcing executives should be aware of the potential impact if their provider has a significant amount of revenue (more than 85%) as a financial services pure play BPO vendor,” said Gartner.

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