New Delhi, Sep 30 (Inditop.com) More business process outsourcing (BPO) service providers in India will exit the market in coming years, as it is difficult for them to stay afloat in the current form due to the slowdown, according to a study released here Wednesday.
“One-quarter of the top business process outsourcing (BPO) service providers will not exist as separate entities by 2012,” said the study by IT research and advisory firm Gartner.
Market exit, acquisitions and the ascent of new vendors will rearrange the BPO provider landscape in the coming years, it said.
“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 of 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,” he added.
Gartner suggested that buyers’ vendor selection teams gain insight into prospective providers’ business deals to understand how profitable the vendors are.
Also, it is important to gain insight into the vendor’s track record of winning new businesses, it added.
The financial services sector accounts for about one-third of the total BPO market globally. Service providers with significant amounts of BPO revenue from the banking sector were the first exposed to the credit crunch and the financial meltdown.
Gartner has advised buyers to build exit strategies into contracts and develop contingencies for contract termination especially before signing a deal as the rate of cancellation of deals has risen sharply since 2007.
