Gartner: Companies Outsourcing Customer Services Will Fail by 2007

Filed in archive Outsourcing News on March 8, 2005

Research firm Gartner said that around 80 percent of companies that outsource customer service functions would fail by 2007. Gartner stated that a diminishing work force and unmanaged offshore operations are the main reasons for the failure. They added that 60 percent of these companies would face problems in the form of client defections and hidden costs (which will cancel out cost savings) by 2008.

Furthermore, with the increasing mergers in the Indian outsourcing market, it was advised that companies should choose their outsourcing firms wisely. Gartner predicted that 70 percent of the top 15 Indian call center companies will be bought or marginalized by the end of the year.

Nevertheless, Gartner said that the customer service outsourcing market would continue to grow from $8.4 billion in 2004 to $12.2 billion in 2007. In addition, they said that non-core customer services outsourcing could still garner cost savings of 25 percent to 30 percent.

Still, alexa Bona, research director at Gartner, warned that when rapid growth occurs, processes would break down.