Gartner: Beware of shaky outsourcingproviders

Business process outsourcing, the fastest growing part of the European IT services and sourcing market, will attract unreliable...

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Business process outsourcing, the fastest growing part of the European IT services and sourcing market, will attract unreliable players that could lead to high-profile failures, research firm Gartner has warned.

European businesses hoping to outsource activities such as human resources, payment systems and inventory management because of the cost benefits, should watch out who they do business with.

"There will be many companies jumping in [to offering outsourcing services] with two feet without a serious commitment to the process delivery model," said Robert Brown, a Gartner senior analyst.

Business process outsourcing is an immature but rapidly growing market, and service providers will want to be associated with it, according to Gartner. Today's dominant vendors, such as EDS, IBM and PricewaterhouseCoopers, will face tough challenges from new entrants.

Companies looking to outsource should "watch out for the newcomer using a BPO [business process outsourcing] label just as a sales tool," Gartner said.

The European market for business process outsourcing should reach £26.6bn in 2002 and grow to £44.5bn by 2005. It is the fastest growing component of the European IT services and sourcing market with a projected 14.7% compound growth rate between 2000 and 2005, according to Gartner.

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