Gartner Says Many Enterprises Are Frustrated with their BPO Relationships Due To a Lack of Understanding of their Service Agreement

Hype Cycle Report Examines 27 of the Most Compelling and Topical BPO Service Offerings

STAMFORD, Conn., August 22, 2006 — Through 2009, 50 percent of organizations involved in business process outsourcing (BPO) relationships will experience cost overruns and unacceptable service delivery quality, according to Gartner, Inc. Gartner analysts attribute this frustration by enterprises to a lack of understanding of their specific BPO offerings in terms of market hype versus true market maturity.

“It’s clear that buyer’s across the market are experiencing consistent and pervasive hype concerning which processes and service providers can truly deliver on the promise of business process outsourcing,” said Lisa Stone, research vice president for Gartner.

“Companies must set up an internal BPO strategy in order to block out the hype and determine the best offering for them to achieve their goals,” Ms. Stone said. “This consists of measuring the environment, identifying the drivers behind why BPO is being considered and deciding which approach is best for entering into a BPO relationship. Then use a structured sourcing process through vendor evaluation, contracting and negotiating and creating an internal management support team to ensure that all details are in place to support the service before signing an outsourcing contract.”

In the Gartner report “Hype Cycle for Business Process Outsourcing, 2006”, two distinct BPO services stand out for their transformational impact: core banking, and comprehensive finance and accounting (F&A) BPO. However, they are both far from mature (each is more than five years away). When they mature, they will assert a pervasive influence on basic service delivery approaches for their sectors.

In the more immediate time frame (less than two years), contact center outsourcing, which is expected to plateau in less than two years, appears capable of reaching maturity and providing high-level impact. Contact center outsourcing has a high potential for business impact, since these services improve or drive business functions for interacting with a wide range of constituencies, including customers, partners, employees and suppliers. Driven by the provider's functional process expertise and industry-specific capabilities, contact center outsourcing can deliver on the promise of BPO enterprise-wide.

“Organizations that have adopted a multi-channel, multi-domain contact center, and realized its effectiveness, should only investigate outsourcing those functions or channels that aren't economically viable for them to maintain,” said Matthew Goldman, research director for Gartner. “Midsize and smaller organizations that need to appear bigger than they are should investigate contact center outsourcing or globally delivered (offshore) contact center outsourcing as a potential solution.”

More information on the BPO service offerings available in the market can be found in the Gartner report, “Hype Cycle for Business Process Outsourcing, 2006.”  This report presents a graphical example of the key BPO offerings and where they fall on the hype cycle.  This report can be found on Gartner’s Web site at www.gartner.com/DisplayDocument?doc_cd=140117&format=html.

This report is one of 78 hype cycles released by Gartner in 2006. More than 1,900 information technologies and trends across more than 75 industries, technology markets, and topics are evaluated by more than 300 Gartner analysts in the most comprehensive assessment of technology maturity in the IT industry. Gartner's hype cycles assess the maturity, impact and adoption speed of hundreds of technologies across a broad range of technology, application and industry areas. It highlights the progression of an emerging technology from market over enthusiasm through a period of disillusionment to an eventual understanding of the technology's relevance and role in a market or domain. Additional information regarding the hype cycle reports is available on Gartner’s Web site at http://www.gartner.com/it/docs/reports/asset_154296_2898.jsp.

Contacts:


Christy Pettey
Gartner
+1 408 468 8312
christy.pettey@gartner.com

Laurence Goasduff
Gartner
+ 44 1784 267 195
laurence.goasduff@gartner.com


About Gartner:
Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company. Gartner delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is the indispensable partner to 60,000 clients in 10,000 distinct organizations. Through the resources of Gartner Research, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 4,000 associates, including 1,200 research analysts and consultants in 80 countries. For more information, visit www.gartner.com.