At Gartner’s Customer Relationship Management Summit in London this month the research company predicted that 80 per cent of organisations that outsource customer service and support contact centres with the main aim of cutting costs will fail by 2007.

The company also pointed out that while the worldwide market for customer service outsourcing would increase from $8.4 billion to $12.2 billion by 2007, offshore call centres would still only account for less than 5 per cent of the total market.
Presenting the findings, Gartner research director Alexa Bona said “Our research shows that there are significant risks associated with outsourcing customer service.”

The widely perceived image of companies reaping massive savings by shifting their customers services to Indian call centres was false the company claimed. Gartner believes that by the end of this year 70 percent of the leading 15 Indian owned business process outsourcing startups that provide call centre services will be taken over, merged or marginalized. Between now and 2008, 60 per cent of companies that outsource their customer services will face problems such as customer defection and other hidden costs that will outweigh the savings made by offshoring.

Bona said that while companies could achieve between 25 and 30 per cent cost savings if outsourcing was managed properly, most companies failed to perform appropriate pilot testing before locking themselves into long term contracts with unsuitable service providers.

www.gartner.com/crm

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