As many as half of all firms that outsource could see cost overruns, says research company Gartner.
In a statement released on Wednesday, the company said through 2009, 50% of organisations involved in business process outsourcing (BPO) relationships would experience cost overruns and unacceptable service delivery quality.
Its analysts attribute this frustration for enterprises to a lack of understanding of specific BPO offerings in terms of market hype versus true market maturity.
"It`s clear buyers across the market are experiencing consistent and pervasive hype concerning which processes and service providers can truly deliver on the promise of BPO," said Lisa Stone, research VP 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," 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."
Pervasive influence
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 BPO.
However, both are far from mature as each is more than five years away. When they mature, they will assert a pervasive influence on basic service delivery approaches for their sectors, said the company.
In the more immediate time frame, contact centre outsourcing, which is expected to plateau in less than two years, appears capable of reaching maturity and providing high-level impact.
"Contact centre 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," Gartner said.
"Driven by the provider`s functional process expertise and industry-specific capabilities, contact centre outsourcing can deliver on the promise of BPO enterprise-wide," said the company.
"Organisations that have adopted a multi-channel, multi-domain contact centre, and realised 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 organisations that need to appear bigger than they are should investigate contact centre outsourcing or globally delivered (offshore) contact centre outsourcing as a potential solution."
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