Davids take on outsourcing Goliaths

Established outsourcing providers should prepare themselves for a bitter battle as smaller service providers form alliances in a bid to take a bigger slice of the $600bn global IT call centre services market.

According to a report from analyst Datamonitor, big guns in the sector including Accenture and IBM Global Services are facing increasingly stiff competition from alliances of service providers.

Accenture and IBM Global Services are typical of a new breed of full service providers that offer a one-stop shop for everything from strategy consultancy, through systems integration to call centre and business process outsourcing solutions.

But these firms will come under increasing pressure from new kids on the outsourcing block, Datamonitor warned.

"When BT and HP announced in May 2004 that they would develop shared go-to-market services, including a call centre proposition, they started a trend," said Ryan Powell, call centre technology analyst at Datamonitor and author of the study.

The study points to recent alliances and partnerships between various players in the IT services and outsourcing space, including CSC with AON, and EDS with Siebel.

These alliances aim to bring together various elements of the IT services and outsourcing puzzle to address customers' increasingly complex demands.

The analyst firm noted that margins among call centre outsourcing providers are being squeezed hard, and that some call centre companies have started to move away from being commodity businesses to offer a more complex mix of services.

Datamonitor reported that another factor is the loss of call centres to nearshore areas like Eastern Europe and North Africa, and lower cost destinations such as India.

This shift, combined with firms increasingly implementing web- and phone-based self-service systems, has changed the type of calls reaching call centre agents and has the potential to lower call volumes.