One component to the revenue stream is customer churn. Every industry faces some degree of customer churn as part of the overall business environment. Sometimes customers merge or cease operations, sometimes they discontinue a part of their operation which makes the use of services obsolete. Sometimes though the churn is because of a general willing of the customer to consider alternative solutions...which in most cases leads to the transfer of business to a competitor.
The BPO industry is not immune to the general competitive environment faced by corporations. In theory the long lead time in negotiating a suitable BPO solution combined with strong operational challenges implementing said solution should lead to a low churn rate.
The hurdle rate, so it seems, is rather high to transfer business away.
A recent recent study though seems to suggest otherwise. The study evaluated respondents willingness to consider moving their business away form their existing BPO provider and their motivation for doing so.
The results differ dependent upon the industry surveyed. A whopping 26 % of respondents within the "IT Networking and Infrastructure Support" group indicated a willingness to move their business.
On the other end of the scale only 9 % of "Finance and Accounting Users" seem to be prepared to entertain different solutions.
The most interesting take away of the study is the degree to which SaaS or BaaS is making inroads into traditional BPO relations. Between 4 to 5 out of 10 respondents indicate that their reasoning to abandon their existing relationship is rooted in their willingness to entertain a Saas or BaaS solution.
Of course...the notion that the BPO business is under attack by the emergence of SaaS and BaaS is nothing new. As such the study does not really suggest anything out of the ordinary.
It is never the less an interesting fact that almost 50 % of customer churn in the BPO industry can be attributed to new solutions as apposed to competitive pressures.